VAT question for motor traders

[d5hef]

When a motor-trader sells a second hand car how is VAT handled? Obviously with many people working on small margins adding 17.5% on top of the traders purchase price would wipe out much if not all of that margin. Is it the case that you just pay tax on the profits made, and if so can anyone pointme towards supporting literature.

Cheers

[Fast_AL]

Its known as the margin scheme applies to alot of second hand goods including motor vehicles. Have a look at the link.

Section 2 explains the scheme and section 8 looks in detail at some special rules for motor vehicles.

http://customs.hmrc.gov.uk/channelsPo

Hope it helps

[d5hef]

Many thanks

Cheers