Brexit, and VAT on second hand cars imported from Great Britain to Northern Ireland

[Eager]

You maybe need a new accountant, what happened the vat you claim back on the 7k purchase price

if your official. Maybe becomes a issue if driveway trading

 

[davyk31]

The majority of cars coming in don’t have vat, only a very small percentage are vat qualifying

It isn’t as simple as that. They don’t “have VAT” because of the margin scheme being in place, that changes with the new rules.

As with any business supply you can reclaim VAT on your purchases and pay Vat on your sales.

 

[RyanM3]

It isn’t as simple as that. They don’t “have VAT” because of the margin scheme being in place, that changes with the new rules.

As with any business supply you can reclaim VAT on your purchases and pay Vat on your sales.

Ok I wasn’t aware of that, if all cars now come with a vat invoice to reclaim then it shouldn’t be that big of an issue as initially thought

 

[Coog]

if your official. Maybe becomes a issue if driveway trading

If you're not official then you won't be paying VAT anyway. The problem arises if you are official or legit but not VAT registered, which I assume is a very small number of dealers given the 85k threshold.

 

[Eager]

If you're not official then you won't be paying VAT anyway. The problem arises if you are official or legit but not VAT registered, which I assume is a very small number of dealers given the 85k threshold.

a mate done a period of time doing some hmrc work recently. He reckoned the main thing was they wanted anyone they investigated to be vat registered, That was the aim.
I guess this might force that too.

 

[Wild Thing]

if your official. Maybe becomes a issue if driveway trading

Even a minor driveway trader full time scraping a living will soon exceed vat threshold on turnover. Driveway traders under that radar will end up trawling the ni trade, auctions, gumtree and facebook market place

 

[Wild Thing]

If my understanding is correct, it will all balance out, it down to cashflow, and bbc sensational journalism. If you even notice, the guy from agnews stated it will affect some purchases. No doubt a cost of cashflow will initially be passed on, until the cut throat big boys start playing games

 

[suckindiesel]

I don't know what way it will pan out, but a lot of folk don't seem to understand the margin scheme to start with. It's not VAT on the purchase price or selling price as it stands currently, or VAT on the net profit. Regardless of whether a car is VAT qualifying or not, VAT registered dealers pay 20% VAT on the gross profit they make on that car. That 20% is included in the gross profit, not 20% on top of. So if you buy a car for £1,000, sell it for £2,000, but spend £500 prepping in, you pay HMRC £166.67 of VAT (the VAT element of the £1,000).

As I said before, customers/friends/family/resident car experts generally don't seem to know it exists, or that income tax exists for that matter, when they are telling you what fortune you are going to make on their car and how they must be in the wrong job etc etc

 

[Chris_702]

I don't know what way it will pan out, but a lot of folk don't seem to understand the margin scheme to start with. It's not VAT on the purchase price or selling price as it stands currently, or VAT on the net profit. Regardless of whether a car is VAT qualifying or not, VAT registered dealers pay 20% VAT on the gross profit they make on that car. That 20% is included in the gross profit, not 20% on top of. So if you buy a car for £1,000, sell it for £2,000, but spend £500 prepping in, you pay HMRC £166.67 of VAT (the VAT element of the £1,000).

As I said before, customers/friends/family/resident car experts generally don't seem to know it exists, or that income tax exists for that matter, when they are telling you what fortune you are going to make on their car and how they must be in the wrong job etc etc

Amen.

 

[Wild Thing]

I don't know what way it will pan out, but a lot of folk don't seem to understand the margin scheme to start with. It's not VAT on the purchase price or selling price as it stands currently, or VAT on the net profit. Regardless of whether a car is VAT qualifying or not, VAT registered dealers pay 20% VAT on the gross profit they make on that car. That 20% is included in the gross profit, not 20% on top of. So if you buy a car for £1,000, sell it for £2,000, but spend £500 prepping in, you pay HMRC £166.67 of VAT (the VAT element of the £1,000).

As I said before, customers/friends/family/resident car experts generally don't seem to know it exists, or that income tax exists for that matter, when they are telling you what fortune you are going to make on their car and how they must be in the wrong job etc etc

Yes but as stated earlier, will the margin scheme be applicable in NI when a border goes down the irish sea? Do we revert back to claim vat back on purchase price, pay vat on sale price, revenue scoops the difference?

