Second-Hand Margin Scheme & the Northern Ireland Protocol
There is currently no provision for the application of the second-hand margin scheme on the sale of qualifying motor vehicles sourced in Great Britain to customers located in Northern Ireland under the Northern Ireland protocol, which sets out the relationship with both the UK internal market and EU single market in the wake of the UK’s exit from the European Union.
HMRC have taken steps to remove this legislative disadvantage for affected NI traders retrospectively with the upcoming introduction of the Second-hand Motor Vehicle Export Refund Scheme which will allow traders to account for VAT on the sale of second-hand motor vehicles on the profit made, subject to the normal conditions of the scheme.
Prior to the introduction of this, a temporary extension of the margin scheme has been granted to allow for the traders to account for VAT on the margin of goods purchased in Great Britain as opposed to the full sales value.
The introduction of the Northern Ireland protocol requires businesses to reassess the VAT treatment of supplies between Great Britain and Northern Ireland, in addition to those supplied NI to EU and vice versa to ensure ongoing compliance. The application of the Northern Ireland protocol can become particularly complex when there are multiple movements of goods between Great Britain/Northern Ireland/the European Union as action may need to be taken in relation to each movement of the goods in question. Should you or your client be involved in supplies governed by the NI protocol, please see advice from one of our expert consultants at the earliest opportunity to make certain all your liabilities are being met and no corrective action is required.
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