VAT Qualifying (Used car)

[Mudster]

I've been browsing the Sales Lists at Blackbushe and noticed a couple of the cars that caught my eye were described as "VAT Qualifying".

These were 40,000 mile 2008 models.

So what exactly is VAT Qualifying about a car of this age and how does effect me as an individual or if I choose to buy it through my VAT registered business?

I understand it on a new/nearly new dealer car, but I struggle to understand what VAT status a used car has.

 

[wemorgan]

are these former Motability cars originally bought without VAT?

 

[Setanta]

I've been browsing the Sales Lists at Blackbushe and noticed a couple of the cars that caught my eye were described as "VAT Qualifying".

These were 40,000 mile 2008 models.

So what exactly is VAT Qualifying about a car of this age and how does effect me as an individual or if I choose to buy it through my VAT registered business?

I understand it on a new/nearly new dealer car, but I struggle to understand what VAT status a used car has.

How did you manage to access that list?

 

[Mudster]

are these former Motability cars originally bought without VAT?

No it wasn't one of the Mobility sales, it was lease firm.

I've seen a few used cars described as "Vat qualifying" and I've yet to understand what it actually means.

 

[Mudster]

How did you manage to access that list?

Go to the website, register and it allows you access to the full search facilities. All free.

 

[Setanta]

Thanks - just did it and had a look. No Kompressor/Biturbo W220's :-(

 

[Mudster]

This is for sale at the Nottingham sale on 16th August. I'm very interested to see how much it gets.

MERCEDES-BENZ E280 3.0 CDI SPORT
5 Doors, Estate, Diesel, Auto/Manual Mode, Silver, VAT Qualifying

• Registration WP07VDL
• Registration date 29/06/2007
• Mileage 44553 Warranted
• Colour Silver
• Log bookn/a

 

[JohnDeere8530]

think some businesses can reclaim the vat on the purchase of these, and certain disabled people certainly can. I think the vat element on the used car may only be on the dealers profit and not the whole amount of the car. Depends if the dealer works on the secondhand car "Vat margin scheme" or not. Ring HMRC for full clarifiction, their helpline is very good, it is a fairly complex area

Certain disabilities mean someone can reclaim all the vat of the purchase price of a new car if adaptions are fitted

 

[MOCAŠ]

VAT Status and Used Cars

The use to which a car is put will determine its status for VAT purposes. In turn, that VAT status will determine whether VAT should be charged on the disposal of the car and hence whether there is any VAT available for recovery in the hands of a subsequent owner.

If VAT has been fully recovered on a car, that car will be “VAT qualifying”. If a qualifying car is sold VAT will be chargeable on its sale, and recoverable by the purchaser under the rules outlined above.

If input VAT recovery has been restricted on a car at any point in its life, that car becomes “Non-Qualifying”. VAT will not be due on the sale of a non-qualifying car.

Deloitte LLP Cartax: The company car tax website

Further info here: http://www.hmrc.gov.uk/vat/sectors/motors/selling-cars.htm

 

[Mudster]

Well I read both of the links from MOCAS above and what a minefield this is. You'd have to get straight what you're paying before you start bidding on one of those.

Also how would you calculate the "margin" on a car bought at auction.

This is one for Jay I think.

 

[tromppost]

This is for sale at the Nottingham sale on 16th August. I'm very interested to see how much it gets.

MERCEDES-BENZ E280 3.0 CDI SPORT
5 Doors, Estate, Diesel, Auto/Manual Mode, Silver, VAT Qualifying

• Registration WP07VDL
• Registration date 29/06/2007
• Mileage 44553 Warranted
• Colour Silver
• Log bookn/a

Thats a little old to get from the Auction imo. You may find a better one for sale private and it may be cheaper but worth a look.

 

[flango]

Well I read both of the links from MOCAS above and what a minefield this is. You'd have to get straight what you're paying before you start bidding on one of those.

Also how would you calculate the "margin" on a car bought at auction.

This is one for Jay I think.

VAT qualifying has different meanings need to check with our accountant on exactly what it means on the sale of used cars and how this interfaces with the margin scheme.

 

[Mudster]

VAT qualifying applies to nearly new or pre registered cars that are registered as company cars and the company can then reclaim the VAT.

Cars bought at auction are very very rarely VAT qualifying, An 07 plate bought at auction would definitely not be VAT qualifying, no VAT would be payable at the purchase and no VAT would be chargeable at the sale.

The only exception to this is commercial vehicles and some van derived cars.

So margin calculation is not a problem

In that case why is this auction house describing a number of vehciles as "VAT qualifying" - even 2 - 3 years old, that's what puzzled me.

As I explained in the original post I understand the principal of new and nearly new but I'm sturggling with this description of older vehciles.

 

[wemorgan]

I thought that if no VAT was paid on the new vehicle eg. it was a company pool car, then when it is sold second hand it will be VAT qualifying. Could be wrong though.

 

[flango]

In that case why is this auction house describing a number of vehciles as "VAT qualifying" - even 2 - 3 years old, that's what puzzled me.

As I explained in the original post I understand the principal of new and nearly new but I'm sturggling with this description of older vehciles.

Sorry I misread the post in the first place, but will check with our accountant tomorrow and come back with a definitive answer unless Jay beats me to it

I like you am a little confused I thought I knew what it meant but now not so sure

 

[MOCAŠ]

I'm no expert on this, but the way I read the Deloitte advice, a car becomes "VAT qualifying" if the VAT was reclaimed on its initial purchase and it is now being sold to a private buyer for the first time since then. Is it not possible that the car in question has been in the hands of a company since new, making this the first opportunity for VAT to be paid on its sale?

EDIT - hadn't seen wemorgan's almost identical post (#14) when I wrote this.

 

[Mudster]

I'm no expert on this, but the way I read the Deloitte advice, a car becomes "VAT qualifying" if the VAT was reclaimed on its initial purchase and it is now being sold to a private buyer for the first time since then. Is it not possible that the car in question has been in the hands of a company since new, making this the first opportunity for VAT to be paid on its sale?

That seems plausible, but I can't get my head around how this would effect the actual value of the vehicle. In so much as it's an 07 E class and will sell on a forecourt in the region of £20,000.

So when this runs through the auction the bidders understand that they'llhave to pay vat on the purchase price and adjust their bid accordingly?

I'm still puzzled.

 

[MOCAŠ]

So when this runs through the auction the bidders understand that they'llhave to pay vat on the purchase price and adjust their bid accordingly?

Yes, I'd imagine that's exactly how any prospective bidder would approach such a sale. They'll have a figure in their head for their total outlaty on the vehicle, and would have to factor the VAT liability into that.

 

[flango]

I have never seen a car of this age or a lot newer be subject to VAT at an auction,commercial vehicles yes but never cars, really need to get my head around this as this might have opened a can of worms, will talk to our accountant tomorrow.

Anyone else seen cars at the block subject to VAT?

 

[Mudster]

I've only ever seen commercial vehciels subject to VAT, never a private car, that's what threw me.