Legal Article - VAT

Vehicle Road Tax Legislation

Road Tax is not VATable.

The rate of VAT and Vehicle Sales

In order to avoid paying unnecessary VAT follow the guidance below, or you may lose around £11 per vehicle for 6 months tax, or £20 for 12 months tax.

 When you sell a vehicle under the margin scheme, you may separately itemise Road Tax on an invoice, as long as you purchased it on behalf of your customer.

 You cannot itemise Road Tax, on your sales invoice if you offer a vehicle for sale with unexpired Road Tax.

  Equally you cannot itemise Road Tax on your Sales Invoice if you offer it within the price of the vehicle.

When is road tax refundable?

If you take possession of a part exchange vehicle and you surrender the RFL, the money received does not attract VAT.

Do not alter the purchase price of the vehicle to reflect the value of the refund.

Are you entitled to a repayment of VAT?

Prior to 1 March 1993, VAT was due on refunds received from RFL in respect of second hand cars. When the law changed, dealers were allowed to recover VAT paid since 1 April 1973.

If you have not made your reclaim, you are entitled to do so. Lawgistics can help by making the claim on your behalf.


Published: 21 Mar 2011


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