If you have contacted a non-export dealer recently about buying a car net of UK Vat you will most likely have been told that cannot sell the car VAT free to you. Their motivation is to make a UK car sale and this requires a registered address for the car. Without that, they miss their sales targets. These dealers aren’t motivated to help you reclaim the UK VAT when you export your car. They are motivated to sell cars to UK residents.

Introduction to VAT Reclaim

VAT reclaim is a process that allows individuals and businesses to recover the Value-Added Tax (VAT) paid on goods and services in the UK. For car exports, VAT reclaim is a crucial aspect as it can result in significant cost savings. In the UK, VAT is applied to goods and services, including cars, at a standard rate of 20%. However, VAT-qualifying cars can be exported outside of the EU without paying VAT upfront, making them an attractive option for overseas buyers. To be eligible for VAT reclaim, the car must be a VAT-qualifying car, which means it has only been owned by businesses in its lifetime. Once a car is privately owned, it cannot become VAT qualifying again.

VAT reclaim rule change for individuals living overseas.

Since Brexit the rules for VAT reclaim have changed. Previously a ‘tourist tax’ allowed overseas individuals to reclaim the VAT on a car they had bought and exported. This no longer possible. The VAT can be reclaimed by a UK registered business for items they have bought for their business. This needs to be done correctly so it meets the required criteria.

If the purchaser does not have a business establishment in the UK, they must follow a different process for claiming VAT refunds.

Who can reclaim VAT on cars?

It’s not HMRC’s job to then give you the VAT back. The most recent VAT notices on this state that the VAT is only reclaimable by the supplying dealer.

So if you are in a situation when a dealers tells you to reclaim the VAT yourself, you need to really be careful. What’s actually true is, the dealer should be reclaiming the VAT for you on proof of permanent export. To reclaim VAT, the car must be an eligible vehicle, meeting specific criteria set by HMRC.

UK VAT Rules for Car Exports

The UK VAT rules for car exports are complex and require a thorough understanding of the regulations. For VAT-qualifying cars, the VAT can be reclaimed by the supplying dealer or the buyer, provided they are VAT registered. The VAT reclaim process involves submitting a claim to HM Revenue and Customs (HMRC) with the required documentation, including proof of export and purchase invoices. UK residents living overseas can no longer reclaim VAT on car exports, and non-export dealers are not motivated to sell cars VAT-free to overseas buyers. However, UK VAT-registered businesses can reclaim VAT on car exports, and car exporters become experts at the process, enabling you to buy a car overseas net of VAT.

VAT registered supplying dealers can reclaim VAT

We have had many anxious calls from overseas buyers whose UK dealer had told them that they can reclaim the VAT back after they had exported the car. Unfortunately, that has not been possible for sometime now. The reason they are contacting us, is to find out if we can assist and try and retrospectively reclaim the VAT for them. Unfortunately, it is not possible for us to do that because we would need to be the supplying dealer to the individual and the invoice would be made out to our business, allowing us to treat the VAT as input tax on our VAT returns.

How to buy cars VAT free for export.

If MHH International bought the car from the dealer and then sold the car to the overseas client and exported it to them, this is as successful way to buy a car net of UK VAT for overseas clients. This all assumes that the car is VAT qualifying. This simplifies the export process, ensuring that all necessary steps are followed for a successful VAT reclaim.

VAT Qualifying car rules

For a second hand motor vehicle to be eligible for the VAT reclaim, it must be VAT qualifying. This means it has only been owned by businesses in its lifetime. Once a car is privately owned, it can not become VAT qualifying again.

How to check if a car is VAT Qualifying

Some cars are advertised as VAT qualifying, but some dealers make it their policy not to advertise them as VAT qualifying to reduce overseas interest. A call from an overseas number can also damage a sale so our best advice is to get in touch and let us make this simple. It the dealer sells to us, we make it simple for him (as it’s a UK sale) and simple for you.

How much VAT can I claim back?

Reclaiming the VAT can reduce your car’s purchase price by one sixth. This makes it the single biggest saving for car export and hence a huge advantage if you can buy VAT qualifying car.

Can I claim VAT back if I am not VAT registered?

No. private individuals can no longer reclaim the VAT back. Even UK business owners who are not VAT registered cannot claim the VAT back. The car needs to be bought by a UK VAT registered business. The business also needs to have been advised by their accountant that they are eligible to reclaim the VAT. The car needs to be VAT qualifying and the reclaim needs to be done correctly. VAT-registered businesses must include their claims on their UK VAT return to successfully reclaim the VAT.

How can I get the VAT off a car export?

If you want to buy a car from a non-export dealer who is not prepared to do the VAT reclaim, we would strongly suggest that you get in touch before you are invoiced by the dealer. We frequently take over managing the transaction for clients to help them buy their cars VAT free. We will quote you for the vehicle without the VAT and with the export costs in a clear price breakdown. This makes buying the car net of VAT simple and our expert team do the VAT reclaim for you, ensuring you receive the VAT discount in your car export price.

Documentation and Submission

To reclaim VAT on a car export, the required documentation must be submitted to HMRC. This includes proof of export, purchase invoices, and a registration certificate. The documentation must be accurate and complete to avoid delays or rejection of the claim. The submission process typically involves completing an application form and attaching the required documents. It is essential to keep records of all documentation, including receipts, invoices, and correspondence with HMRC. The VAT reclaim process can be complex, and it is recommended that individuals and businesses seek professional advice to ensure compliance with the regulations.

Refund Process and Timeline

The refund process for VAT reclaim on car exports typically takes several weeks to several months depending on your eligibility level with HMRC. After submitting the claim, HMRC will review the documentation and verify the eligibility of the claim. If the claim is approved, the refund will be paid to the claimant’s bank account. The timeline for the refund process can vary depending on the complexity of the claim and quality of the paperwork submitted. It is essential to plan ahead and allow sufficient time for the refund process to be completed.

Get in Touch Today

So hopefully, you can see that paying a UK dealer the VAT works for the dealer, but it certainly won’t be working for you. So please get in touch if you are thinking about buying a car or if you have already found a car in the UK. We have extensive experience working with HMRC to ensure compliance and successful VAT claims. We’re here to help and we look forward to hearing from you.

Import your car VAT Free from the UK