 

[suckindiesel]

Yes but as stated earlier, will the margin scheme be applicable in NI when a border goes down the irish sea? Do we revert back to claim vat back on purchase price, pay vat on sale price, revenue scoops the difference?

I believe the margin scheme will operate as normal for cars bought in NI yes. "Margin schemes will remain available for sales of goods that are purchased in Northern Ireland or the EU, whether sold to customers in Northern Ireland, Great Britain or the EU."

No one seems to have a definitive answer on how this will work as yet. Most ex lease cars have had some of the VAT claimed by a business and remain VAT qualifying when second hand then, when a dealer buys them there is already a VAT element built in to the purchase price and on the invoice, not sure how this will work.

It does say "It is understood the issue is being raised at the Joint Committee - the UK-EU body which is overseeing the NI part of the Brexit deal.
The EU would have to agree to set aside this provision of the deal if the new arrangement is not to begin in January."

Lets cross fingers as I for one can't be arsed with it.

 

[DC.]

Brexit: Why second-hand cars could become more expensive Why second-hand cars could become more expensive

 

[stevieturbo]

Are new cars not subject to vat ?

So when sold second hand, the EU rule will basically see the government get a double whack at the VAT on the full value of the car ?

 

[J55NI]

I don't know what way it will pan out, but a lot of folk don't seem to understand the margin scheme to start with. It's not VAT on the purchase price or selling price as it stands currently, or VAT on the net profit. Regardless of whether a car is VAT qualifying or not, VAT registered dealers pay 20% VAT on the gross profit they make on that car. That 20% is included in the gross profit, not 20% on top of. So if you buy a car for £1,000, sell it for £2,000, but spend £500 prepping in, you pay HMRC £166.67 of VAT (the VAT element of the £1,000).

As I said before, customers/friends/family/resident car experts generally don't seem to know it exists, or that income tax exists for that matter, when they are telling you what fortune you are going to make on their car and how they must be in the wrong job etc etc

The £500 you spent prepping it can that be claimed as an expense then?

 

[davyk31]

Yes the £500 is an expense against the dealers income tax returns.

 

[gcon45]

If it does weed out the driveway / Facebook dealers it won’t necessarily be a bad thing.

I know a few of these “dealers” who are also hard brexiteers.
Oh the irony...

 

[suckindiesel]

The £500 you spent prepping it can that be claimed as an expense then?

A business expense offset against income tax yes, but not the VAT. Absolutely sucks if you are in to older stuff that needs a lot of prep like I am.

 

[kharma45]

More good news

 

[davyk31]

Oh great, so we all have to buy home market stuff now like Jaguar Land Rover.

At least the AA and RAC will prosper with a huge increase in membership to cover the lack of reliability but they will also find themselves a lot busier with a lot more breakdowns.

 

[Wild Thing]

Its default wto, a handshake will be done, its the sensational journalism same crap about food shortages in northern ireland

 

[stevieturbo]

Oh great, so we all have to buy home market stuff now like Jaguar Land Rover.

At least the AA and RAC will prosper with a huge increase in membership to cover the lack of reliability but they will also find themselves a lot busier with a lot more breakdowns.

Could they be busier with the amount of VW's and BMW's etc on the road ?

 

[Jonny_W]

Oh great, so we all have to buy home market stuff now like Jaguar Land Rover.

At least the AA and RAC will prosper with a huge increase in membership to cover the lack of reliability but they will also find themselves a lot busier with a lot more breakdowns.

would rather get the bus or walk than ever own anything from LR again.

 

[Nutts]

The Japanese manufacturers who have invested in UK plants could also benefit- pretty sure Nissan, Toyota and Honda have a few models assembled in the UK. No idea how the parts / engines would be affected tho

 

[acsmyth]

I think now that Dom Cummings has been given the boot, we'll see a last-minute deal on 31st December. BoJo is a t**t, but I doubt his party would let him go onto a WTO style arrangement with the EU.

 

[Lappintyre]

More good news

That info has been around for a while now. IIRC there was a member on here had to put a deposit on his Porsche in 2020 even though it was due to arrive until 2021 so he would avoid the extra 10%