VAT on Margin Scheme and Demo vehicles

[DB74]

Maybe I'm missing something here but how can a motor garage sell a demo vehicle and then claim that it falls under the Margin Scheme

My understanding is that a vehicle can only fall into the Margin Scheme where the garage has obtained the vehicle from a source which is not VAT-registered

Is this something to do with the vehicle maybe being imported from the UK originally. But I don't see how that makes the seller a non-VAT registered person.

Can anyone enlighten me here please

 

[deadlyduck]

Is this Revenue Commissioners document (particularly paragraphs 6 and 11) any use?

If purchased from another dealer who is also operating the 'margin scheme', it seems that paragraphs 6 & 11 allow the scheme to apply to the transaction.

 

[DB74]

Thanks but I don't see how that applies

It's effectively a brand new car so unless the other dealer is not registered for VAT (which is a virtual impossibility unless they are only selling 2 cars a year) then they should have been charged VAT

It's basically a scam as far as I can see

a. vehicle comes in from abroad as brand new, no VAT charged as it's an intra-EU acquisition BUT this is different to the seller not being VAT-registered
b. treat the car as a demo model for a couple of months
c. sell the car to consumer at close to full market value
d. claim it falls under the Margin Scheme as a second-hand vehicle and pocket the VAT which is roughly in the region of €5,600 for a car which sells for €30K