Vat - claiming it back?

LillythePink

We live in Guernsey and so don't pay vat over here and can claim it back or have it deducted from UK suppliers if we are exporting ie if we buy something from Amazon, they deduct the vat at source so we only pay the "net" price.

So, the question.....

we are planning on buying a motorbike from a BMW dealer, heard rumours that you cannot claim the vat back from a second hand bike.

This would seem a little unfair seeing as a UK resident would have to pay vat on a bike going the other way ie import duty from a bike bought here and imported to the UK.

Does anyone know if this is the case or does anyone have any links etc

This is my OH asking - and he hasn't been able to or found anything that says it in basic english!

Thanks

anniecave

When you talk about buying at the "net price" or claiming it back, do you mean in a business context eg are you a VAT registered trader?

In the UK the VAT rules on buying motor vehicles are different from most other goods, unless you are buying a vehicle for a business and there is absolutely no "private use" of the vehicle - including commuting to/from work. If you are buying such a vehicle and using it solely for business use (eg a driving instructor car not used for any private use) then the VAT would be reclaimable anyway in the same way as buying any other product. Obviously I'm not sure what is the difference as you live in Guernsey but it might be similar.

As I understand it, this VAT rule is to stop small traders or businesses getting a vehicle and being able to reclaim VAT, and then using it for private purposes, which would basically be a VAT fiddle as the customer as a customer should have to pay VAT on the vehicle.

John_Pierpoint

http://www.hmrc.gov.uk/vat/sectors/motors/what-is-car.htm#2

"A motor cycle is not a car"

http://www.hmrc.gov.uk/vat/start/schemes/margin.htm

It would seem to me that the dealer has almost certainly bought the second hand motor cycle with no input VAT from an ordinary consumer.

The dealer may well be paying VAT "on the margin scheme". ie HMRC only get VAT on the dealer's profit.

The dealer is making a "zero rated exports" transaction - so it is up to the customer to know this and haggle a good price, as the dealer is saving a 20% tax by selling to you.

I don't know, I don't deal in second hand motor bikes, that is just logic and since when has tax been logical?

LillythePink

Thanks both of you for your replies

I haven't trawled the net or the HRMC website as I have been working so will have a look through over the weekend.

John - thanks for the heads up about the margin scheme - will certainly bear this in mind