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VAT on import and sale of collectors item vehicle

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Published: 09 Oct 2023

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Q: Client is UK VAT registered and deals in classic cars. He has bought a classic car which is over 30 years old and so when the car was imported he was charged VAT at a reduced value (which equates to 5% VAT) and has claimed this VAT on his VAT return. He is now going to sell this classic car to a consumer in the UK and the goods are being delivered from England to Scotland so the “Place of Supply of Goods” will be the UK I understand. What VAT should he charge when selling this item in the UK?

A: Although the VAT calculated on the import is effectively 5% this is still a Standard-Rate (currently 20%) item and so the client should declare VAT at the 20% rate on this UK sale.

In the future he could “opt” to use the margin scheme for imported items (that are eligible for reduced value VAT) by writing to HMRC Written Enquiries section. He should not claim the 5% import VAT but then ONLY account for 20% VAT on any positive margin achieved. Once notifying HMRC of taking up this option he will have to use the margin scheme for these type of imports for at least the following 2 years (and until cessation is notified to HMRC). See HMRC internal guidance at VATMARG07000.

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