HMRC has launched a new online system and guidance for tax agents on VAT on vehicles brought permanently into the UK.
The new system, Notification of Vehicle Arrivals (NOVA), can be checked by the DVLA and is primarily put in place to simplify the process and counter fraudsters evading VAT on vehicles brought in from overseas.
According to the Revenue, this type of fraud costs the Exchequer around £110m a year.
Sally Beggs, deputy director for VAT fraud at HMRC, said: “The new online collaborative system means people will get the green light from the DVLA only where their vehicle has been notified to HMRC for VAT purposes.
“Any attempt to cheat the system will stall.”
An HMRC spokesperson said that the fraud mainly stems from cars brought to the UK from EU countries. "HMRC have the power to inspect documents, including car ownership documents, as part of their compliance powers," they said.
"However, the NOVA system tackles the VAT risk by ensuring that the VAT due is secured by HMRC before the vehicle can be registered and licensed with the DVLA/DVA."
NOVA replaces the manual system, whereby people dealt with HMRC and the DVLA separately.
Under the new system, clients who bring vehicles permanently into the UK must notify the Revenue within two weeks and pay or account for any VAT due. Failure to do so will result in a £5 late notification fee per day.
Until HMRC has been notified, the client will not be able to register their vehicle, according to the guidance.
Accountants acting on behalf of a VAT registered business will need to be formally authorised by their clients to notify HMRC, however for a private individual or non VAT registered business they will not.
The formal authorisation process includes the accountant submitting a notification on behalf of the client. HMRC will then send your client a letter with a unique authorisation code within seven days.
According to guidance, it’s important to notify your client that you will need to know the code and that the code will expire within 30 days from the date of the letter.
Accountants already signed up for HMRC’s online services will be able to register for NOVA using their existing online services login. New users can sign up by first registering for HMRC online services.