April 30, 2009

Car dealers – margin scheme

Since 1995 HMRC have allowed a concession where a car dealer has failed to maintain the necessary records in order to support the margin scheme. Under the concession even where a dealer did not hold the necessary information HMRC would still allow VAT to be accounted for on notional profit margins.

HMRC have announced that from 01 April 2010 this concession is to be withdrawn as it does not fit within European Law which means that where a dealer does not hold the necessary evidence to show the profit margin for each car VAT will be payable on the full selling price of each car.

You should ensure that any car dealer clients are aware of this important change and always obtain and keep the necessary documentary evidence to support the purchase and sale price of each car.

Elysian Associates

April 2009


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