VAT Margin Scheme on second-hand cars
HMRC have reorganised the VAT margin scheme publications and as part of this change launched a new notice (718/1) entitled ‘The VAT Margin Scheme on second-hand cars and other vehicles’. This notice includes all the information relevant to the motor trade which had previously been included in the general VAT Margin Scheme notice.
The notice is intended to provide information on using the second-hand margin scheme to account for VAT on the sale of second-hand vehicles. The margin scheme works by allowing car dealers to account for VAT on their profit margin i.e. on the difference between the cost of acquiring a car and its reselling price.
The notice explains:
- Which vehicles can be sold under the scheme;
- How the scheme works;
- How to calculate the margin;
- What records must be kept.
The notice also covers changes to the rules concerning the information that must be included on margin scheme invoices.