Caught for VAT on car import.

DavidAdam

Bought a 7 month old car in Northern Ireland with 1500 miles. Did not know that I would have to pay VAT on this. Thought that as long as it was older than 6 months I was VAT exempt. The revenue are looking for €5,500 VAT which makes the car very expensive. Any advice on what I should do here.

Esel

In this scenario, you can claim a refund from the UK of the VAT paid on the car when it was first registered there.

I think Revenue give you the option of returning the car to the UK as an alternative.

DavidAdam

There is no VAT on the invoice that I received from the garage where I bought the car. I think that dealers can use the margin scheme when selling second hand cars in Northern Ireland. I may be wrong on this and so if anyone knows how to go about reclaiming vat from UK government please let me know

Atlantic Dawn

Too late now, choices are either pay it or else offload the car in NIRL.

Belfast

or you could drive it in northern Ireland until the mileage goes over 6000 KM. or loan it to some one there to drive it until.

DavidAdam

Have already taken it to NCTS for inspection so I don,t think that would work since they now know the milage

mickdw

Belfast wrote: »

or you could drive int in northern Ireland until the mileage goes over 6000 KM. or loan it to some one there to drive it until.

Could have done that but I'd imagine having presented the car with 1500 miles, they will now stick to that as this was to the mileage when first entering.

Schoolboy error.

Esel

DavidAdam wrote: »

There is no VAT on the invoice that I received from the garage where I bought the car. I think that dealers can use the margin scheme when selling second hand cars in Northern Ireland. I may be wrong on this and so if anyone knows how to go about reclaiming vat from UK government please let me know

I would be amazed if VAT has not been paid in the UK. The fact that VAT is not mentioned on your receipt for a used car does not mean VAT has not been collected in the UK previously.

DavidAdam

The first owner of the car would have paid VAT in Uk. But can I reclaim the VAT that this person paid. Its knowing how to go about reclaiming the UK VAT?

mickdw

DavidAdam wrote: »

The first owner of the car would have paid VAT in Uk. But can I reclaim the VAT that this person paid. Its knowing how to go about reclaiming the UK VAT?

I think the rules are eu wide and a car with 1500 miles is a 'new means of transport' as far as the tax people here and in the uk are concerned so maybe dealt differently than a normal used car and there may be a full vat claim available to you from UK.
Another angle on this is that a new means of transport should be able to be bought in UK for export less the vat allowing you to pay the Irish vat only on arrival.
Your options are limited now though.

Would the dealer do a swap for a similar car with suitable mileage?

Esel

DavidAdam wrote: »

The first owner of the car would have paid VAT in Uk. But can I reclaim the VAT that this person paid. Its knowing how to go about reclaiming the UK VAT?

You can. It has been talked about here before. Did you try a search?

Maybe a bit of searching the HMRC website could throw up the reclaim procedure.

BeepBeep67

I imported a 4 month old car before, once I had registered in the RoI and paid my VAT.
I contacted the garage, they sent me a HRMC form to complete, once I had all my new documentation I sent it back with photocopies and they sent a cheque.

Plan to be out of pocket for a month or so.

This was 10 years ago, so things may have changed a little.

Football Friend11

The fact that you mentioned there’s no VAT on the invoice leads me to think you won’t be able to claim UK VAT.

If the car is a ‘margin scheme’ vehicle (should say on the invoice) then there will be no VAT for you to claim as the dealer returns VAT on the difference of cost and selling price.

If the car is a ‘VAT qualifying’ then there should be VAT on the invoice and usually you would provide documentation to the dealer proving it’s been exported and they refund you the VAT.

Sometimes with VAT qualifiers if you give the dealer your tax/pps number they sell you a VAT qualifier but they take the VAT off the invoice and just charge you the net. I find this very much depends on the dealer.

Bottom line is the fact that you have the dealer invoice and there’s no VAT on it then I don’t think you’ll be able to claim back anything. I would contact the dealer and see what they will do for you

Esel

^ I think what you are describing there is what happens when a person/company which is VAT-registered here buys a vehicle in the UK.

Football Friend11

Apologies re read the first post. You bought a new car as it had 1500 miles on it. New cars have to be sold as ‘VAT Qualifying’

I suspect that the dealer sold it to you as a ‘used car’ so on the margin scheme as most accounting systems don’t factor in the 1500 Miles condition.

In your situation I would contact the dealer and ask for a VAT invoice as you bought a new car and what documentation you need to provide them so they will refund it to you.

I’m basing this on what a previous poster said and the 1500miles would be classed as new in the UK. I’m not familiar on their laws regarding this.

