VAT Qualifying cars at auction

wojtur

Hi

I am planning to buy a car at BCA (for around £5-6k) and I would like to find out how much I will pay extra on the top of the hammer price.

At BCA they fee seem to be around 8% of the value of the car.
Also I have notices that many cars have "VAT Qualifying" mention at their description. Can someone please explain me what VAT Qualifying means for the end price of the car? Does it mean that I need to pay VAT on the top of the hammer price?

I went to one of the auctions and I have noticed that some cars are sold as provisional sale. Can someone please explain what it means?

Many thanks

W


W

harveybobbles

Provisional means it didnt reach its reserve price. ie, bidding got to £4850 but the Vendor wants £5250. So you can then argue the toss with the Vendor and try to meet hqalf way. I normally just offer another £100 and see what happens.


VAT Qualifying Although all used cars bear VAT it is not usually accounted for separately and VAT is not generally added to the hammer price. In some circumstances (qualifying cars) the VAT element may be broken out from the hammer price and shown separately. This is done to enable a VAT registered buyer, purchasing the vehicle for a qualifying purpose, to recover the VAT.
Commercial VAT This relates to used light and heavy commercial vehicles, plant and equipment. VAT at current rates is charged on top of the auction selling price in almost all cases. The auction rule is that all light and heavy commercial vehicles, plant and equipment are subject to VAT unless the auctioneer declares otherwise.
Margin VAT In all other cases (margin cars) the VAT is not shown separately and cannot be recovered. Cars that are not eligible for recovery of VAT even if purchased by a VAT registered person and bought on a tax invoice are called margin cars.

Clear as mud, eh?

The fees vary depending on the value of the car - but they are clearly displayed around the auction sight.

Wig

wojtur wrote: »

Hi

I am planning to buy a car at BCA (for around £5-6k) and I would like to find out how much I will pay extra on the top of the hammer price.

At BCA they fee seem to be around 8% of the value of the car.
Also I have notices that many cars have "VAT Qualifying" mention at their description. Can someone please explain me what VAT Qualifying means for the end price of the car? Does it mean that I need to pay VAT on the top of the hammer price?

I went to one of the auctions and I have noticed that some cars are sold as provisional sale. Can someone please explain what it means?

Many thanks

W


W

You will find once you have added the buyers fee to the average bid for any particular car. That the price you are paying is very similar to what you can buy from Autotrader. The auction offers convenience -you might be going to a sale where there is more than one car of the type you want and you can choose which one looks best- but has the risk of not knowing what you are getting. Newer cars (less than 5 years old I think) are covered against major mechanical defect. If you buy one which still has manufacturers warranty, this will be good but you need to either phone ahead and ask if the service book has the required stamps, or ask them if you can view the warranty book before the sale, you will also need to know what you are looking for in the service book i.e. you will need to be familiar with what stamps it needs @ what mileage, because you won't have time to study the service book in any detail, and prior to the bidding the auctioneer will just say "service book has 4 stamps" He won't say if those 4 stamps are what is required to make the warranty valid or not.

Autotrader has the same price but offers the safety of an extended test drive, but there is no comeback against private sellers. But you do get a tax disc usually

Do your research on autotrader before going to auction.

Auction cars don't have a tax disc, so you will be driving home with no tax unless you have a trailer. You should be able to insure it by phone and they generally have got MOT's, if you check on "DVLA Vehicle enquiry" you will often see that your car is still taxed... but the tax disc will not be on the car so it usually does not draw any attention when you drive it home.

JasonLVC

Basically, a VAT qualifying car means that whatever the hammer selling price is, VAT will be added on top.

You cannot reclaim this VAT unless you are using the car for a specific commercial purpose (taxi, driving school, car hire, etc). Any other use and the VAT is not recoverable if you are a business and not recoverable if you are an individual.

Qualofying cars are therefore more expesnive, so make sure the hammer price is much less than a non-qualifying car.

Wig

JasonLVC wrote: »

Basically, a VAT qualifying car means that whatever the hammer selling price is, VAT will be added on top.

You cannot reclaim this VAT unless you are using the car for a specific commercial purpose (taxi, driving school, car hire, etc). Any other use and the VAT is not recoverable if you are a business and not recoverable if you are an individual.

Qualofying cars are therefore more expesnive, so make sure the hammer price is much less than a non-qualifying car.

The bid price + buyers fee + registration fee is what you will pay for all cars regardless of their VAT status.

A VAT qualifying car will have the VAT itemised on the sale receipt, whilst a non qualifying car will not. The price paid will always be
bid price + fees,
not bid price + VAT + fees

'Bid Price' always includes VAT you just don't normally see the VAT itemised on the receipt

To recover VAT on a qualifying car you must be VAT registered (and using it for a qualifying purpose).

Qualifying cars are exactly the same cost to any buyer, it's just that the VAT element can be recovered by some buyers, thus making them cheaper to those buyers only, and only after they have accounted for them in their accounts.

blueboy2001

JasonLVC wrote: »

Basically, a VAT qualifying car means that whatever the hammer selling price is, VAT will be added on top.

You cannot reclaim this VAT unless you are using the car for a specific commercial purpose (taxi, driving school, car hire, etc). Any other use and the VAT is not recoverable if you are a business and not recoverable if you are an individual.

Qualofying cars are therefore more expesnive, so make sure the hammer price is much less than a non-qualifying car.

Sorry, but the above is totallly and absolutely incorrect.

Normal car auctions (ie non-commercial vehicles) run by BCA where VAT qualifying vehicles are sold, the hammer price is inclusive of VAT.

If you buy a car where the hammer price is £11750, this will be shown on the invoice as £10000 plus £1750 VAT. You will then have the buyers premium (which is also subject to VAT) on top.

BCA have a very comprehensive guide to buying at auction: http://www.british-car-auctions.co.uk/PDF/Guide_To_BuyingandSelling_AUG10_V2.pdf

One thing to point out is that if you are buying something expensive, it may be worth using an "auction buyer" or doing a deal with a used car dealer and have them buy the car for you. BCA give substantial discounts to account customers on a sliding scale of how many cars they buy. In the past it worked out cheaper for me to have a dealer buy a car on their account for me, and me to pay them £250 for their trouble, than it was to have bought it myself. I paid the auction centre directly myself and took the car away the same day.

wojtur

Thank you all for you input.

@blueboy2001 is right, with BCA the hammer price includes the VAT if a car is sold as VAT Qualified. I went today to the auction and asked their staff about that which they confirmed and also got some lefleats that again confirmed that. The price on the receipt is then broken down so VAT appears separately. I gues VAT registered buyers (not private buyers) can claim VAT back off their purchase.

bigjl

You are incorrect about the taxdisc WIG, they keep them in the office, unless they were retained by the previous owner, sometimes at BCA they leave them in the window, though the auctioneer will usually tell you if it still has tax, as then a certain section of the crowd bid over an above on taxed cars, as they are easier to sell on.

The tax being left on has become more common since they stopped dealer cashing in the tax by only allowing the registered keeper to do so.

wojtur

Just replying to my own post. I have bought a VAT qualifying car couple of days ago at BCA and I can confirm that the hammer price includes the VAT