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HMRC internal manual

VAT New Means of Transport

Purchasing a new means of transport in the UK for removal to another member-state: allowing a refund of VAT for a removed vehicle

Where a non-taxable person sells a used vehicle that falls within the definition of a new means of transport to another non-taxable person for removal to another EU member-state, the seller of the vehicle for that single transaction is treated as if they were a taxable person and assumes all of the rights of a taxable person (no VAT registration is required). They are entitled to recover input tax in respect of the supply of the car to them, and the PTU will refund the VAT on request.

The legal vires for this is in section 40 of the VAT Act 1994; the conditions are detailed in Regulations 149 to 154 of the VAT Regulations (SI 1995/2518).