{"id":17173,"date":"2020-10-01T15:23:01","date_gmt":"2020-10-01T09:53:01","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=17173"},"modified":"2024-05-24T14:38:19","modified_gmt":"2024-05-24T09:08:19","slug":"an-analysis-on-margin-scheme-on-the-sale-of-repossessed-vehicle","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/an-analysis-on-margin-scheme-on-the-sale-of-repossessed-vehicle\/","title":{"rendered":"An Analysis on Margin Scheme on the Sale of Repossessed Vehicle"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Volkswagen Financial Services UK deals with the financing business related to vehicle purchases under the renowned brands Skoda, Bentley, Volkswagen, Porsche, Audi etc.&nbsp;In this article we described about An Analysis on Margin Scheme on the Sale of Repossessed Vehicle: Latest from UK Tribunal.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/an-analysis-on-margin-scheme-on-the-sale-of-repossessed-vehicle\/#Area_of_Contradiction\" >Area of Contradiction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/an-analysis-on-margin-scheme-on-the-sale-of-repossessed-vehicle\/#Here_are_the_following_Consideration_Referred_by_the_Upper_Tribunal\" >Here are the following Consideration Referred by the Upper\nTribunal&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/an-analysis-on-margin-scheme-on-the-sale-of-repossessed-vehicle\/#Notion_of_VAT_Arrangement_related_to_a_Stream_of_Transaction\" >Notion of VAT Arrangement related to a Stream of\nTransaction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/an-analysis-on-margin-scheme-on-the-sale-of-repossessed-vehicle\/#Conclusions\" >Conclusions<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Area_of_Contradiction\"><\/span>Area of Contradiction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\ncontradiction arose when VFS seek a refund against the tax paid on the sale of\nrepossessed vehicles on the basis of the fact that they are resellers and are\neligible for the benefit of margin scheme related to aforesaid sale acquired\nfrom customers in the event of the cancellation of the hire purchase agreement.<\/p>\n\n\n\n<p>The margin scheme is referred to as a tax arrangement that permits a VAT-registered business to address <a href=\"https:\/\/corpbiz.io\/learning\/press-release-tax-liability-to-be-followed-for-calculation-of-interest\/\"><strong>tax liabilities<\/strong><\/a> on the difference between sale and cost of goods. The purpose of the scheme is to avert the double taxation.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Here_are_the_following_Consideration_Referred_by_the_Upper_Tribunal\"><\/span>Here are the following Consideration Referred by the Upper\nTribunal&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>As per hire and purchase agreement, the customer is not liable to dispose of the vehicle as owner until and unless the customer purchase the vehicle after discharging the remaining instalments. Thus; whenever the agreement ends up prematurely, the customer cannot dispose of the vehicle as an owner<\/li>\n\n\n\n<li>No supplies involves when the customer decided to transfer the possession of the vehicle back to the VFS. In such an event, the notion of a margin scheme cannot be applied.&nbsp;<\/li>\n\n\n\n<li>\u2018Repossession of the car\u201d cannot be considered as the actual handing over of the tangible items.&nbsp;<\/li>\n\n\n\n<li>The concept of supplies in hire purchase would end up on the cancellation of the agreement.&nbsp;<\/li>\n\n\n\n<li>Irrecoverable <strong><em>VAT<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Value-added_tax\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> Cost won\u2019t exist in regards to repossession, thus; no double taxation and margin scheme.<\/li>\n\n\n\n<li>The concept of supply cannot be applied to repossessed vehicles.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/lok-sabha-clears-the-taxation-and-other-laws-relaxation-and-amendment-of-certain-provisions-bill-2020\/\">Lok Sabha clears the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Notion_of_VAT_Arrangement_related_to_a_Stream_of_Transaction\"><\/span>Notion of VAT Arrangement related to a Stream of\nTransaction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>VFS\nbuys out vehicles from authorized dealers after paying out applicable VAT\ncharges. Consequently, such purchases allow VFS to availed credit of VAT paid.\nThere is no contradiction in such an arrangement.&nbsp;&nbsp;<\/p>\n\n\n\n<p>The\nvehicles are further sold to the customers via hire purchase agreement. VFS is\npaying out VAT on the sale value of the vehicles at the point of sale to the\ncustomer, though such liabilities are retrieved from the customer overtimes.<\/p>\n\n\n\n<p>VAT is paid on the entire value of the vehicle upfront as the concept of supply encompasses within its scope&nbsp;<strong>\u201c<\/strong><em><strong>transfer of possession under the hire purchase agreement\u201d<\/strong>.<\/em>&nbsp;There is no issue in this regard as well.&nbsp; <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Key Pointers \u2013 Summary and Considered Decisions  <\/h3>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"633\" height=\"340\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-4.png\" alt=\"Summary and Considered Decisions \" class=\"wp-image-17174\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-4.png 633w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-4-300x161.png 300w\" sizes=\"(max-width: 633px) 100vw, 633px\" \/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusions\"><\/span>Conclusions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> As soon as customers pay out the entire instalments, he\/she becomes the legal owner of the vehicle in absolute terms meaning \u2013 VKS would no longer claim the ownership of the vehicle. The customer is also eligible to terminate the contract after making 50% of the instalments. In such an event, the possession of the vehicle routed back to the real owner i.e. VFS. The installment paid by the customers in this regard is treated as the cost of supply by the VFS.  <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/banking-regulation-amendment-bill-2020-passed-by-lok-sabha\/\">An Outlook on Banking Regulation (Amendment) Bill, 2020 Passed by Lok Sabha<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Volkswagen Financial Services UK deals with the financing business related to vehicle purchases under the renowned brands Skoda, Bentley, Volkswagen, Porsche, Audi etc.&nbsp;In this article we described about An Analysis on Margin Scheme on the Sale of Repossessed Vehicle: Latest from UK Tribunal. Area of Contradiction The contradiction arose when VFS seek a refund against [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":17182,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[153,152],"tags":[1058],"acf":{"service_id":"50"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":3238,"readingTime":2,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17173"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=17173"}],"version-history":[{"count":18,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17173\/revisions"}],"predecessor-version":[{"id":64410,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17173\/revisions\/64410"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/17182"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=17173"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=17173"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=17173"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}