The second-hand motor vehicle export refund scheme is a new scheme that the government intends to introduce on 1 October 2022.
It will allow you to claim a refund of VAT if you move a second-hand motor vehicle from Great Britain (England, Scotland and Wales) to Northern Ireland for resale.
If you’re a car dealer who sells motor vehicles in Northern Ireland, you will soon have to use the scheme if you:
- buy vehicles in Great Britain and move them to Northern Ireland for resale
- currently use the VAT margin scheme for those sales
You may also be able to use the refund scheme if you:
- are VAT registered in the EU
- buy second-hand vehicles in Great Britain and export them to the EU for resale
Further information on the scheme will be published in May 2022.
If you’re a dealer in second-hand motor vehicles in the UK
When the refund scheme is introduced you will no longer be able to use the VAT margin scheme to account for VAT on second-hand vehicles that you buy in Great Britain, move to Northern Ireland and then resell.
The VAT on these sales will be subject to the normal rules for moving goods between Great Britain and Northern Ireland. When you sell the vehicle, you will account for VAT on the full value of the supply.
The refund scheme will allow you to claim a refund of VAT on the vehicle you have purchased when you move it from Great Britain to Northern Ireland as long as you intend to resell it.
What vehicles are eligible under the scheme
Motor vehicles that are currently eligible for the VAT margin scheme when purchased in Great Britain and sold in Northern Ireland will be eligible for the refund scheme when it is introduced.
If you buy second-hand vehicles in Northern Ireland or from the EU, you will not be able to use the export refund scheme. You will continue to be able to use the VAT margin scheme when you sell them.
How you will account for VAT
You will be able to treat the refund amount as if it were input tax and make the claim on your UK VAT return.
The refund amount will be worked out as the VAT element of the value of the vehicle that you purchased in Great Britain at the time that you move it to Northern Ireland.
In most cases, the value will be the full purchase price you paid for the vehicle.
For example, if you purchase an eligible second-hand car in Great Britain for £12,000 the refund amount would be £2,000 (£12,000 × one-sixth). When you sell the car in Northern Ireland, you must account for VAT at the full value of the supply.
What will happen during the transition to the new scheme
You will be able to use the refund scheme for any eligible vehicles that you move from Great Britain to Northern Ireland from the date that the scheme is introduced.
You will continue to be able to use the VAT margin scheme until that date.
Vehicles that you already have in stock in Northern Ireland when the refund scheme is introduced will continue to be eligible to be sold under the VAT margin scheme.
If you’re a dealer in second-hand motor vehicles in an EU country
When you purchase a second-hand vehicle from Great Britain and export it to an EU country, the VAT on the sale of the vehicle will be subject to the normal rules that apply in the EU country in which you make the sale.
This scheme may allow you to claim a refund of UK VAT on the vehicle you have purchased, when you export it from Great Britain, providing that you intend to resell it.
The refund amount will be worked out as the UK VAT element of the value of the vehicle that you purchased in Great Britain at the time that you export it to an EU country.
If you have a business establishment in the UK, you will be able to claim the refund on your UK VAT return.
If you do not have a business establishment in the UK, including if you are a non-established taxable person, there will be a different process for making a claim.
The second-hand motor vehicle export refund scheme is a new scheme that the government intends to introduce on 1 October 2022.
It will allow you to claim a refund of VAT if you move a second-hand motor vehicle from Great Britain (England, Scotland and Wales) to Northern Ireland for resale.
If you’re a car dealer who sells motor vehicles in Northern Ireland, you will soon have to use the scheme if you:
- buy vehicles in Great Britain and move them to Northern Ireland for resale
- currently use the VAT margin scheme for those sales
You may also be able to use the refund scheme if you:
- are VAT registered in the EU
- buy second-hand vehicles in Great Britain and export them to the EU for resale
Further information on the scheme will be published in May 2022.
If you’re a dealer in second-hand motor vehicles in the UK
When the refund scheme is introduced you will no longer be able to use the VAT margin scheme to account for VAT on second-hand vehicles that you buy in Great Britain, move to Northern Ireland and then resell.
The VAT on these sales will be subject to the normal rules for moving goods between Great Britain and Northern Ireland. When you sell the vehicle, you will account for VAT on the full value of the supply.
The refund scheme will allow you to claim a refund of VAT on the vehicle you have purchased when you move it from Great Britain to Northern Ireland as long as you intend to resell it.
What vehicles are eligible under the scheme
Motor vehicles that are currently eligible for the VAT margin scheme when purchased in Great Britain and sold in Northern Ireland will be eligible for the refund scheme when it is introduced.
If you buy second-hand vehicles in Northern Ireland or from the EU, you will not be able to use the export refund scheme. You will continue to be able to use the VAT margin scheme when you sell them.
How you will account for VAT
You will be able to treat the refund amount as if it were input tax and make the claim on your UK VAT return.
The refund amount will be worked out as the VAT element of the value of the vehicle that you purchased in Great Britain at the time that you move it to Northern Ireland.
In most cases, the value will be the full purchase price you paid for the vehicle.
For example, if you purchase an eligible second-hand car in Great Britain for £12,000 the refund amount would be £2,000 (£12,000 × one-sixth). When you sell the car in Northern Ireland, you must account for VAT at the full value of the supply.
What will happen during the transition to the new scheme
You will be able to use the refund scheme for any eligible vehicles that you move from Great Britain to Northern Ireland from the date that the scheme is introduced.
You will continue to be able to use the VAT margin scheme until that date.
Vehicles that you already have in stock in Northern Ireland when the refund scheme is introduced will continue to be eligible to be sold under the VAT margin scheme.
If you’re a dealer in second-hand motor vehicles in an EU country
When you purchase a second-hand vehicle from Great Britain and export it to an EU country, the VAT on the sale of the vehicle will be subject to the normal rules that apply in the EU country in which you make the sale.
This scheme may allow you to claim a refund of UK VAT on the vehicle you have purchased, when you export it from Great Britain, providing that you intend to resell it.
The refund amount will be worked out as the UK VAT element of the value of the vehicle that you purchased in Great Britain at the time that you export it to an EU country.
If you have a business establishment in the UK, you will be able to claim the refund on your UK VAT return.
If you do not have a business establishment in the UK, including if you are a non-established taxable person, there will be a different process for making a claim.
