Exporting a car

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JodieR
JodieR Registered Posts: 1,002 Beyond epic contributor 🧙‍♂️
in General accounting discussion
Hello
A client of mine is selling one of his company cars. Someone's interested in buying it but they are going to export it to Cyprus and therefore believe (and so far I agree) that no VAT should be charged on the sale.
I phoned the VAT helpline and they pointed me in the direction of public notice 705 which I have read and understand, but at the end of it it says that if the car is not going to be used in the EU before it is exported (which I think applies in this case) that 'you may be able to supply the vehicle VAT-free as a direct export. Notice 703 Exports and removals of goods from the UK provides more information about direct exports'.
I'm working my way through Notice 703 now as it's not something I'm familiar with, if anyone can briefly let me know the process I'd be very grateful.

Thanks

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  • K H
    K H Registered Posts: 81 Regular contributor ⭐
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    Firstly a car is not subject to vat but comes under the margin scheme.
    This means that vat is payable on the difference between the original purchase price and selling price (ie profit of £2000 ,vat is 3/23rds £260.87).

    It is therefore not relevant to zero rate the supply for vat.

    However, if you are selling for export a usually standard rated item then you can only zero rate it if you have proof of export (bill of lading) . It is not possible to zero rate an item which is sold in the uk for someone else to export or even to someone from outside the uk who is in this country unless you have proof of export (even if they have a euro vat No).

    i hope this helps


    K H
  • JodieR
    JodieR Registered Posts: 1,002 Beyond epic contributor 🧙‍♂️
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    Hi
    Thanks for your reply, having re-read my initial post I left out a vital piece of information - my client runs a coaches/chauffeur company and the car he's selling was only ever used for transporting customers, it wasn't a company car that he or any employee used personally. Therefore I presume that he did reclaim the VAT on it (although I have only recently started acting for him and haven't seen records going back that far), so I am right in thinking that he would ordinarily have to charge VAT on the sale aren't I?
    Jodie

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