VAT on used cars

[DaveHerns]

A main dealer trying to sell me a "director's car" is doing the paperwork to show the car with a pre VAT price , VAT at 20% with the total being the windscreen price. Seems there was some sort of finance on the car which the dealer has cleared. Last used car I purchased from a main dealer didn't have a pre and post VAT price on the invoice. I thought there was no VAT on used cars or at best just on the dealer's profit element. Can anyone help? Thanks.

 

[Astra99]

Right back when VAT was first introduced, VAT on used cars was only chargeable on the difference between the dealer's purchase price and the selling price. (I am not sure if costs such as preparation and repairs could be added to the purchase price). To prevent Joe Punter being able to calculate the dealer's profit, (and thus offer a lesser price), prices were always quoted with VAT, and the VAT fraction was not recoverable by VAT-registered purchasers. Commercial vehicles, on the other hand, have VAT imposed on the total selling price.

It sounds like the dealer is trying to make the car seem like a "new" one; brand-new cars are subject to VAT, which is usually shown separately

HTH

 

[DaveHerns]

Are you saying the dealer is being naughty with the VAT man?

 

[JohnD]

I don't know about VAT on used cars, but if the car had been owned by the dealership as a demonstrator or executive car, they would not previously have retailed it, so would not have bought it as a used car, so there would not be a "bought price/selling price" gap to calculate the profit on.

I have a car where the First Owner was "XXXXX Cars Ltd" (the maker) as a factory demonstrator. I suppose it might have been used by various dealers to seduce potential buyers, or pressmen.

 

[motorbiking]

https://www.gov.uk/vat-margin-schemes
https://www.gov.uk/reclaim-vat/cars