Understand who can claim VAT on a car export. The rules for UK VAT reclaim have changed since Brexit causing some very expensive mistakes for those who have been caught out. We explain who can claim the VAT back on cars, how you can buy a car net of VAT in the UK when you live overseas.
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.
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.
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.
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’s not been the case 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 and then we exported the vehicle.
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.
VAT Qualifying car rules
For a car 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.
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. This makes buying the car net of VAT simple and our expert team do the VAT reclaim for you.
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. This is definitely the right time to contact us. We’re here to help and we look forward to hearing from you.
