The finance and tax questions manufacturers ask most

What happens if scrap sales are left off the books?

Scrap sales are taxable income, so leaving them off underpays both VAT and corporate income tax. Once found, the tax is due with a late-payment surcharge of 0.05% per day, and a penalty of 50% to five times the unpaid tax may apply.

It is common in electroplating, hardware, machining and injection moulding: income from offcuts, spent solutions and old moulds goes unrecorded year after year.
Typical signs: regular dealings with a scrap buyer but no matching income; raw material usage and finished goods that do not reconcile.
The fix: keep a scrap register and invoice or declare every disposal as it happens.

This page is general information only and is not tax, legal or accounting advice on any particular matter. Policy references reflect the documents in force at the time of writing; how they apply depends on the company's facts and on the local tax authority.

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