VAT when you buy a vehicle to sell on
VAT-registered motor dealers can reclaim the VAT shown on the invoice when they buy vehicles to sell on. Reclaim on your next VAT Return.
Keep records when you buy a vehicle so you charge the right amount of VAT when you sell it.
If the vehicles are cars you must intend to sell them within 12 months to reclaim the VAT.
VAT on imported vehicles
You normally need to use Notification of Vehicle Arrivals (NOVA) within 14 days of importing a vehicle into the UK.
You don’t need to use NOVA if any of the following apply:
- the vehicles have engines below 49cc, or 7.2 kilowatts (about 9.65 horsepower) if they’re electric
- you’re using a secure registration scheme
If your customer changes their mind about how to use the vehicle and you can no longer use a secure registration scheme you must use NOVA instead within 14 days of your customer letting you know.
You can report on a spreadsheet if you need to use NOVA for lots of vehicles.
What happens next
HMRC will confirm the VAT due when they’ve processed your NOVA form.
Account for vehicles you import from the EU as acquisitions on your next VAT Return.
Pay VAT on vehicles you import from outside the EU through customs. You can reclaim it on your next VAT Return.
Vehicles you don’t sell
You can reclaim VAT on vehicles you use for:
- daily rental to customers
- test drives
- courtesy cars for your business
You have to pay VAT back to HMRC if a vehicle is also used privately, eg if an employee uses a car at weekends.
Stocking cars you don’t own
You can also reclaim VAT on charges for stocking cars you don’t own before you sell them.
Work out what VAT to charge when you sell a vehicle.