Margin Scheme

masit

Hi there

I have been selling cars privately for a while now and I am thinking of going the official route ie, vat registered and so on. On some of the invoices I have got over the years from car garages in the UK some have margin scheme on them, some have VAT paid on them. I know the margin scheme, you pay VAT on your profit from purchase price to sale price. My question is, what happens with the cars that would have VAT shown on the invoice from the UK. Do they fall under the margin scheme or will I end up paying VAT on the full sale price.

Thanks for any help

CIARAN_BOYLE

masit wrote: »

Hi there

I have been selling cars privately for a while now and I am thinking of going the official route ie, vat registered and so on. On some of the invoices I have got over the years from car garages in the UK some have margin scheme on them, some have VAT paid on them. I know the margin scheme, you pay VAT on your profit from purchase price to sale price. My question is, what happens with the cars that would have VAT shown on the invoice from the UK. Do they fall under the margin scheme or will I end up paying VAT on the full sale price.

Thanks for any help

First off if you have a vat number they won't charge you vat so you can buy cheaper. They will then either say no vat on the invoice and you have to charge vat on the full sale price or margin scheme as otherwise discussed.

masit

CIARAN_BOYLE wrote: »

First off if you have a vat number they won't charge you vat so you can buy cheaper. They will then either say no vat on the invoice and you have to charge vat on the full sale price or margin scheme as otherwise discussed.

Thanks for your reply.

I would think most garages would operate the margin scheme, but if some didn't and the VAT was on the invoice how would it work. I'm just trying to figure out the 3 options, margin scheme, VAT and no VAT. Even if I'm VAT registered and a garage offers no VAT would it be better for me to let the UK garage pay the UK VAT and how would I account here. Because VAT on a €20000 car will end up being a nice few euros. Also, does the company name have to be on the invoice or can it be my own personal name, ie Joe Blogs Motors or would Joe Blogs do?

CIARAN_BOYLE

masit wrote: »

Thanks for your reply.

I would think most garages would operate the margin scheme, but if some didn't and the VAT was on the invoice how would it work. I'm just trying to figure out the 3 options, margin scheme, VAT and no VAT. Even if I'm VAT registered and a garage offers no VAT would it be better for me to let the UK garage pay the UK VAT and how would I account here. Because VAT on a €20000 car will end up being a nice few euros. Also, does the company name have to be on the invoice or can it be my own personal name, ie Joe Blogs Motors or would Joe Blogs do?

Intra community acquisitions. You supply them your vat number and they zero rate the sale. No VAT.

relax carry on

CIARAN_BOYLE wrote: »

Intra community acquisitions. You supply them your vat number and they zero rate the sale. No VAT.

Then full vat on the sale in Ireland.

masit

Ok, the car I have now has the full 20% Uk VAT with no margin scheme on invoice. If that was to be sold in the company what will I be paying VAT on. Full sale price, profit or no VAT as its paid in the EU?

exaisle

Best to consult an accountant rather than rely on replies here....better to be safe than sorry.

masit

exaisle wrote: »

Best to consult an accountant rather than rely on replies here....better to be safe than sorry.

Oh I know. I have one but I would be the first car dealer he has to deal with. I just wanted to find out some info for my own benefit.

PCX

You should read the Revenue leaflet on the margin scheme if you have not already.

Section 11 covers goods purchased from other EU countries.

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

davindub

masit wrote: »

Ok, the car I have now has the full 20% Uk VAT with no margin scheme on invoice. If that was to be sold in the company what will I be paying VAT on. Full sale price, profit or no VAT as its paid in the EU?

If you have been charged vat outside the margin scheme and you are registered for vat, this is a mistake, provide your vat number and get it re-invoiced. You charge vat on the entire sale price - VRT then claim a credit for the vat you would have paid if bought in Ireland.

But if the dealer is operating the margin scheme, get this put on the invoice. You pay the vat but cannot claim the input credit. You charge vat @ (sale price - VRT - cost price) * vat rate

The above is very generalistic, your accountant will examine in detail the status of the vehicle and it complies with the margin scheme, 2nd hand status, etc. The above may not apply if you register the car in Ireland before sale.