The second-hand motor vehicle export refund scheme (the refund scheme) was due to be introduced with effect from 1 October 2022. ICAEW’s Tax Faculty understands that this will now be delayed due to ongoing negotiations between the UK government and the EU about the implementation of the Northern Ireland Protocol.
There is currently no revised start date for the refund scheme but the faculty understands that HMRC’s guidance will be updated in due course to provide a new start date.
The refund scheme will be compulsory for car dealers who buy second-hand vehicles in Great Britain, sell those vehicles in Northern Ireland and currently use the VAT margin scheme for those sales. Once introduced, the refund scheme will allow businesses to claim a refund of VAT instead of using the VAT margin scheme to account for VAT on those sales.
Until the refund scheme is introduced, businesses moving second-hand vehicles from Great Britain to Northern Ireland for resale should continue to use the existing guidance on sales of second-hand motor vehicles in Northern Ireland.
For more information on how the refund scheme is expected to operate, please see HMRC issues VAT export refund scheme guidance
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