A Step-by-Step Guide on How to Claim VAT Back on Exported Cars

If you have recently contacted a non-export dealer about buying a car net of UK VAT, you will most likely have been told they cannot sell it to you VAT-free. Their motivation is to make a UK car sale, and this requires a registered UK 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 VAT registered 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 UK without paying VAT, making the price very attractive to 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.

The rules for VAT reclaim have changed. Previously, in some instances, overseas individuals could reclaim the VAT from HMRC for a car they had bought and exported. Since Brexit, this has not been possible. However, VAT can be reclaimed by a UK-registered business and then sold on VAT free as an export. This process must be done correctly to meet the required criteria.

Who can reclaim VAT on cars?

VAT is reclaimable only by the supplying dealer.

So if you are in a situation where a UK dealer tells you to reclaim the VAT yourself, they are incorrect. In fact, only the supplying dealer can reclaim the VAT for you on proof of permanent export. To reclaim VAT, the car must be an eligible vehicle that meets 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, VAT can be reclaimed by the supplying dealer, 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 VAT-registered businesses specialising in export reclaim VAT regularly and enable you to buy a car overseas use.

VAT-registered supplying dealers can reclaim VAT

It is not uncommon for overseas buyers to call for help as a UK dealer had advised they could personally reclaim VAT after exporting the car. Unfortunately, that has not been possible for some time now. The reason they are contacting us is to find out whether we can assist and try to reclaim the VAT for them retrospectively. Unfortunately, it is not possible for us to help in this situation because we would have  needed to be the supplying dealer to the individual, and the purchase invoice would be made out to MHH International, 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, then sold it to the overseas client and exported it to them, this is a 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 VAT reclaim, it must be VAT-qualifying. This means it has been owned only by businesses throughout 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 such to reduce overseas interest. A call from an overseas number can also damage a sale, so our best advice is to get in touch at the point you have decided you are ready to buy and let us manage the purchase process for you. When 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 a VAT-qualifying car.

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

No. Private individuals can no longer reclaim the VAT. Even UK business owners who are not VAT-registered cannot claim back VAT. The car needs to be bought by a UK VAT-registered business or individual. 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 purchase the vehicle from 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 does 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 its eligibility. 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 the 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

Hopefully, you can see that paying VAT to a UK dealer works for the dealer, but it certainly won’t work for you. So please get in touch if you are thinking about buying a car or have already found one 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