vat qualifying cars

JohnDeere8530

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I am after secondhand e350 and see a couple of vat qualifying ones around. My question is are these priced the same (inc vat) as a non qualifying car?

Ie if there were two identical in all aspects cars, but one was vat qualifying (ie from a leasing company etc) and one wasnt, would the vat qualifying one have the same price (inc vat) as the other one ?

My thoughts is that a qualifying car is advantageous to certain people/organisations, therefore the dealer can charge more as it would still be good value to organisations etc that can recover the vat ?
 
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JohnDeere8530

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This is a tricky one to get my head around, anyone with any knowledge on the subject, ie would a salesman mark a Vat Qual car up over and above its none Vat Qual equivalent ?
 

redbaron

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It merely refers to the vehicle being able to be put on a business lease and VAT reclaimed.

It has nothing to do with the price of the car.

All cars are subject to VAT.
 
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JohnDeere8530

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not all cars are subject to vat, what about a s/h one that has been through the hands of a owner who cannot reclaim the vat. The vat then is lost.

Vat qual vehicles are ones where the owner reclaims the vat on purchase and then pays it on sale price, therefore they can save vat on the amount it depreciates

What I want to know is would a dealer mark up a Vat Qualifying car as such a car is advantageous to some customers ? Ie is it worth us mere mortals buying car we like that happens to be a vat qual vehicle ?
 

redbaron

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not all cars are subject to vat, what about a s/h one that has been through the hands of a owner who cannot reclaim the vat. The vat then is lost.

Vat qual vehicles are ones where the owner reclaims the vat on purchase and then pays it on sale price, therefore they can save vat on the amount it depreciates

What I want to know is would a dealer mark up a Vat Qualifying car as such a car is advantageous to some customers ? Ie is it worth us mere mortals buying car we like that happens to be a vat qual vehicle ?
No they wouldnt. They price cars to sell. It costs money to have unsold metal on the forecourt.

All cars are subject to VAT. Even a car that has had vat paid on it at original is subject to VAT on the profit that the dealer makes.
 

bolide

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VAT qualifying cars are fairly rare and if they are described as such I would expect the price to exclude VAT. Vans are often VAT-qualifying

There is (normally) no VAT on secondhand car sales. The vendor pays VAT, if he's VAT registered, but does not charge it and therefore it's not shown on the invoice

In the ordinary course of affairs VAT appears on the invoice only once on a car - on the initial purchase invoice

Nick Froome
 

markjay

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It's a good question...

Let's say a company buys a new car priced at £22k, it will presumably receive an invoice for £20k+VAT.

Now come sell time two years later and the car lost say 50% of it's value and now has a 'book price' (as second hand) of £11K.

Another business now wants to buy the car. Both companies are VAT Registered. If both seller and buyer agree on 'book' price, will the car change hands for £11K+VAT, or for £9.17k+VAT?
 

markjay

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Thinking about it, the answer must be £9.17+VAT...

The first private buyer that buys a car (new or second hand) pays the VAT and it then can never be reclaimed back anymore.

So as long as the car is bought and sold only by VAT-Registered companies, the VAT can be reclaimed, but the first non-VAT-Registered buyer 'breaks the chain' so to speak and the VAT is then lost forever.

So I am assuming that a VAT-qualifying car is one that will be sold by VAT-Registered owner?

At least that's what I think...
 
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Dryce

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Thinking about it, the answer must be £9.17+VAT...

The first private buyer that buys a car (new or second hand) pays the VAT and it then can never be reclaimed back anymore.

So as long as the car is bought and sold only by VAT-Registered companies, the VAT can be reclaimed, but the first non-VAT-Registered buyer 'breaks the chain' so to speak and the VAT is then lost forever.

So I am assuming that a VAT-qualifying car is one that will be sold by VAT-Registered owner?

At least that's what I think...
Basically yes.

If the car is traded 'inside' of the VAT system then VAT invoices are applicable.

Leasing companies benefit from this as they're not financing the VAT component of the car - the customer pays the VAT as it comes due no each lease payment. So that car remains 'inside' the VAT system.

VAT registered Dealers trading used cars that are not VAT qualifying are still liable for VAT internally based on the margin they make - not the sale value of the vehicle. This is called the VAT Margin Scheme.
 
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JohnDeere8530

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two types of vat on the sale of a s/h car,

1.the second hand margin scheme, this is where the motor dealer pays vat on his markup
2. is the vat qualifying vehicle, is a car where all the vat can be recovered by some buyers.

I dont wish to get involved in the differences here. It is just a question of if a private individual finds a vat qual car (ie one that is +vat), would the gross price he pays be more than an equivalent non vat qual car bought from same dealer ?

