VRT for a new car from the North

Sam W

Hi everyone,

Missus bought a new German car from the North the other day. The dealer there said she just needs to bring the COC (Certificate of Conformity) and a V5C (log book) to the NCT centre.

But when we look at the VRT booking's email, it says 'For new cars a Certificate of Conformity (CoC) must be on the Revenue computer system before a new vehicle can be registered.'

Has anyone done this recently? Are you required to input your CoC details onto Revenue's system? Apparently the CoC is in German and we would not want to do it by ourselves if possible...

Isambard

is this brand new and is it German registered?

Sam W

Isambard wrote: »

is this brand new and is it German registered?

Hi, it is a new Mercedes registered in the UK.

Marcusm

Registered to your wife in the U.K. or to someone else? If the dealer was selling a new car to a non-resident, it should have been put on “X” plates for export, nil rated for VAT, no VED charged etc. Did they do this?

Sam W

Marcusm wrote: »

Registered to your wife in the U.K. or to someone else? If the dealer was selling a new car to a non-resident, it should have been put on “X” plates for export, nil rated for VAT, no VED charged etc. Did they do this?

It's registered to her as a resident of Ireland, as we were worried about the uncertainty of Brexit and potential import customs duty if the car is not imported to Ireland before 31 Dec. So we were charged the 20% UK VAT. Once we pay the VRT and the Irish VAT, we can claim the UK VAT back as long as it is done within 2 months.

hotrodder

What is the implications of importing a used Uk car after brexit. If vat is charged what value will the vat be charged on. (Purchase price or Irish book value)

User1998

VAT is always charged on the purchase price, but a trade deal seems to be in place now

hotrodder

User1998 wrote: »

VAT is always charged on the purchase price, but a trade deal seems to be in place now

Does trade deal mean no vat ?

User1998

Looks like it, not sure yet

Isambard

business as usual , almost as if they never left.

Sexual Chocolate

User1998 wrote: »

Looks like it, not sure yet

From what I've being reading we'll be paying VAT after next week.

mgn

Sexual Chocolate wrote: »

From what I've being reading we'll be paying VAT after next week.

If the VAT is paid on the car already cant see why you would have to pay it twice.
I open to correction though.

Sam W

For new cars, VAT will still have to be paid regardless of where the car comes from.

For old cars (I think older than 6 months old and have more than 5k mileage?) there will be no VAT if the car is from EU/UK.

Del2005

mgn wrote: »

If the VAT is paid on the car already cant see why you would have to pay it twice.
I open to correction though.

The UK are now a 3rd country so VAT will be due on imports, the deal means no other tariffs.

Getting the VAT back from the UK is a different matter.

Del2005

Del2005 wrote: »

The UK are now a 3rd country so VAT will be due on imports, the deal means no other tariffs.

Getting the VAT back from the UK is a different matter.

Will the same apply to a car sold 2nd hand by a Northern Ireland Garage?

Del2005

Deleted User wrote: »

Will the same apply to a car sold 2nd hand by a Northern Ireland Garage?

No, Northern Ireland is still in the single market. But I can't see their stock of 2nd hand vehicles lasting long though with Britain not an option now for us.

Marcusm

Sam W wrote: »

It's registered to her as a resident of Ireland, as we were worried about the uncertainty of Brexit and potential import customs duty if the car is not imported to Ireland before 31 Dec. So we were charged the 20% UK VAT. Once we pay the VRT and the Irish VAT, we can claim the UK VAT back as long as it is done within 2 months.

The dealer is an idiot! A U.K. car cannot be registered to an overseas resident. More importantly, there was absolutely no need to pay U.K. VAT. All he had to do was fill out VAT form 411 and you would not have been charged VAT on day 1. What car was it and how much VED was charged? It can be little enough for “fuel efficient” cars but grows up to over £2k and there is an extra year 1 charge for cars over £40k. Again, all avoidable of the dealer did their job properly.

Del2005

Del2005 wrote: »

No, Northern Ireland is still in the single market. But I can't see their stock of 2nd hand vehicles lasting long though with Britain not an option now for us.

I'm looking at an English plate car for sale in a Northern Irish garage. They bought it at auction. So I dont know if this will be liable to VAT or not. It's all very confusing at the min.

un5byh7sqpd2x0

Del2005 wrote: »

The UK are now a 3rd country so VAT will be due on imports, the deal means no other tariffs.

Getting the VAT back from the UK is a different matter.

Northern Ireland is still in the Customs Union, so not a third country. However, given the car is presumably < 6 months old or has < 6000km VAT will be due.

Marcusm

Deleted User wrote: »

I'm looking at an English plate car for sale in a Northern Irish garage. They bought it at auction. So I dont know if this will be liable to VAT or not. It's all very confusing at the min.

