Sales of Second-hand Motor Vehicles in NI

The second-hand motor
vehicle payment scheme

The second-hand motor vehicle payment scheme has replaced the VAT margin scheme for second-hand vehicles that you buy in Great Britain, move to Northern Ireland and then resell in NI or the EU.

The scheme in summary means that dealers buying cars from GB to resell in NI/ EU will be able to calculate the “VAT Payment Amount” by calculating 1/6 of the Gross paid for the car (if normal 20% VAT rate applies) and claiming this amount in your VAT return as you would for normal purchases with “Input VAT”.

e.g. buy second hand car from GB for £12,000, the payment amount would be £2,000. You include this as a purchase in your VAT return: Gross £12,000, VAT £2,000 and Net £10,000.

You should include this in your VAT Return for the period in which you moved the vehicle from Great Britain to Northern Ireland.

When you sell the vehicle in NI the sale will attract VAT at 20% on its full value.

You can only use the payment scheme for eligible motor vehicles that you moved from Great Britain to Northern Ireland after 30 April 2023.

The VAT margin scheme will still apply to vehicles purchased in GB before May 2023 and sold before 30 April 2024 (otherwise new rules apply to these vehicles & VAT will have to be accounted for on the full selling price).

Please note these rules only apply to vehicles purchased in GB and sold in NI. The second hand VAT margin scheme still applies to vehicles purchased in NI.

 

We have summarised the VAT treatment of moving vehicles under the new scheme:

Bought from
Sold to
VAT Treatment 
GB GB Can use normal margin scheme – take away the purchase price from the selling price to work out the gross margin and pay 1/6 of this as the VAT element
GB NI VAT Payment scheme – Claim 1/6 on gross purchase price and pay full 20% on net sales price
GB ROI VAT Payment scheme – Claim 1/6 on gross purchase price and pay full 20% on net sales price
NI GB Can use normal margin scheme – take away the purchase price from the selling price to work out the gross margin and pay 1/6 of this as the VAT element
NI NI Can use normal margin scheme – take away the purchase price from the selling price to work out the gross margin and pay 1/6 of this as the VAT element
NI ROI Zero Rated if it is an ROI VAT registered business and you get their ROI VAT number & complete an EC Sales List
If selling to a private customer – UK VAT chargeable at 20% on net sales price

 

See more HMRC Guidance Here

 

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