Football Friend11

Esel wrote: »

^ I think what you are describing there is what happens when a person/company which is VAT-registered here buys a vehicle in the UK.

You could be right. I’m more experience in the business end but I’m pretty sure the advice holds up.

Getting a VAT qualifying or margin scheme invoice doesn’t depend on who you’re selling it too but rather the history of the car. All new car invoices will be VAT qualifying and *most used car will he margin scheme. It usually makes no odds to a normal person as you can only claim VAT back on commercial vehicles here but in this scenario it could be useful to the OP.

Providing the rules in the U.K. re new cars is the same as here then I’ll outline what I suspect happened.

Seeing as the car was 7 months old I suspect it was a demo. The way demos work here is as soon as I register it Revenue want the VAT straight away the don’t care when you sell it. You pay the VAT and seven months later you sell as a margin scheme so you don’t double pay. Most consumers don’t care about this they can’t claim back the VAT so makes no difference.

If this was done in the OP scenario then the dealer would have returned VAT to the U.K. revenue already sold as margin scheme as normally it doesn’t matter. What they should have done is reverse the demo and sold the car to the OP as new. They would then reclaim the VAT they paid initially and refund to the OP.

Now I’m making the assumption that the U.K. laws re new cars and demos are the same as here. I’m not too sure but I think it’s worth a shot considering the money involved.

Belfast

DavidAdam wrote: »

Have already taken it to NCTS for inspection so I don,t think that would work since they now know the milage

So the vat is already paid?

Del2005

Belfast wrote: »

So the vat is already paid?

No but the vehicle is on their system as "new" now, turning up in a few days with >6k km on it won't alter the fact it was originally presented as "new".

Belfast

Del2005 wrote: »

No but the vehicle is on their system as "new" now, turning up in a few days with >6k km on it won't alter the fact it was originally presented as "new".

It depends on if they allow it to be returned to Northern Ireland . I imagine the importation is not complete until the vat is paid.
Is it possible to cancel the importation and re-import it later?

fergus1001

mickdw wrote:

Could have done that but I'd imagine having presented the car with 1500 miles, they will now stick to that as this was to the mileage when first entering.

get 6k miles up on the clock then go back to them to do the vrt, they won't know the difference anyways

DavidAdam

fergus1001 wrote: »

get 6k miles up on the clock then go back to them to do the vrt, they won't know the difference anyways

Don't know about that They will have the car vin and reg plate on their system. The garage that I bought from have suggested that they will take the car back drive it in U.K. and sell it to me again when it has 6000 km but I don't know how revenue will view that when l go back to them

bazz26

Belfast wrote: »

It depends on if they allow it to be returned to Northern Ireland . I imagine the importation is not complete until the vat is paid.
Is it possible to cancel the importation and re-import it later?

fergus1001 wrote: »

get 6k miles up on the clock then go back to them to do the vrt, they won't know the difference anyways

The car is now on the VRT/Revenue system as being assessed including the mileage at time of assessment but not registered so you cannot really rock up a month or 6 months later with over 6000 km on the clock expecting them to assess it again. It will be flagged on their system, Revenue are not stupid.

Unless the OP can get a VAT refund from the UK then they might have no choice but to sell the car back in the UK/NI or pay the VAT as well as VRT. Unfortunately the OP made a costly error and didn't properly research the rules around importing where the VAT is due on vehicles with under 6 months old and/or with less than 6000 km on the clock. They are stuck between a rock and hard place now.

newmember2

bazz26 wrote: »

The car is now on the VRT/Revenue system as being assessed including the mileage at time of assessment but not registered so you cannot really rock up a month or 6 months later with over 6000 km on the clock expecting them to assess it again. ....

Why not?

DavidAdam

bazz26 wrote: »

The car is now on the VRT/Revenue system as being assessed including the mileage at time of assessment but not registered so you cannot really rock up a month or 6 months later with over 6000 km on the clock expecting them to assess it again. It will be flagged on their system, Revenue are not stupid.

Unless the OP can get a VAT refund from the UK then they might have no choice but to sell the car back in the UK/NI or pay the VAT as well as VRT. Unfortunately the OP made a costly error and didn't properly research the rules around importing where the VAT is due on vehicles with under 6 months old and/or with less than 6000 km on the clock. They are stuck between a rock and hard place now.

The garage has told me they will take back the car but they will not refund all of the purchase price.

Now lets follow your logic through. I take it back & someone else from ROI could buy the car in 2019 when it has lets say 7000km on it. As you say it will be flagged on the revenue system from the time I presented it. So are you saying that customs will charge this other buyer vat because I presented it when it has 1500 miles on it.