Simply ask them if it is a VAT qualifying car.

mickdw

The uk is a third country but the wording of the deal appears to state that trade should continue such that trading between uk and eu does not encur any further taxes versus trading within either jurisdiction.
Be interesting to see if vat will be due or not on cars.

un5byh7sqpd2x0

The car was bought in NI. It’s not a third country as regards the EU. The dealer made a major cock up registering it in the first place however, and it’s going to cost the OP some money to rectify.

L-M

Marcusm wrote: »

Simply ask them if it is a VAT qualifying car.

It being VAT qualifying or not doesn’t matter because presumably the person trying to buy it is not registered for VAT.

mickdw

If vat qualifying, the vat element is still there and so a non vat registered person could for example pay irish vat and then reclaim uk vat.

Surely if this is to apply from 1st Jan 2021 there must be people from Revenue poring over the detail of the agreement and we should be informed before 1st. Otherwise what happens?

Isambard

Deleted User wrote: »

Surely if this is to apply from 1st Jan 2021 there must be people from Revenue poring over the detail of the agreement and we should be informed before 1st. Otherwise what happens?

good question, if it isn't answered it could be that imported vehicles would be held at the docks or , heaven forbid, stopped at the border. I don't know what the arrangement will be if importing a NI car as you are supposed to declare goods on entry

L-M

mickdw wrote: »

If vat qualifying, the vat element is still there and so a non vat registered person could for example pay irish vat and then reclaim uk vat.

Not after Jan 1st as the car has to have originated in the North, it can’t have come through the mainland UK.

mickdw

L-M wrote: »

Not after Jan 1st as the car has to have originated in the North, it can’t have come through the mainland UK.

I think as long as uk agree to remain in compliance with eu tax law, the vat situation will remain as was. Its even in the trade deal doc that info sharing will be in place re vat transactions.
Its more an agreement to stay on eu terms than a trade deal.

Marcusm

L-M wrote: »

It being VAT qualifying or not doesn’t matter because presumably the person trying to buy it is not registered for VAT.

It does matter as the vehicle is being exported.

Marcusm

L-M wrote: »

Not after Jan 1st as the car has to have originated in the North, it can’t have come through the mainland UK.

On export from the uK, U.K. VAT is capable of being recovered on a VAT qualifying car but not on any non-qualifying one. Irish VAT would be payable but there would be minimal additional cost.

L-M

Marcusm wrote: »

On export from the uK, U.K. VAT is capable of being recovered on a VAT qualifying car but not on any non-qualifying one. Irish VAT would be payable but there would be minimal additional cost.

Unless buying from auction which is cost prohibitive for the private buyer, VAT qualifying cars aren’t going to be common.

Marcusm

L-M wrote: »

Unless buying from auction which is cost prohibitive for the private buyer, VAT qualifying cars aren’t going to be common.

Yes and no, I would expect. The number of cars which are advertised as VAT qualifying is quite low, as it has historically only been of interest to those exporting outside the EU. When looking at 3 year old ex-PCP/lease cars sold via dealers, they will almost certainly be VAT qualifying but likely never advertised as such. U.K. new car market has been dominated by PCP/lease for decades (partly because of VAT advantages which can help with lease values). Buying boy the GMFV was unusual at cars were usually traded (historic due diligences I did on lease cos we looked at buying when working in the YK). However, few dealers Will actually use this when marketing.

L-M

PCP a isn’t a lease though so they won’t be VAT.

The only cars that will be VAT qualifying are Rental cars or “Lease cars” (Ie. long term rentals) or actually Personal lease cars.

So basically won’t be able to buy any car off a private individual also. If you meet a dealer that isn’t willing to invoice at a 0 VAT rate either you could have to suffer the cost of that too. I mean in the sense that you’d have to pay it and then claim it back.

Marcusm

L-M wrote: »

PCP a isn’t a lease though so they won’t be VAT.

The only cars that will be VAT qualifying are Rental cars or “Lease cars” (Ie. long term rentals) or actually Personal lease cars.

So basically won’t be able to buy any car off a private individual also. If you meet a dealer that isn’t willing to invoice at a 0 VAT rate either you could have to suffer the cost of that too. I mean in the sense that you’d have to pay it and then claim it back.

A PCP is treated as HP for VAT purposes rather than a sale such that, for VAT purposes, it is treated as a VATable supply of leasing services for the U.K. As such the car is not treated as sold by the financier until the GFMV is paid or the car is sold outright. This is why I intuit that there should be a significant supply for years to come. Pre 2019, different finance houses may have treated it as a sale of goods but that’s long gone.

It’s not the private individual that you would be buying the car from. If the private individual has taken ownership and paid off the PCP then you are correct that it will not be “VAT qualifying”. That, I understand, is only the minority of cases.

