The Value Added Tax (Cars) Order 1992

Relief for second-hand motor cars U.K.

[F1 8.— (1) Subject to complying with such conditions (including the keeping of such records and accounts) as the Commissioners may direct in a notice published by them for the purposes of this Order or may otherwise direct, and subject to paragraph (3) below, where a person supplies a used motor car which he took possession of in any of the circumstances set out in paragraph (2) below, he may opt to account for the VAT chargeable on the supply on the profit margin on the supply instead of by reference to its value.

(2) The circumstances referred to in paragraph (1) above are that the taxable person took possession of the motor car pursuant to—

(a) a supply in respect of which no VAT was chargeable under the Act or under Part I of the Manx Act;

(b) a supply on which VAT was chargeable on the profit margin in accordance with paragraph (1) above, or a corresponding provision made under the Manx Act F2 ... [F3 or a corresponding provision of the law of a member State where the motor car is removed to Northern Ireland];

[F4 (bb) a supply [F5 received before 1st March 2000] to which the provisions of article 7(4) of the Value Added Tax (Input Tax) Order 1992 applied;]

[F6 (c) a de-supplied transaction, other than an article 5 transaction;

(d) subject to paragraph (2A) below, an article 5 transaction.]

[F7 (2A) An article 5 transaction does not fall within sub-paragraph (d) of paragraph (2) above unless the taxable person has a relevant predecessor in title.]

(3) This article does not apply to—

(a) a supply which is a letting on hire;

(b) the supply by any person of a motor car which was produced by him, if it was neither previously supplied by him in the course or furtherance of any business carried on by him nor treated as so supplied by virtue of article 5 above;

(c) any supply if an invoice or similar document showing an amount as being VAT or as being attributable to VAT is issued in respect of the supply;

F8 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F9 (e) the supply by any person of a used motor car if the person took possession of that motor car in Great Britain, or the Isle of Man, and it is removed to Northern Ireland.]

F10 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Subject to paragraph (6) below, for the purposes of determining the profit margin—

(a) the price at which the motor car was obtained shall be calculated as follows—

(i) (where the taxable person took possession of the used motor car pursuant to a supply) in the same way as the consideration for the supply would be calculated for the purposes of the Act;

(ii) (where the taxable person is a sole proprietor and the used motor car was supplied to him in his private capacity) in the same way as the consideration for the supply to him as a private individual would be calculated for the purposes of the Act;

[F11 (iii) (where the taxable person took possession of the motor car pursuant to a de-supplied transaction, other than an article 5 transaction) by taking the price he paid pursuant to the transaction;

(iv) (where the taxable person took possession of the motor car pursuant to an article 5 transaction) by taking the price at which his relevant predecessor in title obtained the motor car;]

(b) the price at which the motor car is sold shall be calculated in the same way as the consideration for the supply would be calculated for the purposes of the Act [F12 ;

F13 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .].

(6) Subject to paragraph (7) below, where the taxable person is an agent acting in his own name the price at which the motor car was obtained shall be calculated in accordance with paragraph 5(a) above but the selling price calculated in accordance with paragraph 5(b) above shall be increased by the amount of any consideration payable to the taxable person in respect of services supplied by him to the purchaser in connection with the supply of the motor car.

(7) Instead of calculating the price at which the motor car was obtained or supplied in accordance with paragraph (6) above, an auctioneer acting in his own name may—

[F14 (a) calculate the price at which the motor car was obtained by deducting from the successful bid the amount of the commission payable to him under his contract with the vendor for the sale of the motor car;]

(b) calculate the price at which the motor car was supplied by adding to the successful bid the consideration for any supply of services by him to the purchaser in connection with the sale of the motor car,

in either (or both) cases excluding the consideration for supplies of services that are not chargeable to VAT.]

