Legal Article - VAT

Car Imports

The VAT treatment depends on whether the car is imported from one of the European Union Member State (an acquisition) or from another country as follows:

a) Acquisition from EU Member State

If you give the EU seller your UK VAT number, the car can be sold free of VAT. You must account for acquisition tax.

This means you pay over to Customs the VAT you would have been charged, although at 17.5% and then claim it back as input tax on your Return. The VAT charged is entered in Box 2 on your VAT return.

When you sell the car it is treated just the same as a qualifying car.

b) Purchase from outside the EU

When you import a car from elsewhere, VAT and duty is chargeable. This VAT can be recovered on your VAT return. The car cannot be sold under the margin scheme. You must treat the car as a qualifying car.

c) Problem areas

If you are charged VAT in another EU Member state, then you cannot claim it back on your VAT return. Contact Lawgistics if you are charged VAT in another Member State.

Second Hand Margin Scheme Supply

An EU motor dealer can sell to a UK dealer using the margin scheme. His sales invoices should make reference to this. The UK dealer can then use the ordinary margin scheme to sell the car.


Published: 21 Mar 2011


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