Output tax is chargeable on the supply of goods or services in the course or furtherance of a business (VATA 1994, s. 4(1)). Therefore, no VAT is due where goods, which are part of the assets of a business, are lost, stolen or destroyed.

However, if goods that have been supplied are lost, stolen or destroyed while still at the supplier's premises or while being transported to the customer, output tax is due if title has transferred to the customer.

Where goods are lost the onus of establishing such loss lies on the taxable person.

Distinguish theft of goods from theft of sale proceeds

A distinction is made between:

1where goods are lost or stolen; and

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