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October 24th 2013 / BY: Wisteria

VAT issues associated with moving your Motor Vehicle

There may come a time during your life where you are required to change where you live, maybe due to family circumstances, your career requires you to do so or you just prefer to live elsewhere in the world. One consideration you may have is whether or not you take your motor vehicle with you. By doing so, this does have several implications with Value Added Tax (VAT) being a particular consequence of moving vehicles.

If you import a new or used car into the UK on a permanent basis, then you will normally be required to pay VAT or duty on the car. If however this car originated from outside the European Union (EU), you may be eligible for some reliefs from the duty and VAT due.

If you export a vehicle from the UK, you are able to claim some VAT relief.

EU to the UK

If you are moving from another EU member state to the UK permanently and you decide to bring your car/motor vehicle with you, then you will have to pay VAT on the vehicle. This only applies to new vehicles.

The VAT you have to pay will include VAT on:

–          The vehicle itself

–          Any accessories that were purchased along with the vehicle

–          The delivery and any incidental charges incurred in relation to the vehicle

The classification of a new vehicle is one which has driven less than 6,000 kilometres (3,728 miles approx.) or if it has been in use for less than 6 months.

Within 14 days of your car arriving to the UK, you must notify HM Revenue & Customs (HMRC) of the vehicle details and make any VAT payments to them. This has to also be done before you can register and license the vehicle with the Driver Vehicle Licensing Agency (DVLA). The simplest way to do this notification would be complete a ‘Notification of Vehicle Arrivals’ NOVA service which is an online application.

Any late notification (outside the 14 day window) will have a late penalty fee which is charged at £5 per day per vehicle.

One thing to note is that if you are importing a car that is second-hand, then you will not have to pay VAT as long as VAT has been paid in another country. You will however still have to notify HMRC and complete a NOVA notification within 14 days of the vehicle arriving to the UK.

In addition to this, if your visit with a vehicle is temporary (i.e. less than 6 months in a 12 month period) you will not have to pay VAT or have to notify HMRC.

Outside the EU to the UK

Again if you are importing a vehicle to the UK, but this time the original destination is from outside the EU, you will be required to pay VAT and duties on the vehicle as well as declaring the vehicle to Customs upon import. Upon confirmation of payment by HMRC, you will be then able to register your vehicle with the DVLA or DVA.

There is an exception however, if you meet the following specific conditions, you will not have to pay any VAT or duty on the vehicle. This falls under the ‘Transfer of Residence Relief’ where a C104A form needs to be filled.

The conditions are to get these VAT and duty exemptions are:

–          Moving to the UK which will now be your normal home

–          Prior to this, you had your normal home outside the EU for a continuous 12 month period

–          Possession and use of the vehicle was for at least 6 months outside of the EU

–          Vehicle was not purchased under any duty/tax-free scheme

–          Post-import, you will use the vehicle for at least 12 months

UK to the EU

If you are exporting your motor vehicle to the EU, you will have to pay VAT in the destination country at their VAT rates. When purchasing your car within the UK, if you tell the supplier you will be taking this vehicle elsewhere in the EU, then a VAT 411 form will have to be completed and you do not have to pay UK VAT. There are 3 certain conditions that you have to meet:

–          You will take personal delivery of the vehicle in the UK

–          Within 2 months of supply to you, the vehicle will be removed from the UK

–          You and your supplier send signed and completed VAT 411 forms to the specified address

If you make a sale of your car to someone who will then move this vehicle from the UK to another EU member state, then you will potentially be able to reclaim the VAT that you incurred when you first purchased the vehicle. This only applies if you can prove you paid for the VAT on the vehicle purchase and you are not UK VAT registered.

UK to non EU countries

This scheme is called ‘The Personal Export Scheme’ which is designed for those who intend to leave the UK for non EU countries with the intention to remain outside of the UK for at least 6 months. If this applies to you, then under this scheme you will not have to pay VAT on any motor vehicle that you purchase in the UK (as long as you are going to export it).

Upon purchase of the vehicle, instead of a VAT 411 form as above, the supplier will provide you with a VAT 410 form. In addition to this, you will be required to complete and sign the form as well as read the VAT notice 707 and confirm that you have read and understood what the notice is about.

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If you have any VAT queries or other tax issues you may require expert advice and help with, please contact us on 020 8952 0140 or email info@wisteria.co.uk where a tax specialist will be more than happy to assist you.

The above is general guidance only and not specific advice.