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Vat Reclaim on Used Cars by Primary Medical Certificate

  • 17-04-2013 9:51pm
    #1
    afishyfish
    Registered Users Posts: 207 ✭✭


    I was recently awarded a Primary Medical Certificate which allows me to buy a new or used car and entitles me to a refund of both VAT & VRT.
    Now, if I was buying a new car this would be straight forward enough.
    But I can't afford one (that I'd be happy with), So I'm looking at second hand options. The only problem here is that (normally) there is no vat on a used car, so my only refund is residual VRT.
    In order to reclaim vat on a used car, I have been trying to track down the rare used cars that come with vat invoices.
    I'm amazed by how many car dealers are unaware of this fact; but, cars which have never been privately owned, and therefore have not become marginal (the vat element has been "fused" to the value), these cars (provided the dealers accountancy dept. has the wit to do so), can be sold with vat invoices.
    Examples of these cars are ex-rental cars, or ex-lease cars.
    I have identified a limited number of these cars and (once I sell my old car) am ready to purchase a 2008 car with a vat invoice. The problem is, while it makes good financial sense, I'm not crazy about the car itself.

    Finally.... my question; can anybody suggest sources for these cars. To get the ball rolling, here are a few I've found;
    Buying directly from Merrion Fleet Company
    Buying directly from Lease Plan
    Hertz sell to garages (Bolands of Wexford and Waterford)

    Any other suggestions?

    Thanks
    Tagged:


Comments

  • #2
    George Dalton
    Registered Users Posts: 5,728 ✭✭✭George Dalton


    afishyfish wrote: »
    I'm amazed by how many car dealers are unaware of this fact; but, cars which have never been privately owned, and therefore have not become marginal (the vat element has been "fused" to the value), these cars (provided the dealers accountancy dept. has the wit to do so), can be sold with vat invoices.

    Have you got any concrete information on this? It's a bit of a grey area IMO and is something I would like to know the answer to as we buy a lot of our stock from lease companies.

    There is nothing to stop any dealer selling any car with a VAT invoice rather than under the margin scheme if they so choose. The problem is that under normal circumstances they can't reclaim any VAT relating to their purchase of the car.

    So in a case where they sell to somebody like yourself can they then reclaim the VAT? I'm not sure they can.

    Obviously if they can't then they won't give you a VAT invoice. At least not without increasing the ex. VAT price of the vehicle to make up for the lost VAT, which would then cancel out any savings from your point of view.


  • #3
    colm_mcm
    Registered Users Posts: 73,379 ✭✭✭✭colm_mcm


    I thought revenue made a payment equal to the vat amount, not claim the vat from the garage


  • #4
    George Dalton
    Registered Users Posts: 5,728 ✭✭✭George Dalton


    colm_mcm wrote: »
    I thought revenue made a payment equal to the vat amount, not claim the vat from the garage

    I always thought that too but the claim form asks for the purchase invoice showing the VAT paid, whereas under the margin scheme garages are specifically instructed not to show VAT separately on their invoices.


  • #5
    colm_mcm
    Registered Users Posts: 73,379 ✭✭✭✭colm_mcm


    Citizens info says
    You can claim tax relief on

    A new vehicle
    A used vehicle that has been purchased from an authorised dealer and that has not been previously registered in the state

    But then says
    You can also buy a previously registered used vehicle, in which case the amount of the repayment will be the residual tax contained in the value of the vehicle.

    Does this not mean that you don't have to buy from a dealer? Do they mean they put a value on it and pay you a percentage?

    I know there are provisions for those that bought a vehicle before applying too.


  • #6
    afishyfish
    Registered Users Posts: 207 ✭✭afishyfish


    The above statements are quite vague, as they mention 'TAX relief' and 'residual TAX', without specifying VAT or VRT. Just Tax.

    George Dalton, you asked if I have concrete information on this. No, not really. Just the above vagueness of 'tax' relief.
    However, I have called the relevant revenue office in Monaghan to enquire.
    The said they would refund residual VRT (worked out by the revenues online vrt calculator)

    They mentioned that if the garage provides a vat invoice I can also reclaim vat. However, they would by no means be drawn on the specifics of how or when garages could do this.
    The attitude was; go figure it out yourself.

