VAT refunds for dealers of second-hand cars – do you really know your entitlement?
The rules on claiming VAT on second-hand cars can be quite complex. If you are a dealer of second-hand cars and prepare your own VAT return, are you correctly calculating your VAT?
If you are using the margin scheme for your vehicles you may be overpaying VAT.
VAT margin schemes tax the margin between what you paid for a vehicle, and what you sold it for. The margin is treated as VAT inclusive and you pay VAT at 16.67% (one-sixth) on this margin. However, it is not always straightforward to calculate the margin especially if you buy cars from the car auctions or a buyer’s premium is charged.
Recently a business identified a VAT overpayment of around £200,000 over a four year period. If you buy vehicles from car auctions you could also be overpaying VAT.
If you think that you are affected and would like to discuss this please contact us.
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