VAT on re-sale of 2nd hand cars

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tecate

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If I sell a used car to someone and there's a margin (i.e. the car has been imported, is exempt entirely from VRT but I sell on at a profit), am I obliged to collect and pay VAT on this margin?

This is a sideline/hobby which I would have thought I could carry out on a sole trader basis. However, I'm now seeing that there could be some serious implications if I don't get things in order!

The cars are being bought in the UK (sometimes from vat registered uk independent motor dealers and sometimes from private individuals)- imported in my name and re-registered in my name. They are then actively used by me for a time for my own use. This may vary from a couple of weeks to a month or two....and then sold on.
 
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I don't know the answer to your question, but out of curiosity how are they "exempt entirely from VRT"????
 
newtothis said:
I'm aware of those, but I can't see how they could be applied in the scenario described by the OP.
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Maybe I should revise my statement slightly from "exempt entirely" to "exempt". I'm importing electrics - which are exempt from VRT for the first €5k of VRT that may otherwise be due.

Getting back to the original query, where do I stand in terms of obligations in relation to VAT on a car (or cars) I may sell onwards?
 
tecate said:
Maybe I should revise my statement slightly from "exempt entirely" to "exempt". I'm importing electrics - which are exempt from VRT for the first €5k of VRT that may otherwise be due.
Click to expand...

Ah, that make's sense :) - it's not an exemption, though, and isn't on the list of exemptions. According to Revenue it's a repayment or remission.

I can't help you with your original query, though I do know that regardless of whether they're imports or not, if you will be classed as a trader if you buy and sell even a very small number of cars. A friend of mine who liked to change his car very frequently got cought out with this. Once you're classsed as a trader, there are a whole host of things you'll find you have to do.
 
@newtothis: thanks for that.

I'd be very keen to figure this out - as I don't want to sleep walk my way into a world of pain with Revenue! If there's anyone with an insight into this, I'd appreciate their opinion.
 
@RedOnion : Yes, I've been trying to decipher that document but I'm still unsure as to how it pertains to my situation.

"11. VAT due on sales of second-hand motor vehicles
In the case of Irish-registered second-hand vehicles, VAT is due on the difference between the sale price and the purchaser price of the vehicle. Under no circumstances can any portion of the price, e.g. the VRT element, be separated from the rest of the sale price when calculating the VAT liability. Where an authorised dealer brings a second-hand vehicle into the State that has been registered in another country, he/she is not obliged to register the vehicle in Tax and Duty Manual VAT and VRT on transactions involving Motor Vehicles 8 Ireland until it is being sold. At that stage, the dealer is obliged to ensure that the vehicle is registered in Ireland in the name of the purchaser (or the nominated person, where the purchaser is a company) before the vehicle is released to the purchaser. In this situation Revenue generally accepts that the portion of the sale price that represents the VRT liability is paid by the dealer in the name and on the account of the purchaser, i.e. the customer pays the VRT, and the dealer simply administers the payment from the money handed to him or her. Accordingly, the VAT liability on the sale by an authorised motor dealer of a secondhand vehicle, brought into the State from another country, is generally calculated on the VRT-exclusive amount received from the customer. (This also applies in the case of a new vehicle sold by an authorised dealer prior to being registered in Ireland.) In the case of the sale of a second-hand vehicle by any person other than an authorised dealer, a VAT liability arises on the full VRT-inclusive amount received, and no adjustment is allowed."

I guess I'm not an 'authorised dealer' - given that I'm not VAT registered either, then I suppose it's that last sentence that's of relevance;

"In the case of the sale of a second-hand vehicle by any person other than an authorised dealer, a VAT liability arises on the full VRT-inclusive amount received, and no adjustment is allowed."

I don't really understand. What I've read elsewhere is that you can only collect VAT if you're VAT registered??. However, I'd be liable for VAT on which amount exactly (cars are electric - so there's a refund or allowance (up to the first €5k) on VRT.
What do they mean by the full VRT inclusive amount? I charge VAT on the full cost of the car??? (if so - it seems totally unsustainable) - or I can just do so on the margin between purchase price in the UK and sales price in Ireland?
 
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Tax (and particularly VAT) are not my area, so you need proper advice here.

Ignore the VRT piece for a moment. On a normal car what's the position? At what point does what you're doing become a trade, and when do you need to register for VAT?

If you were registered for VAT, I understand you'd be charging VAT on the difference between what you pay for the car and what you sell it for.

The 'adjustment' referred to above is in relation to VRT which is zero in your case, so shouldn't impact on VAT at all.

It's quite a specific question. If I was in your position I'd put a call into Revenue as a query in relation to a potential business case.
 
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