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VAT on Second Hand Cars Question (Margin Scheme)

  • 28-01-2014 3:40pm
    #1
    Jimmy Bottles
    Registered Users, Registered Users 2 Posts: 349 ✭✭


    Simple enough question.

    Practically all the second hand cars a dealer has will be sold on via the Margin Scheme. No VAT input will be claimed on the purchase and the VAT output will be calculated on the difference between the sales price and the purchases price (margin).

    That's fine. The legislation also states that the Margin Scheme doesn't automatically have to be used if the dealer doesn't want to.

    http://www.revenue.ie/en/tax/vat/leaflets/margin-scheme-second-hand-goods.html

    Point 13 in the above guide spiked my interest though. The paragraph deals with situations where the dealer may want to apply the normal rules. The last line however states "The dealer him/herself may not however claim any VAT credit in relation to his/her purchase."

    What about cases where a dealer has purchased a second hand car from a register person and this registered person has applied full VAT on the sale of the car to the dealer. Can the dealer in this case apply the normal VAT rules and claim the full VAT input from the invoice ? I would have thought so but that line in the guide is throwing me.

    Thanks.


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