If they buy it back and resell it to you with the required mileage and you have proof of the new purchase date and mileage and proof you sold it then I don’t see how revenue could dispute anything.

Money doesn’t even have to change hands or you don’t even need to go back to the Uk. Just get them to issue you proof of them buying it, drive it around to get the mileage up and the get them to issue you a new receipt with anew date..job done.

KevRossi

Any chance the dealer will take the car as a trade in against a car with no mileage/age issues.

DavidAdam

KevRossi wrote: »

Any chance the dealer will take the car as a trade in against a car with no mileage/age issues.

Yes he will but he will charge £3,000 sterling for doing this.

mickdw

DavidAdam wrote: »

Yes he will but he will charge £3,000 sterling for doing this.

Feck him.
I'd query his vat receipt in that you bought a new means of transport and therefore should have a full uk vat reclaim available to you on immediate export once paying vat in Ireland.

bazz26

newmember? wrote: »

Why not?

Don't they take the PPS number of the person who it is being registered to when the car is assessed? If they were not noting when the car was assessed and by who then it would be open to abuse by people who come back when the VRT figure is lower?

DavidAdam wrote: »

The garage has told me they will take back the car but they will not refund all of the purchase price.

Now let's follow your logic through. I take it back & someone else from ROI could buy the car in 2019 when it has lets say 7000km on it. As you say it will be flagged on the revenue system from the time I presented it. So are you saying that customs will charge this other buyer vat because I presented it when it has 1500 miles on it.

Hold your horses there, that's not what I said. I'm saying if the same person presents the car 3 months later surely the Revenue system will flag this otherwise there nothing stopping someone from getting a VRT/VAT figure, not liking those figures so goes off and drives the car for a few thousand miles over another few months and then comes back to get a lower figure. It would be open to abuse. Selling the car on to someone else who then gets it assessed is a different matter. I'm talking about the same person bringing the car back for an assessment more than once.

newmember2

DavidAdam wrote: »

Don't know about that They will have the car vin and reg plate on their system. The garage that I bought from have suggested that they will take the car back drive it in U.K. and sell it to me again when it has 6000 km but I don't know how revenue will view that when l go back to them

You need to find the current status of the car with revenue - is it already deemed imported and so you're liable for the VAT or, as it's still on UK plates and hasn't been registered in Ireland, has it yet to be imported. If it's the latter then you're free to go off and put up the required mileage and then re-import at a later date

Enquire at the NCT centre - they might know, and if not, they or you can contact revenue to see where you stand. Maybe the car be "brought back to the UK" and re-imported with the necessary 6k KMs? If the vehicle is presented again for registration and it has 6k KMs on it, how can revenue then class it as a new means of transport? You're not the first person who has decided not to go through with the registration of a vehicle so I would presume revenue will be able to tell you what your options are.

DavidAdam

bazz26 wrote: »

Don't they take the PPS number of the person who it is being registered to when the car is assessed? If they were not noting when the car was assessed and by who then it would be open to abuse by people who come back when the VRT figure is lower?



Hold your horses there, that's not what I said. I'm saying if the same person presents the car 3 months later surely the Revenue system will flag this otherwise there nothing stopping someone from getting a VRT/VAT figure, not liking those figures so goes off and drives the car for a few thousand miles over another few months and then comes back to get a lower figure. It would be open to abuse. Selling the car on to someone else who then gets it assessed is a different matter. I'm talking about the same person bringing the car back for an assessment more than once.

Get some else to register the car in their name

New means of transport rules apply.
Complete the vrt process, you will have to pay the vat.
Take your completed forms back to your seller, providing they are registered for vat and use the hmrc form ref 411.

They in turn will/should reimburse you the U.K. vat, which they can reclaim by returns.

DavidAdam

Its still in UK plate. They do not allow you to register a car until VRT & VAT is paid. Anyway the advice is good. Talk to the revenue and get options.

newmember2

bazz26 wrote: »

... otherwise there nothing stopping someone from getting a VRT/VAT figure, not liking those figures so goes off and drives the car for a few thousand miles over another few months and then comes back to get a lower figure. It would be open to abuse.

The car is re-presented and it now has done the required mileage to have it no longer considered a new means of transport, how is that an abuse? It's not as if it hasn't done the mileage. What's the difference between this scenario and importing any other car with more than 6k KMs on the clock?
As it is, can't you present a car for registration and then not go through with it?
If you're then free to bring the car back to the UK, why would you be prevented from re-presenting the car at a future date when the car is older or with more mileage and it then to be assessed on that age/mileage? The car is actually older or it does actually have a greater mileage so where is the abuse?

mickdw

newmember? wrote: »

The car is re-presented and it now has done the required mileage to have it no longer considered a new means of transport, how is that an abuse? It's not as if it hasn't done the mileage. What's the difference between this scenario and importing any other car with more than 6k KMs on the clock?
As it is, can't you present a car for registration and then not go through with it?
If you're then free to bring the car back to the UK, why would you be prevented from re-presenting the car at a future date when the car is older or with more mileage and it then to be assessed on that age/mileage? The car is actually older or it does actually have a greater mileage so where is the abuse?

