Setting up as a car trader

audiboy

Hi
I want to start car trading and was wondering if anybody knew the laws and regulations e.g do i need to set up a company, VAT registration, and can i trade from home.
Also can i import vehicles from the uk and what is the correct procedure without getting myself into trouble.
thanks

mickdw

You should contact revenue. You would need to register for tax & vat. I think you will also be issued with a dealer number from one of the government agencies. This number will allow you to trade cars without you being registered as an owner on the car. A private individual buying at auction for example has to put themselves down as the owner and so would devalue the car by having an additional owner.
As far as I know, the dealer number also allows you to legally hold uk registered car here in ireland until sold. THis is helpful as as private individual legally is supposed to pay vrt with 24 hours of importing a uk car. You being a dealer can hold the cars and pay vrt when sale has been agreed. Im not 100% on this stuff but revenue would give you all the info. Its online too Id say

I know of a guy in the area that does this and he is apparently amazing at it. He made over 30K one month in January and drives a 911 and is only 27. From what I've been told, his success is down to the size of his balls, boldest decision maker in the world.

Bit off topic and doesn't answer your question but if you can know the industry, a lot of potential is there if you're the best.

tombull82

mickdw wrote: »

You should contact revenue. You would need to register for tax & vat. I think you will also be issued with a dealer number from one of the government agencies. This number will allow you to trade cars without you being registered as an owner on the car. A private individual buying at auction for example has to put themselves down as the owner and so would devalue the car by having an additional owner.
As far as I know, the dealer number also allows you to legally hold uk registered car here in ireland until sold. THis is helpful as as private individual legally is supposed to pay vrt with 24 hours of importing a uk car. You being a dealer can hold the cars and pay vrt when sale has been agreed. Im not 100% on this stuff but revenue would give you all the info. Its online too Id say

Correct

Deleted User wrote: »

If you can know the industry, a lot of potential is there if you're the best.

Correct

As TheEntrepreneur said You have to be Good at it with balls to take some risks at times.

-Chris-

This question might be answered quicker if it's in the Motors forum, I can move it if you want OP?

niceirishfella

re; Vat etc, there changes happening and explained in this article in the irishtimes.com

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WHEN THE Department of Finance quietly announced on its website last week that a deal had been agreed with the motor industry over changes to the payment of VAT on used-car sales, it was cautiously welcomed by the industry that had lobbied for such a change.

It might seem like a simple technicality, but for many dealers, it provides the working capital lifeline to keep them afloat. It also creates a situation where dealers will be eager to clear their forecourts of used cars prior to the changeover on January 1st.

Not only will the new system greatly simplify VAT payments for car dealers, but it will also consign the current “VAT clawback” situation to history.

Since 1994, car dealers have availed of a special scheme for the treatment of VAT on secondhand cars. Following the purchase of a used car – or receipt of a used car as a trade-in – the dealer could claim back the theoretical VAT paid out on the vehicle. This was to allow for the fact that dealers would have to charge VAT on the resale and so that amount was “trapped” in the car until sold.

On selling the car, the dealer paid VAT to Revenue based on the price of the car sold, but if that price was lower than the initial purchase cost, the dealer was still responsible for repaying the VAT he originally reclaimed.

As an example, consider a car bought for €20,000. That was treated as a VAT-inclusive price, so with VAT at 21.5 per cent, the dealer would have claimed back €3,539. If the car is sold for the original price, the VAT is repaid in full, but if the car sold for just €15,000, the VAT portion would amount to only €2,654. A “VAT clawback” of the difference was then required.

In 2008 – following changes to VRT legislation – much of the used stock on dealer forecourts was devalued, placing car dealers in a difficult situation in terms of cash flow, as many cars were being sold at a loss.

Earlier this year, Revenue made concessions to the industry to allow the repayment of owed VAT over four instalments up to January 19th, 2010. Additionally, a VAT margin scheme was agreed upon, whereby dealers account for VAT solely on their profit margin on each car. The VAT margin scheme was included in the last budget – with €20 million allocated to it – but was deferred due to fears within the industry about the loss of working capital that a move away from the current scheme would bring.

Now due to be reintroduced in the Budget and Finance Bill 2010, the VAT margin scheme will take effect from January 1st, 2010. The announcement was timed to pre-empt dealers’ September 19th VAT return, as there will be a transition period from the old system to the new, designed to ease the financial burden of car dealers.

Cars bought before the last day of 2009 (but only those sold after July 1st, 2009) will only be subject to VAT payment on the price the car sells at – there will be no further VAT clawback.

In the example given above, where the dealer buys a car for €20,000 and then sells it at €15,000, he will only be accountable for the VAT received on the sold car: €2,654. As he would have originally claimed €3,539 from Revenue on the purchase of the car, the State loses out to the tune of €885.

While the sample figures may have been representative in 2008, used-car prices have rallied over the past few months, so the cost to the Government may not be significant. Pat Murphy of the Department of Finance states that “our understanding is that the problem has decreased”. Without the added financial pressure of the VAT clawback, dealers can focus on clearing old stock at realistic prices in preparation for the implementation of the new scheme in 2010.

audiboy

Thanks a million everyone for advice will be definately using it

BnA

Audiboy...

There has been a good bit of discussion on this over on motors over the years. My own experience of it as posted over there a while back ....


The other thing I would say is that there are an awful awful lot of fools out there that think they can make a few quick bucks from importing and selling a few cars. I know, because I was that fool.

It sounds like a no brainer. Import this car. VRT NCT etc it up and sell it for 2k profit. It is not remotely as simple as that. There are a lot of problems with it.

1) The margins are tight. Don't believe the Asking price for cars on websites. That is not what they are selling for. You might make a few quid on some cars, but it will be very tight.

2) It will only take one Lemon to screw you up. You buy a car for 10k. Take it for the NCT. Fails out the door, car is freggin worthless. It will take a long time to try and make that money back.

3) You will always have money tied up. Again, you buy a car for 10k. Maybe it's a grand car, but you are having trouble shifting it. It's sitting there gathering dust and losing money in your driveway. You can't get your 10k back untill you sell it. You can't buy another car untill you get your 10k. What do you do...?

4) Tyre Kickers. They will be the bain of your life. You leave a match at half time to go meet some fella who was mad interested on the phone. Waste your time, maybe getting the car cleaned etc. Yer man is a waste of time. No intention of buying and just killing time on a Sunday afternoon reading the small ads.

I (like half the young fellas in the country) did this a few years ago. I imported 4 cars. Made good money on one of them, broke even on one and lost on two. And wasted an AWFUL lot of time. I would run a mile from doing it now.

Having said all that, I wouldn't rule it out completely as a business choice. I'd just say, go into it with your eyes open.

If I was to give one bit of advice to learn from my mistakes, I would say, buy with your head and not your heart. I bought cars that I liked not cars that would sell.

The other thing I would say, particularly if you are not a mechanic, is stick to a limited number of cars, and get to know them well. Their, specs, known faults, what to look out for etc when buying.

niceirishfella

All good advice above!

audiboy

Thanks for advice

i was thinking alomg the lines of trading through the auctions what does everyone think of this

tombull82

audiboy wrote: »

Thanks for advice

i was thinking alomg the lines of trading through the auctions what does everyone think of this

I've brought in a few cars from UK adn got a few from the auctions also, I find the prices are ~ the same but a lot less hassle to go to the auction, i.e brining back cars on the ferry and the distance involved.