VAT-registered motor dealers can reclaim the VAT shown on the invoice when they buy vehicles to sell on. Reclaim on your next VAT Return:
Keep records when you buy a vehicle so you charge the right amount of VAT when you sell it.
If the vehicles are cars you must intend to sell them within 12 months to reclaim the VAT.
VAT on Imported Vehicles
You normally need to use Notification of Vehicle Arrivals (NOVA) within 14 days of importing a vehicle into the UK.
You do not need to use NOVA if any of the following apply:
the vehicles have engines below 49cc, or 7.2 kilowatts (about 9.65 horsepower) if they are electric
you are using a secure vehicle registration scheme, see vehicle registration scheme website (external link).
If your customer changes their mind about how to use the vehicle and you can no longer use a secure registration scheme you must use NOVA instead within 14 days of your customer letting you know.
To use the NOVA service, please use the Nova Log In (external link). You will need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you log in.
You can report on a spreadsheet if you need to use NOVA for lots of vehicles (external link).
What Happens Next
HMRC will confirm the VAT due when they have processed your NOVA form.
Account for vehicles you import from the EU as acquisitions on your next VAT Return.
Pay VAT on vehicles you import from outside the EU through customs. You can reclaim it on your next VAT Return.
Vehicles You Do Not Sell
You can reclaim VAT on vehicles you use for:
daily rental to customers
courtesy cars for your business
You have to pay VAT back to HMRC if a vehicle is also used privately, for example if an employee uses a car at weekends.
- Information relating to VAT on certain specific transactions between members of trade bodies and HMRC (external link)
Stocking Cars you do Not Own
You can also reclaim VAT on charges for stocking cars you do not own before you sell them.