Legal Article - VAT

Second Hand Car Auctions

Margin Scheme Cars – Selling at Auction

1. When you sell a margin scheme vehicle at auction, the selling price is the hammer price less the commission i.e. the net amount received from the auction.

2. VAT cannot be claimed on the commission.

3. The invoice from the auction will be your sales invoice for the purposes of the margin scheme.

Margin Scheme Cars – Buying at Auction

1. When you buy a margin scheme vehicle at auction, the purchase price is the hammer price plus any commission (buyer’s premium).

2. VAT cannot be claimed on the commission.

3. The invoice issued by the auction will be your purchase invoice for the purposes of the margin scheme.

4. Where other charges are made, (e.g. transport, insurance) this will be invoiced separately and VAT can be claimed where appropriate.

VAT Qualifying Cars – Selling at Auction

1. VAT qualifying cars means you are liable to VAT at 17.5% when they are sold.

2. You must tell the auctioneer that the car is being sold with 17.5% VAT.

3. In this situation, the hammer price will include VAT.

4. You may be charged a selling commission (or similar), on which VAT is charged and is recoverable

VAT Qualifying Cars – Buying at Auction

1. When VAT qualifying cars are sold at auction the hammer price includes VAT.

2. You should be told this either by windscreen stickers or by a verbal announcement.

3. Your invoice should show VAT as a separate amount.

4. Where there is a buyer’s premium or other charges, these should be shown separately. The VAT charged is recoverable subject to the normal rules.

Published: 21 Mar 2011

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