HMRC has is introducing a brand new VAT return scheme for sellers that purchase automobiles in Nice Britain and plan to resell them in Northern Eire or the EU.
The brand new scheme, often called the second-hand motorized vehicle fee scheme, will substitute the prevailing margin scheme, with the modifications taking impact on Could 1, 2023.
It may be used to say a VAT-related fee for any eligible second-hand motorized vehicle that’s purchased in Nice Britain after which moved to Northern Eire or the EU for resale.
MHA MacIntyre Hudson highlighted the brand new HMRC documentation in a communication to retailers final week.
The fee quantity is calculated as one sixth of the acquisition value. For instance, the fee quantity for an eligible second-hand automotive bought in Nice Britain for £12,000 could be £2,000.
The sale will then entice VAT at 20% on its full worth if offered in NI, or on the standard-rate relevant if offered in different EU nations.
Sellers ought to make the declare on their VAT Return and deal with the fee quantity as if it had been enter tax.
The VAT margin scheme will stay out there for eligible motor autos which are bought earlier than Could 2023.
Use of the margin scheme is a brief measure allowed by the Authorities, however breaches the Northern Eire Protocol. The brand new scheme was launched to beat the issue.
In November 2020, Lookers and TrustFord joined forces with the Nationwide Franchised Sellers Affiliation (NFDA) to discover a resolution to a post-Brexit tax subject which was set so as to add 20% to the price of each automobile imported from the mainland UK.
Three months later the UK Authorities confirmed it might reinstate the VAT margin scheme for automobiles imported and resold by automotive retailers in Northern Eire – avoiding strain on seller margins and value will increase for patrons, a transfer celebrated by sellers and the NFDA.
To view the HMRC’s new steering on the scheme’s software for automotive retailers, click on right here.