VAT - A guide to the second-hand motor vehicle payment scheme

This guidance will help you to quickly see who can use the second-hand motor vehicle payment scheme, how to treat sales on stock and provides links to further help.

Introduction
Who can use the scheme?
What vehicles can be claimed on?
How to calculate the payment amount
How do you claim the refund?
How do you treat sales of stock purchased in GB from 1st May 2023?
How do you treat sales on stock purchased in GB before 1st May 2023?
Further information

Introduction

The second-hand motor vehicle payment scheme commenced 1 May 2023. It applies to second-hand vehicles that you buy in Great Britain (GB), move to Northern Ireland (NI) or the European Union (EU) and then resell. The scheme allows for a VAT related payment calculated as a fraction of the purchase price. There are different rules depending on if the motor vehicle was in stock prior to 1 May 2023.

You can use the payment scheme if you:

Are VAT registered in NI or the EU and your business activity involves buying and selling second-hand vehicles or you make occasional purchases of second-hand vehicles for resale.
Buy an eligible second-hand motor vehicle in GB.
Move that vehicle to NI or the EU with the intention of reselling it in NI or the EU.

What vehicles can it be claimed on?

The scheme can be used for second-hand vehicles that have been bought in GB from VAT-registered dealers if sold to you under the margin scheme (this should be clear from the invoice you receive).

It also applies to second-hand vehicles bought in GB from businesses that are not registered for VAT, and from private individuals, dealers or businesses unable to reclaim the input VAT on purchase, and from Motability with an invoice showing VAT charged at the zero rate.

Second hand vehicles include cars, vans, lorries and motorcycles.

How to calculate the payment amount:

The refund payment amount is calculated on the VAT fraction on the value of the vehicle that you purchased in GB at the time that you move it to NI or the EU. For example, if you buy an eligible second-hand car in GB for £12,000 the refund payment amount would be: £2,000 (£12,000 × 1/6).

How do you claim the refund?

NI established VAT registered businesses - claim the refund on their VAT return
EU established VAT registered businesses - To make a claim, you must complete form VAT67 and provide the required documents. You can then submit your claim electronically or by post.

To make a claim you’ll need the following information:

your unique reference number (if you have previously submitted a claim).
your name and address.
the type of business you’re working in.
your EU VAT registration number.
the name and address of the official body in the EU country.
the dates covered by the claim.
the amount you’re claiming for.
your bank details.
the details of vehicles you’re claiming for.

How do you treat sales on stock purchased in GB before 1 May 2023?

If sold before 30th April 2024 you can still use margin scheme on eligible vehicles
If purchased prior to 1st May 2023 and still in stock/sold after 30th April 2024, VAT will have to be accounted for on the full selling price of the vehicle.
No retrospective claim for refund payment of VAT will be allowed on vehicles that were imported from GB to NI before 1st May 2023.
NI car dealers apply can continue to use the second-hand margin scheme on cars moved to Northern-Ireland before 1st January 2021, which are sold after 30th April 2024.