HMRC have issued a policy paper in respect of the 2022 Value Added Tax (Margin Schemes and Removal or Export of Goods: VAT-Related Payments) Order (SI 2023/68) – see https://claritaxnews.com/vat/si-2023-68-the-value-added-tax-margin-schemes-and-removal-or-export-of-goods-vat-related-payments-order/. See also https://claritaxnews.com/vat/vat-second-hand-motor-vehicles-new-hmrc-guidance/ for further HMRC guidance.
Under the Northern Ireland Protocol, second-hand motor vehicle dealers in NI may not use the VAT margin schemes on motor vehicles bought in GB or IoM. This means that they must account for VAT in full on sales of these vehicles, potentially increasing prices for consumers or increasing costs for businesses. This risks distorting the trade in motor vehicles within the UK. To support the second-hand motor vehicle industry in NI, the government is introducing the scheme. VAT registered businesses that purchase eligible used motor vehicles in GB or IoM and remove them to NI for resale may be able to claim VAT-related payments. This means that businesses that deal in motor vehicles in NI will remain in a similar financial position as those applying the VAT margin schemes elsewhere in the UK.
The new scheme will also be available to EU VAT registered businesses that purchase eligible used motor vehicles in GB and export them to the EU for resale.
The measure will come into effect on 1 May 2023.
Related content from Claritax Books
Value Added Tax, written by Ciaran McGee MA (Oxon), FCA, CTA, is an extensive volume (over 1,000 pages), written primarily for non-VAT specialist accountants and tax advisers.