Because as an Irish resident, he presented his now purchased car for registration with little mileage.
An Irish person tsking the car out of the country to clock up some miles is taking the piss. I'd imagine one would need proof of temporary residency outside of Ireland to even dream of trying that one.

bazz26

newmember? wrote: »

The car is re-presented and it now has done the required mileage to have it no longer considered a new means of transport, how is that an abuse? It's not as if it hasn't done the mileage. What's the difference between this scenario and importing any other car with more than 6k KMs on the clock?
As it is, can't you present a car for registration and then not go through with it?
If you're then free to bring the car back to the UK, why would you be prevented from re-presenting the car at a future date when the car is older or with more mileage and it then to be assessed on that age/mileage? The car is actually older or it does actually have a greater mileage so where is the abuse?

It states in the VRT regulations that you have 30 days from when the car comes into the State to pay VRT and register the car. Then what's the point of the 30 day rule then if all people have to do is pretend the car was taken back out of the country until the VRT figure came down to a more affordable amount? That's the abuse I'm talking about. Do you know anyone who has successfully done what you are saying? I'm talking about the same person presenting the same car for VRT registration twice?

newmember2

bazz26 wrote: »

Do you know anyone who has successfully done what you are saying? I'm talking about the same person presenting the same car for VRT registration twice?

No, I don't know anyone that's presented a car for a second time. I'm still not seeing the abuse angle though. So if I bring in a car with 3k KMs and manage to put another 3k on it before I present it - so that I don't get hit with VAT, would that also be considered an abuse?

bazz26

That's not the same though, the OP has already presented the car for assessment with 1500 miles on the clock. If the same person goes back to VRT it back in a few months time when it has 6000 km on it, it will be flagged The opportunity to rack up the miles needs to be taken before the car is presented for VRT where it's logged on the Revenue system.

The only way the OP can avoid VAT liability in this case to either sell the car at a loss or get a family member/friend to VRT in their name when it has 6000 km on the clock, then transfer ownership back to the OP afterwards after it's put on Irish plates.

Voodoomelon

Yep, sell it to your long lost cousin, go for some scenic trips and have them bring it in afterwards.

Marcusm

newmember? wrote: »

No, I don't know anyone that's presented a car for a second time. I'm still not seeing the abuse angle though. So if I bring in a car with 3k KMs and manage to put another 3k on it before I present it - so that I don't get hit with VAT, would that also be considered an abuse?

Yes because it is the condition of the car at the point of importation which is relevant to the tax (VAT) arising as a consequence of importation.

mickdw

newmember? wrote: »

No, I don't know anyone that's presented a car for a second time. I'm still not seeing the abuse angle though. So if I bring in a car with 3k KMs and manage to put another 3k on it before I present it - so that I don't get hit with VAT, would that also be considered an abuse?

Well given that you can very easily buy a 3k km car vat free in the UK and then get it vat free here by running up some miles, it is certainly an abuse of the system and vat fraud.
To pull off such a trick would likely involve producing a false invoice also as the real invoice will show exported free of vat and mileage.
People are doing this, making a hand written invoice and presenting at over 6k km.
As a self employed person, i certainly wouldn't want to do this as it would be easily spotted and very serious.

terrydel

Esel wrote: »

I would be amazed if YepVAT has not been paid in the UK. The fact that VAT is not mentioned on your receipt for a used car does not mean VAT has not been collected in the UK previously.

Yep, vat is paid once only, when something is sold new, not on a subsequent sale.

Esel

mickdw wrote: »

Well given that you can very easily buy a 3k km car vat free in the UK and then get it vat free here by running up some miles, it is certainly an abuse of the system and vat fraud.
To pull off such a trick would likely involve producing a false invoice also as the real invoice will show exported free of vat and mileage.
People are doing this, making a hand written invoice and presenting at over 6k km.
As a self employed person, i certainly wouldn't want to do this as it would be easily spotted and very serious.

How exactly can you buy an already registered car VAT-free? Surely VAT would already have been paid at first registration in the UK?

Voodoomelon

Think this only works with VAT qualifying cars. These are cars that were originally owned by a company in the UK, VAT was returned by the dealer on the sale and then reclaimed by the company.

