Second-hand vehicles: Importing cars
Imported cars are not eligible for sale under the margin scheme; and the normal rules for reclaiming input tax on cars apply when a second hand car is imported unless it meets the criteria for:
- returned goods relief (see Notice 702 VAT: Imports); or
- classification as a collector’s piece (see IMPS05200).
The criteria for reclaiming VAT as input tax are set out in Notice 718.
The onward supply of an imported car on which a trader is unable to reclaim import VAT is exempt. This follows the European Court of Justice case in the Commission v Italian Republic (see VATMARG08050). A dealer buying such vehicles can use the margin scheme for the onward sale.
Further guidance on input tax matters relating to imported goods can be found in VIT.