- VAT treatment of lost, stolen, damaged or destroyed goods depends on several factors, including whether a supply occurred, who was responsible for the goods, and if a VAT invoice was issued.
- Lost goods: If the customer is responsible for the loss before delivery, VAT is due on the full sale amount. If the supplier is responsible, VAT is due on the invoiced amount less any credit given, or no VAT is due if no invoice was issued.
- Stolen goods: No VAT is due if goods are stolen from a business premises and no customer was invoiced. If goods are stolen from a supplier’s premises after being sold, VAT is due if the customer was responsible for the goods. If the customer was not responsible, VAT is due if an invoice was issued, and no VAT is due if no invoice was issued.
- Fraud: To avoid paying output tax on goods lost to fraud, businesses must report the incident to the police and contact HMRC with case details.
- Damaged goods: Output tax is due on any income received from selling damaged goods at a discount or for scrap value. No VAT is due on insurance payments for damage.
- Destroyed goods: No VAT is due on the disposal of destroyed goods that cannot be sold and are handed over to the insurer.
Source: marcusward.co
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