When the car is sold subsequently, VAT is charged on top of the sale price. Subsequent businesses can then claim this VAT back, OR, if the vehicle is being exported, ie to Ireland, a business buyer with an Irish VAT number can buy exVAT.

If the car is not VAT qualifying, ie a regular second hand UK car, the dealer simply returns VAT on his profit margin, making it a margin vehicle. No VAT can be reclaimed by anyone on this purchase.

The rumor seems to be that Irish Joe Bloggs is presenting random VAT numbers to dealers in the UK and buying exVAT. Returning to Ireland, meeting the requirements in regards mileage and age in respect of VAT and not paying any VAT at all. I'd be skeptical as to how many people have got away with this, as at the end of the day its the UK dealers arse on the line with HMRC if these cock ups are discovered.

relax carry on

Voodoomelon wrote: »

Think this only works with VAT qualifying cars. These are cars that were originally owned by a company in the UK, VAT was returned by the dealer on the sale and then reclaimed by the company.

When the car is sold subsequently, VAT is charged on top of the sale price. Subsequent businesses can then claim this VAT back, OR, if the vehicle is being exported, ie to Ireland, a business buyer with an Irish VAT number can buy exVAT.

If the car is not VAT qualifying, ie a regular second hand UK car, the dealer simply returns VAT on his profit margin, making it a margin vehicle. No VAT can be reclaimed by anyone on this purchase.

The rumor seems to be that Irish Joe Bloggs is presenting random VAT numbers to dealers in the UK and buying exVAT. Returning to Ireland, meeting the requirements in regards mileage and age in respect of VAT and not paying any VAT at all. I'd be skeptical as to how many people have got away with this, as at the end of the day its the UK dealers arse on the line with HMRC if these cock ups are discovered.

The use of the irish VAT number is recorded on the UK side and reported to Revenue. The UK seller must also carry out their own due diligence checks to ensure the bonafide of the purchase using the vat number. Vat fraud taken very seriously by HMRC and Revenue. HMRC will report information on suspected vat fraud to Revenue and vice versa.

Voodoomelon

Absolutely, but some chap on here recently claimed he bought a car in the UK VAT free and no one on this side is doing the proper checks to make sure it was paid at origin. They only seemed concerned with the 6000km and 6 month rule.

Turbohymac

Ya presenting an imported car here in Ireland with only 1500 on the clock is absolutely madness..its very clearly stated on revenue site..they class this second hand import as NEW CAR ..no way around this except like previous posts return to northern Ireland and clock up over the 4500 approx miles ..but it might be too late since you have rocked up to nct centre in it..

mickdw

Esel wrote: »

How exactly can you buy an already registered car VAT-free? Surely VAT would already have been paid at first registration in the UK?

I believe if you buy a 'new means of transport' from a dealer, you can fill form vat 410 and take the car out of the country vat free.
I agre e that it would have to be vat qualifying but it certainly possible.
You don't need a vat number as long as it's for export and vat is being paid in destination country.
The scam is then taking it in here, running up mileage and avoiding the vat.

Very few vat registered people would try to use their business vat number to bring in a car vat free and then register it without vat as you would be asking for an audit.
Paye however don't have the same fear of the revenue in general.

Esel

Turbohymac wrote: »

Ya presenting an imported car here in Ireland with only 1500 on the clock is absolutely madness..its very clearly stated on revenue site..they class this second hand import as NEW CAR ..no way around this except like previous posts return to northern Ireland and clock up over the 4500 approx miles ..but it might be too late since you have rocked up to nct centre in it..

As said above, the UK VAT can be reclaimed in this scenario once VAT has been paid here.

Esel

mickdw wrote: »

I believe if you buy a 'new means of transport' from a dealer, you can fill form vat 410 and take the car out of the country vat free.
I agre e that it would have to be vat qualifying but it certainly possible.
You don't need a vat number as long as it's for export and vat is being paid in destination country.
The scam is then taking it in here, running up mileage and avoiding the vat.

Very few vat registered people would try to use their business vat number to bring in a car vat free and then register it without vat as you would be asking for an audit.
Paye however don't have the same fear of the revenue in general.

I would think that very few sensible people have tried to pull that stunt though.

Voodoomelon

mickdw wrote: »

You don't need a vat number as long as it's for export and vat is being paid in destination country.

Why are cars any different in regards VAT rules? I'm sure if some chap rang your business up and asked you to sell him something VAT free with no UK VAT number, you'd tell him to take a hike.

I don't see any reason why a sensible UK dealer would sell a car to an Irish lad with no VAT number VAT free, unless i'm missing something.