[F15 (8) For the purposes of this article—

“article 5 transaction” means a transaction which is a de-supplied transaction by virtue of a provision of article 5 of the Value Added Tax (Special Provisions) Order 1995 or a corresponding provision made under the Manx Act;

“de-supplied transaction” means a transaction which was treated by virtue of any Order made or having effect as if made under section 5(3) of the Act or under the corresponding provisions of the Manx Act as being neither a supply or goods nor a supply of services.

(9) For the purposes of this article a person is a relevant predecessor in title of a taxable person if—

(a) he is the person from whom the taxable person took possession of the motor car and himself took possession of it pursuant to a transaction within any of sub-paragraphs (a) to (c) of sub-paragraph (2) above; or

(b) where the motor car has been the subject of a succession of two or more article 5 transactions (culminating in the article 5 transaction to which the taxable person was a party), he was a party to one of those transactions and himself took possession of the motor car pursuant to a transaction within any of sub-paragraphs (a) to (c) of sub-paragraph (2) above.]

Textual Amendments

F1 Art. 8 substituted (1.6.1995) by The Value Added Tax (Cars) (Amendment) Order 1995 (S.I. 1995/1269), arts. 1, 7

F2 Words in art. 8(2)(b) omitted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), regs. 1, 5(4); S.I. 2020/1641, reg. 2, Sch.

F3 Words in art. 8(2)(b) inserted (31.12.2020) by The Value Added Tax (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations 2020 (S.I. 2020/1545), regs. 1, 11(1) (with regs. 109-131); S.I. 2020/1641, reg. 2, Sch.

F4 Art. 8(2)(bb) inserted (1.8.1995) by The Value Added Tax (Cars) (Amendment) (No. 2) Order 1995 (S.I. 1995/1667), arts. 1, 8(a)

F5 Words in art. 8(2)(bb) inserted (1.3.2000) by The Value Added Tax (Cars) (Amendment) Order 1999 (S.I. 1999/2832), arts. 1(3), 10

F6 Art. 8(2)(c)(d) substituted (1.7.2002) by The Value Added Tax (Cars) (Amendment) Order 2002 (S.I. 2002/1502), arts. 1(1), 2(a) (with art. 1(2))

F7 Art. 8(2A) inserted (1.7.2002) by The Value Added Tax (Cars) (Amendment) Order 2002 (S.I. 2002/1502), arts. 1(1), 2(b) (with art. 1(2))

F8 Art. 8(3)(d) revoked (1.8.1995) by The Value Added Tax (Cars) (Amendment) (No. 2) Order 1995 (S.I. 1995/1667), arts. 1, 8(b)

F9 Art. 8(3)(e) inserted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations 2020 (S.I. 2020/1545), regs. 1, 11(2) (with regs. 109-131); S.I. 2020/1641, reg. 2, Sch.

F10 Art. 8(4) revoked (1.8.1995) by The Value Added Tax (Cars) (Amendment) (No. 2) Order 1995 (S.I. 1995/1667), arts. 1, 8(c)

F11 Art. 8(5)(a)(iii)(iv) substituted for art. 8(5)(a)(iii) (1.7.2002) by The Value Added Tax (Cars) (Amendment) Order 2002 (S.I. 2002/1502), arts. 1(1), 2(c) (with art. 1(2))

F12 Art. 8(5)(c) and semicolon inserted (18.3.1998) by The Value Added Tax (Cars) (Amendment) Order 1998 (S.I. 1998/759), arts. 1, 4(2)

F13 Art. 8(5)(c) omitted (1.7.2002) by virtue of The Value Added Tax (Cars) (Amendment) Order 2002 (S.I. 2002/1502), arts. 1(1), 2(d) (with art. 1(2))

F14 Art. 8(7)(a) substituted (2.1.2002) by The Value Added Tax (Cars) (Amendment) Order 2001 (S.I. 2001/3754), arts. 1, 3

F15 Art. 8(8)(9) inserted (1.7.2002) by The Value Added Tax (Cars) (Amendment) Order 2002 (S.I. 2002/1502), arts. 1(1), 2(e) (with art. 1(2))

Commencement Information

I1 Art. 8 in force at 1.1.1993, see art. 1