Casati

Marcusm wrote: »

A PCP is treated as HP for VAT purposes rather than a sale such that, for VAT purposes, it is treated as a VATable supply of leasing services for the U.K. As such the car is not treated as sold by the financier until the GFMV is paid or the car is sold outright. This is why I intuit that there should be a significant supply for years to come. Pre 2019, different finance houses may have treated it as a sale of goods but that’s long gone.

It’s not the private individual that you would be buying the car from. If the private individual has taken ownership and paid off the PCP then you are correct that it will not be “VAT qualifying”. That, I understand, is only the minority of cases.

Don't think that's correct as it would mean that the VAT was reclaimed when the car was registered by the dealer/ bank originally. PCP is simply another form of Hire purchase rather than a lease agreement

Marcusm

Casati wrote: »

Don't think that's correct as it would mean that the VAT was reclaimed when the car was registered by the dealer/ bank originally. PCP is simply another form of Hire purchase rather than a lease agreement

That’s exactly how it works and the fact that the financier does not have to finance the VAT element of the purchase price (instead it charges VAT on all the payments made by the customer) is one of the reasons they can be financed keenly. I spent 20 years in the U.K. as a tax adviser and then structured financier so this is one of the areas which I know well. Thing is that as VAT qualifying has not always been so important it is not always highlighted on the ads (except for things people desperately want to sell). Full records would be kept and a full VAT invoice provided. Nil rated provided you do it properly.

Casati

Marcusm wrote: »

That’s exactly how it works and the fact that the financier does not have to finance the VAT element of the purchase price (instead it charges VAT on all the payments made by the customer) is one of the reasons they can be financed keenly. I spent 20 years in the U.K. as a tax adviser and then structured financier so this is one of the areas which I know well. Thing is that as VAT qualifying has not always been so important it is not always highlighted on the ads (except for things people desperately want to sell). Full records would be kept and a full VAT invoice provided. Nil rated provided you do it properly.

Is that a Brexit change that the UK made in recent months, I was 100% certain that PCP is not the same as leasing / PCH and is seen as a supply of goods between the dealer and bank with vat due on the full amount at the time of sale. In turn the bank charges 0% vat to the customer.

Are you saying that PCP is now seen as a supply of services and that the bank now charges the monthly plus vat to the end customer?

Marcusm

Casati wrote: »

Is that a Brexit change that the UK made in recent months, I was 100% certain that PCP is not the same as leasing / PCH and is seen as a supply of goods between the dealer and bank with vat due on the full amount at the time of sale. In turn the bank charges 0% vat to the customer.

Are you saying that PCP is now seen as a supply of services and that the bank now charges the monthly plus vat to the end customer?

Mercedes Benz litigated the position and the ECJ confirmed, subject to price setting of the GFMV, that it was a supply of services. That was 2016 iirc and HMRC made it mandatory in 2019 although many had been treating it that way already. If the price was such that the goods would be bought out then it was treated as a supply of goods. As U.K. permitted input tax recovery, it was beneficial to ensure that it could be treated as services when dealing (esp) with private customers.

L-M

You’re definitely wrong on that. PCP is a HP agreement and the car is registered to the customer so No VAT trail.

A PCH (which we don’t have in Ireland) is a Lease and the car stays registered to the company, same as any other lease and a VAT invoice could be held then.

Marcusm

L-M wrote: »

You’re definitely wrong on that. PCP is a HP agreement and the car is registered to the customer so No VAT trail.

A PCH (which we don’t have in Ireland) is a Lease and the car stays registered to the company, same as any other lease and a VAT invoice could be held then.

Even Irish Revenue accepts that where the GFMV pricing is at or above the expected future value then it will not be treated as a supply of goods but a supply of services. See the link below. I was careful in my statement to refer to the pricing point. The UK market of PCP is not the same as the Irish market. n TH eIrish market may still be setting very low GFMVs meaning that goods treatment continues to be more appropriate here.

https://www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part03-taxable-transactions-goods-ica-services/Financial-Services/vat-treatment-of-personal-contract-plans.pdf

The HMRC equivalent notice is below. The UK market is more mature nd the treatment as services confers pricing advantages which will have been fully taken advantage of. This is why I suspect there are significantly more VAT qualifying cars potentially in the future.

https://www.gov.uk/government/publications/revenue-and-customs-brief-1-2019-change-to-the-vat-treatment-of-personal-contract-purchases/revenue-and-customs-brief-1-2019-change-to-the-vat-treatment-of-personal-contract-purchases

It's nice to know that I am definitely wrong though.

L-M

I’ve been selling PCP for 7 years, they’re Hire purchase agreements with a balloon, Not Leases. Cars don’t hold VAT.

L-M

That article that you linked is basically where people tried to claim back VAT on a monthly payment which they shouldn’t have, because it’s not a lease.