    From speaking to different garages I have gotten mixed information.
    -A couple have said they can issue a VAT invoice for ANY vehicle.
    -More have said, they can issue a vat invoice for a vehicle as described in my original post.
    -Most say, there is no vat on used cars - end of story. When I try to explain the scenario they are oblivious and don't seem to be interested.

    I'm working on the premise that the second statement is true, but I'm open to corrections.


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  • #7
    George Dalton
    Registered Users Posts: 5,728 ✭✭✭George Dalton


    I have to say I would probably respond the same as the majority of garages have. Reason being as far as I am aware there are no circumstances where a garage can reclaim VAT on the purchase of a used car, regardless of the source of the car. This effectively means that they will lose profit or even make a loss on any given car if they supply a VAT invoice with it for the normal asking price.

    For example supposing a garage buys a car for €8000 from Leaseplan.
    They then sell the car to you for €9500 but they give you a VAT invoice as you requested one.

    They have now lost money on the deal, they can't reclaim the VAT element of the €8000 purchase price but they are now liable for the VAT element of the €9500 as they have invoiced it as a normal VAT invoice rather than under the margin scheme. So they effectively have only gotten €7723 for the car they paid €8000 for.

    I am open to correction on this if anyone has any definite info btw.


  • #8
    afishyfish
    Registered Users Posts: 207 ✭✭afishyfish


    But my point is that if they buy a car from lease plan, that same car won't actually cost them 8000.
    They will physically hand over 8000 but lease plan will happily supply an invoice showing 6000 + vat.

    It will cost them 6000 +vat (rounding numbers for convenience)

    You see the vat isnt even considered or mentioned most of the time because its contained in the value and has no relevance on the open market. 99.99% of the time the vat must be paid so why even mention it?

    They sell it to me for 7000 + vat
    Say 9000

    Once it's privately owned it becomes marginal and forever more the vat element is gone. (Well .... Gone on paper).
    But the car that I paid 7000 + vat for (now marginal) will depreciate from a starting figure of 9000. As its worth in the open market.

    Again. I'm not 100% here. Just the theory I'm going on.
    I'm open to thoughts or corrections.


  • #9
    George Dalton
    Registered Users Posts: 5,728 ✭✭✭George Dalton


    afishyfish wrote: »
    But my point is that if they buy a car from lease plan, that same car won't actually cost them 8000.
    They will physically hand over 8000 but lease plan will happily supply an invoice showing 6000 + vat.

    It will cost them 6000 +vat (rounding numbers for convenience)

    My point is that the car will cost them €8000 rather than €6000 + VAT. I am pretty sure the garage cannot claim back the VAT from the Leaseplan invoice. The VAT on the Leaseplan invoice is a matter for Leaseplan only, it is Leaseplan's VAT liability for the disposal of the vehicle, it does not give the dealer the right to claim the VAT back.


  • #10
    Mickiemcfist
    Registered Users Posts: 1,585 ✭✭✭Mickiemcfist


    A relative of mine has the same disabled driver thing. He's always saying there are realistically only two options available to him; buy new or import.

    Cars up the north are alot cheaper than they are here in the majority of cases, and you then don't pay anything when importing. He also gets the Vat off of fuel.

    It means you can also buy private in the UK, and therefore just get a good RAC inspection & you've cut out the middleman.


    Not sure if this helps but there you go!


  • #11
    afishyfish
    Registered Users Posts: 207 ✭✭afishyfish


    George Dalton wrote: »
    I am pretty sure the garage cannot claim back the VAT from the Leaseplan invoice.

    Surely any vat registered company can claim back vat on a vat invoice they have been issued.
    They may choose not to do so if they wish. Instead they could just treat the car as marginal and simply pay tax on their profit. This is a more simple solution for their accounts dept as most sales are done like this.


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  • #12
    afishyfish
    Registered Users Posts: 207 ✭✭afishyfish


    Mickiemcfist wrote: »
    It means you can also buy private in the UK, and therefore just get a good RAC inspection & you've cut out the middleman.

    You cannot buy privately in Ireland or uk. I'm sure about this. I made that mistake already.
    But I do accept there is a strong case for buying a vat qualifying car in the uk. (From a garage)


  • #13
    afishyfish
    Registered Users Posts: 207 ✭✭afishyfish


    afishyfish wrote: »
    From speaking to different garages I have gotten mixed information.
    -A couple have said they can issue a VAT invoice for ANY vehicle.
    -More have said, they can issue a vat invoice for a vehicle as described in my original post.
    -Most say, there is no vat on used cars - end of story. When I try to explain the scenario they are oblivious and don't seem to be interested.

