Specific applications: conversions of vehicles into cars
When a vehicle upon which VAT has been reclaimed is converted into a car and kept by a trader, VAT must be accounted for on the current value of the vehicle at the time of the conversion. The cost of the conversion must be included. This is an application of sub-section 2 of paragraph 6 of Schedule 6 to the VATA 1994. See paragraph 08700 of this guidance.
Where a vehicle has been converted into a car for resale, VAT is due upon the full price at the time of sale in the normal manner.