Car dealers and VAT saving | AccountingWEB

Car dealers and VAT saving

January is usually a bit quieter for company registration so we formation agents get bored. So how did I spend the extra time ? Haggling over a new car. Well, sort of new as I chanced across one that has  the grand total of 2 miles on the clock so it is second hand therefore I save the VAT . This wee runaround will cost me £3400 less approximately than the sum I was going to fork out for a new model. Due to lack of stock in the spec I want it was looking like a factory build. all I need to do now is flog my current motor and end up on the other side of the negotiating table to where I have been for the past 2 weeks. What goes around comes around as they say.Let the haggling commence...again


New or used?

itsallsogood | | Permalink

Hi, well done on grabbing yourself a bargain, but if the vehicle was pre registered or only has delivery mileage then HMRC still deem it to be a new vehicle and the dealer has to account for full VAT on the sale (i.e. they can't sell it using the margin scheme for second hand goods).  When you say that you saved the VAT do you instead mean that you obtained a discount on the original sale price of the vehicle equivalent to the corresponding output VAT through a reduction in it's value as a result of being pre-registered?

Flying Scotsman's picture


Flying Scotsman | | Permalink

As far as I am concerned I have negotiated a discount equal to the VAT , but you are correct

that they are paying full VAT as it is broken down on the invoice withthe VAT showing separately


There are no discounts available on this model so the only way was to get it pre-registered

and it simply looks like they have chopped off the VAT - makes me feel good anyway to think of it this way




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Marketing consultant at a leading company formation agency ,accountancy practice sales broker, practice growth consultant and SME business consultant , specialising in debt management , marketing , business development and troubleshooting.

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