    I'm working on the premise that the second statement is true, but I'm open to corrections.


    I have an update. The second statement above is true.
    So I was correct in my assumption.
    So i need to find an ex-lease or ex-rental car. Or a uk car which is vat qualifying.


  • #14
    George Dalton
    Registered Users Posts: 5,728 ✭✭✭George Dalton


    afishyfish wrote: »
    Surely any vat registered company can claim back vat on a vat invoice they have been issued.
    They may choose not to do so if they wish. Instead they could just treat the car as marginal and simply pay tax on their profit. This is a more simple solution for their accounts dept as most sales are done like this.

    No they can't.

    Quote below from the relevant documentation from when the margin scheme was introduced:
    Under the margin scheme a dealer who sells second-hand vehicles or agricultural machinery should account for 21% VAT included in the margin. The dealer is not entitled to claim residual VAT in the purchase price.


  • #15
    George Dalton
    Registered Users Posts: 5,728 ✭✭✭George Dalton


    afishyfish wrote: »
    I have an update. The second statement above is true.
    So I was correct in my assumption.
    So i need to find an ex-lease or ex-rental car. Or a uk car which is vat qualifying.

    Have you got the source for this information?

    I am not trying to contradict you by the way, I am just looking for the proof as it is something that could be relevant to me as someone who sells ex lease cars.


  • #16
    George Dalton
    Registered Users Posts: 5,728 ✭✭✭George Dalton


    Another quote from the same source:
    The dealer may opt to apply the normal VAT rules to any supply. This is more likely to occur where s/he is selling to a customer who is an accountable person and who requires a VAT invoice in order to recover his/her VAT inputs. Normal VAT rules mean that VAT is chargeable on the full selling price, instead of on the margin, and a VAT-registered customer is entitled to be issued with a VAT invoice in relation to the supply. The dealer may not, however, claim any input VAT credit in relation to his/her purchase of the vehicle or agricultural machinery in question.


  • #17
    Mickiemcfist
    Registered Users Posts: 1,585 ✭✭✭Mickiemcfist


    afishyfish wrote: »
    You cannot buy privately in Ireland or uk. I'm sure about this. I made that mistake already.
    But I do accept there is a strong case for buying a vat qualifying car in the uk. (From a garage)

    Nope, you can buy a car privately in the UK, you then dont pay the import duties as I said in my original post.

    I also never said you could buy privately in Ireland


  • #18
    afishyfish
    Registered Users Posts: 207 ✭✭afishyfish


    George Dalton wrote: »
    No they can't.

    Quote below from the relevant documentation from when the margin scheme was introduced:

    My point is that this is not under the margin scheme. So I'm afraid that doesn't apply here.


  • #19
    afishyfish
    Registered Users Posts: 207 ✭✭afishyfish


    Mickiemcfist wrote: »
    Nope, you can buy a car privately in the UK, you then dont pay the import duties as I said in my original post.

    I also never said you could buy privately in Ireland

    I'm sorry. But you are mistaken. Right now, I am am typing this from a car with uk plates which I purchased privately in the uk. When I contacted revenue to notify them they told me it had to be bought from a garage in the uk and didn't qualify under this scheme.
    Now I have to pay the vrt or sell it on with uk plates.
    Trust me on this. This is first had information. Not something I was told over a pint.


  • #20
    afishyfish
    Registered Users Posts: 207 ✭✭afishyfish


    George Dalton wrote: »
    Another quote from the same source:

    Again, this applies to marginal cars.
    In rare situations, already discissed, different rules apply.


  • #21
    George Dalton
    Registered Users Posts: 5,728 ✭✭✭George Dalton


    afishyfish wrote: »
    Again, this applies to marginal cars.
    In rare situations, already discissed, different rules apply.

    No it doesn't. It applies to situations where the dealer may choose not to apply the margin scheme.