My reasoning is yes it would be more expensive. Reason being is that the vat qual car would be advantageous to some buyers. Therefore they could afford to pay "a bit more" as the overall nett price to them would be less than a non vat qual car once the vat reclaimed on the qual car.

Is my logic right here ? As it could make 5-10% difference to the gross price in my reckoning, ie still cheaper enough to attract a company that could reclaim the vat on the car, but not too much not to make it worth their bother ?
 
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JohnDeere8530

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seems a tricky question nobody I know really knows the answer but do follow my logic. Any largish main dealer car dealers on here with experience in such things??
 
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JohnDeere8530

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VAT - Motor Trade Insider


It really isnt that difficult :)
Most of us know how the vat system works on new/used cars, this is what the link explains. However this is not what I asked if you reread carefully.

I asked "If a private individual finds a vat qual car (ie one that is +vat), would the gross price he pays be more than an equivalent non vat qual car bought from same dealer ?"

My reasoning being is certain people could afford to pay more for a vat qual car as the nett price would be less to them than if they sourced a non vat qual car

See the question is not as straight forward as it sounds and has repuccussions for anyone buying from a leasing firm such as Black Horse etc
 

amokwa

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Most of us know how the vat system works on new/used cars, this is what the link explains. However this is not what I asked if you reread carefully.

I asked "If a private individual finds a vat qual car (ie one that is +vat), would the gross price he pays be more than an equivalent non vat qual car bought from same dealer ?"

My reasoning being is certain people could afford to pay more for a vat qual car as the nett price would be less to them than if they sourced a non vat qual car

See the question is not as straight forward as it sounds and has repuccussions for anyone buying from a leasing firm such as Black Horse etc
Can the private individual reclaim the vat ?
 

jaymanek

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No private individuals cannot reclaim the VAT.

Only VAT registered businesses in the UK.

There were hardly any VAT qualifying cars around at one point. Recently there have been lots and lots.
The reason car dealers now advertise a car as VAT qualifying is to attract those who are shipping abroad.
This is a massive industry now. These businesses buy the cars here, claim the VAT back on the car and then export the car to a country where they dont have to pay the VAT. So in effect the car is 20% cheaper.

The problem is that these VAT qualifying cars are quite often much more expensive to buy.

I would expect a car advertised to the public to be the INCLUDING vat price. In fact its the law to advertise prices including VAT when dealing with the public.

Commercial vehicles are different, these are usually advertised NET of vat.
 

amokwa

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No private individuals cannot reclaim the VAT.

Only VAT registered businesses in the UK.

There were hardly any VAT qualifying cars around at one point. Recently there have been lots and lots.
The reason car dealers now advertise a car as VAT qualifying is to attract those who are shipping abroad.
This is a massive industry now. These businesses buy the cars here, claim the VAT back on the car and then export the car to a country where they dont have to pay the VAT. So in effect the car is 20% cheaper.

The problem is that these VAT qualifying cars are quite often much more expensive to buy.

I would expect a car advertised to the public to be the INCLUDING vat price. In fact its the law to advertise prices including VAT when dealing with the public.

Commercial vehicles are different, these are usually advertised NET of vat.
OP you have your answer.
 
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JohnDeere8530

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so we as private bodies should avoid vat qual vehicles in that case? Still not sure that its as clear cut as this, as I bet some dealers mark a vehicle up whereas others might not of cottoned on to the fact that they are worth more to some people, such as those with disabilites etc
 

jaymanek

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No makes no difference to a private person.. you just pay the price including VAT and if you are getting a good deal then nothing to lose.
 

knighterrant

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so we as private bodies should avoid vat qual vehicles in that case? Still not sure that its as clear cut as this, as I bet some dealers mark a vehicle up whereas others might not of cottoned on to the fact that they are worth more to some people, such as those with disabilites etc
As mentioned earlier, cars are always priced to sell. No dealer would increase a car's sale price on the offchance that a buyer may be out there who would benefit from any VAT saving. The dealer's market is everyone. VAT qualifying vehicles are advertised as such only to increase the chances of selling it, not to increase the price. (I used to work for a dealer who sold a few VAT-qualifying cars.)
 
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JohnDeere8530

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As mentioned earlier, cars are always priced to sell. No dealer would increase a car's sale price on the offchance that a buyer may be out there who would benefit from any VAT saving. The dealer's market is everyone. VAT qualifying vehicles are advertised as such only to increase the chances of selling it, not to increase the price. (I used to work for a dealer who sold a few VAT-qualifying cars.)
cheers for this, I appreciate your reply and now seems logical to me
 

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