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New VAT refund scheme outlined for NI dealers importing cars from UK

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The Government is introducing a new second-hand motor vehicle export refund scheme, in October.

It will allow dealers to claim a refund of VAT if they move a used motor vehicle from Great Britain to Northern Ireland for resale.

It will replace the VAT margin scheme, which was introduced last year to avoid pressure on dealer margins and price increases for customers.

Further information on the scheme will be published in May 2022. For now, the Government's guidance can be viewed here:

NI retailers had been battling to find a solution to the post-Brexit tax issue, which added 20% to the cost of every vehicle imported from the mainland UK.

Car dealers who sell motor vehicles in Northern Ireland can use the scheme if they buy vehicles in Great Britain and move them to Northern Ireland for resale and currently use the VAT margin scheme for those sales.

The scheme can also apply to those who are VAT registered in the EU and/or buy second-hand vehicles in Great Britain and export them to the EU for resale

When the refund scheme is introduced, dealers will no longer be able to use the VAT margin scheme to account for VAT on second-hand vehicles bought in Great Britain and then moved to Northern Ireland for resale.

The VAT on these sales will be subject to the normal rules for moving goods between Great Britain and Northern Ireland. When the vehicle is sold, dealers will account for VAT on the full value of the supply.

The refund scheme will allow them to claim a refund of VAT on the vehicle that was purchased when it is moved from Great Britain to Northern Ireland, as long as there is an intention to resell it.

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