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  • #22
    Mickiemcfist
    Registered Users Posts: 1,585 ✭✭✭Mickiemcfist


    afishyfish wrote: »
    I'm sorry. But you are mistaken. Right now, I am am typing this from a car with uk plates which I purchased privately in the uk. When I contacted revenue to notify them they told me it had to be bought from a garage in the uk and didn't qualify under this scheme.
    Now I have to pay the vrt or sell it on with uk plates.
    Trust me on this. This is first had information. Not something I was told over a pint.

    Ok fair enough. Why dont you do a deal with a dealer to buy it off you & sell it back for like €200 more? win-win


  • #23
    R.O.R
    Registered Users Posts: 12,672 ✭✭✭✭R.O.R


    George, I think you could reclaim the VAT on the ex. lease cars you buy, but you'd have to pay the full 23% of the sale price to the Revenue when you sell it on. That's why practically all used cars for sale are on the margin scheme - less VAT to pay that way.

    OP - VAT qualyfying cars are very hard to find in Ireland. We have one customer who can't take new cars for one reason or another, but to make it finacially worthwhile we need to buy VAT qualyfying used cars to lease to them. We've sourced about 10 at this stage. 6 from the UK (and it's getting fairly hard to find them there as well) and 4 which were ex. rentals.

    What sort of thing are you looking for? LeasePlan will have the largest selection. Merrion not that far off (and there are other leasing companies too). Ex. Rental stuff is usually fairly new so depends on your budget.


  • #24
    afishyfish
    Registered Users Posts: 207 ✭✭afishyfish


    George Dalton wrote: »
    No it doesn't. It applies to situations where the dealer may choose not to apply the margin scheme.

    If a dealer buys a marginal car (which most are) he has little choice in the matter. He can't choose to treat it as non marginal if it suits him. The vat element has been fused to the value of the car and nothing can change that.
    He may charge vat on it if he wishes. But he can't reclaim vat on his purchase.


  • #25
    George Dalton
    Registered Users Posts: 5,728 ✭✭✭George Dalton


    Have you got a source for this info?


  • #26
    afishyfish
    Registered Users Posts: 207 ✭✭afishyfish


    Mickiemcfist wrote: »
    Ok fair enough. Why dont you do a deal with a dealer to buy it off you & sell it back for like €200 more? win-win

    Have considered this. It's an option, but it would would need to go from me to a 3rd party, to the dealer, then back to me.
    Now a car with 1 previous owner has 4.
    It's an option, but its messy.


  • #27
    afishyfish
    Registered Users Posts: 207 ✭✭afishyfish


    George Dalton wrote: »
    Have you got a source for this info?

    http://www.revenue.ie/en/spotlights/vat-margin-scheme-2nd-hand-cars.html


  • #28
    George Dalton
    Registered Users Posts: 5,728 ✭✭✭George Dalton


    I don't see anything at that link that supports your view.


  • #29
    Tigger
    Closed Accounts Posts: 16,707 ✭✭✭✭Tigger


    afishyfish wrote: »
    Have considered this. It's an option, but it would would need to go from me to a 3rd party, to the dealer, then back to me.
    Now a car with 1 previous owner has 4.
    It's an option, but its messy.
    dealers don't add an owner

    why not buy a car off leaseplan direct
    mabey get george to source the car and agree the price and then pay him a finders fee


  • #30
    George Dalton
    Registered Users Posts: 5,728 ✭✭✭George Dalton


    I found something here which may confirm that a dealer can reclaim VAT on an ex-lease car:
    If the vehicle is sold or traded-in to a motor-dealer, the special scheme for second-hand vehicles will apply, and the dealer can reclaim any residual VAT.

    Taken from here:

    http://www.revenue.ie/en/tax/vat/refunds/vat-reclaims-faqs.html

    So looks like the OP should be good to go.

    Now, next question, what UK reg car does the OP have and what kind of car do they want?v :pac:


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  • #31
    Barr
    Registered Users Posts: 6,990 ✭✭✭Barr


    colm_mcm wrote: »
    Citizens info says


    But then says



    Does this not mean that you don't have to buy from a dealer? Do they mean they put a value on it and pay you a percentage?

    I know there are provisions for those that bought a vehicle before applying too.


    I know someone who tried to claim VRT refund on a private scond hand car - it was refused point blank, as they said it needed to be purchased from an authorised dealer.

    I'd be interested to hear if anyone was able to claim for a private bought vehicle ?


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