It also says unless the GMFV is higher than the expected market value it should not be treated as a lease, which all PCPs have a lower percentage.

Marcusm

L-M wrote: »

I’ve been selling PCP for 7 years, they’re Hire purchase agreements with a balloon, Not Leases. Cars don’t hold VAT.

Selling them in Ireland with Irish style GFNVs not selling them in the U.K. as we are concerned only with the availability of U.K. VAT qualifying cars, Irish sales experience is not relevant. I appreciate that as an employee selling new cars in the Irish motor industry that you might not like punters importing their own but there is no reason to try to deflect the provision of information with less than relevant suggestions.

Marcusm

L-M wrote: »

That article that you linked is basically where people tried to claim back VAT on a monthly payment which they shouldn’t have, because it’s not a lease. H

It also says unless the GMFV is higher than the expected market value it should not be treated as a lease, which all PCPs have a lower percentage.

Again, Irish market experience. Plus neither is an article, both are formal statements of the law applicable in both jurisdictions by the relevant taxing authorities and generally binding on them.

PCP is a marketing term used I different jurisdiction to cover different things. The important thing to note (as confirmed by the Mercedes case which is proof that this actually happens) is that there are likely to be more VAT qualifying cars in the U.K.

That is all I am stating, nothing more, nothing less.

L-M

But I’m saying if you read the whole thing basically what it says if the amount at the end is expected to be more than the car is actually worth it’s not a PCP, which the vast majority are not.

Company leases, rentals. They’re the vast vast majority of VAT qualifying cars. I think disabled ones can be also.

Marcusm

L-M wrote: »

But I’m saying if you read the whole thing basically what it says if the amount at the end is expected to be more than the car is actually worth it’s not a PCP, which the vast majority are not.

Company leases, rentals. They’re the vast vast majority of VAT qualifying cars. I think disabled ones can be also.

It’s absolutely dependent on the level of GFMV and it not being bleeding obvious that the GFMV is set below the expected RV so that the sale is effectively guaranteed at the end.

In any event, U.K. fleet sales amounted to 55-60% of 2018 new car sales in the U.K. so, irrespective of what %age of PCP is VAT qualifying, there will continue to be a reasonable supply from the ex fleet sector. It might not cover every car type, though.

L-M

Absolutely, a majority of those will be high mileage rep mobiles, and the problem is if they exit the VAT qualifying scheme, ie go to someone who doesn’t have a VAT number or a private person, the trail is lost again.

Marcusm

L-M wrote: »

Absolutely, a majority of those will be high mileage rep mobiles, and the problem is if they exit the VAT qualifying scheme, ie go to someone who doesn’t have a VAT number or a private person, the trail is lost again.

Rep mobiles will be a small cohort. Since late 90s, many large corporates have run remuneration schemes which permitted any employee to hve a “company car” in return for salary sacrifice. For cars, VAT savings often made it attractive. Back in 1999, my secretary and clerical assistant both had ones which they changed each 6 months (while I Could not drive!). This has expanded since, although generally not for London dwellers.

This again is not a feature of Irish systems to any significant degree.

You are correct that if they pass through the hands of a non-VAT registered person that they cannot be VAT qualifying. What I am suggesting is that interested buyers need to make efforts to establish which cars are VAT qualifying. I do not suggest that they are anything more than a component of the available cars. What I am simply sugggesting so that more effort is required.

hotrodder

Marcusm wrote: »

Rep mobiles will be a small cohort. Since late 90s, many large corporates have run remuneration schemes which permitted any employee to hve a “company car” in return for salary sacrifice. For cars, VAT savings often made it attractive. Back in 1999, my secretary and clerical assistant both had ones which they changed each 6 months (while I Could not drive!). This has expanded since, although generally not for London dwellers.



This again is not a feature of Irish systems to any significant degree.

You are correct that if they pass through the hands of a non-VAT registered person that they cannot be VAT qualifying. What I am suggesting is that interested buyers need to make efforts to establish which cars are VAT qualifying. I do not suggest that they are anything more than a component of the available cars. What I am simply sugggesting so that more effort is required.

I usually by a year old merc from ni dealer. The car is ex Uk lease. Will I need to pay Irish vat after purchasing this car going forward. What should I check before buying. Can’t seem to get my head around the new vat system.

Casati

hotrodder wrote: »

I usually by a year old merc from ni dealer. The car is ex Uk lease. Will I need to pay Irish vat after purchasing this car going forward. What should I check before buying. Can’t seem to get my head around the new vat system.

No ssue buying any car from Norther Ireland / you don’t have to pay vat again

hotrodder

Casati wrote: »

No ssue buying any car from Norther Ireland / you don’t have to pay vat again

What if northern garage have bought car from Uk auction.