March 2023 VATwatch

New VAT Scheme for Second Hand Motor Vehicles Removed to Northern Ireland or Exported to the EU

A second hand motor scheme is being introduced by HMRC for motor vehicles bought in England, Scotland or Wales and removed to Northern Ireland for resale.

The scheme replicates the effect of the second-hand margin scheme for used cars that applies across the rest of the UK (which was prevented from covering NI under the terms of the NI Protocol).

The new scheme comes in to effect for vehicles removed to NI or exported to the EU after 1^st May 2023.

The second-hand motor vehicle payment scheme allows you to claim a VAT-related payment on your VAT Return if you:

·       are VAT registered in the UK and have a business establishment in the UK

·       buy an eligible second-hand motor vehicle in Great Britain

·       move that vehicle to Northern Ireland with the intention to resell it in Northern Ireland or to the EU

If you buy second-hand vehicles in Great Britain and move them to Northern Ireland you will no longer be able to use a margin scheme when you sell them.

If you are VAT registered in the EU, you may also be able to use the payment scheme if you buy second-hand vehicles in Great Britain and export them to the EU for resale.

Option To Tax Process Update

Last month we let you know about a change to the process for Option to Tax and recommended that forms were sent via email so you received an automated email as proof of submission.

Unfortunately some of the time HMRC’s system is failing to send the automated email confirming receipt of an OTT notification.

As you need their confirmation of receipt for your records, it’s unclear how HMRC will send out confirmation to those for whom the new system hasn’t worked.

While HMRC work to resolve this issue, it is recommended that you copy in other parties such as the counterparty, advisers and colleagues. This way others can vouch for the completion of the notification if necessary.

HMRC have most recently said that, if you haven’t received the confirmation of receipt email, they advise that you send notification again including the date you originally sent notification. It seems that HMRC are manually checking receipt of these and will manually email a confirmation when necessary.

Please let us know if you have sent a notification of Option to Tax and still experience issues as we can feed that back to them via the VAT Practitioners’ Group.

New Advisory Fuel Rates

HMRC have published the advisory fuel rates for company cars. These apply from 1^st March 2023 onwards.

Thank you for taking the time to read this VATwatch round-up.