VAT on car imports post No-Deal Brexit

There's been some chat lately that people may have to start paying VAT (in addition to VRT) on car imports in the event of No-Deal Brexit. My understanding was that the whole reason VRT was introduced was to replace excise duties on car imports which were no longer permitted under the single market. Surely therefore if the UK leaves the single market, VAT should be charged on imports in lieu of, rather than in addition to, VRT?

Whatever your thoughts on VRT itself, surely the idea of being double taxed by having to also pay the kind of tax that VRT was designed to replace is not something that any reasonable government could even attempt to justify?

Post Brexit, unless there is a better agreement negotiated, then importing a car from the UK should be no different than bringing one from, say, Japan. A used car coming from Japan is charged a customs duty at the entry point in to the EU and VRT is charged on registration. I’m not sure if VAT is also charged? I believe that VAT may have to be accounted for by a trader who sells in the normal course of their business but the VAT is charged on a margin basis rather than on selling price and input credit? If the used car is bought by a Irish trader in the UK with a VAT invoice then I believe they deal with VAT in the usual way. VAT is charged on an import of a “new” car from another EU country because thr export from that country will have been charged at 0% for export.

IIRC, the formula for imports before VRT was introduced applied an imputed credit to reduce the UK price before duty and VAT were then applied. The level of import duty was linked to the age of the car and the price paid in the UK. It was a relatively complicated formula.

VRT was introduced, in 1993, when most imports were from the UK and customs duty could no longer be charged as the free movement of goods within the EU required. IIRC, the same changes applied to used cars coming from Japan, another popular source at the time. An EU wide rate of 10% Customs Duty rate is applied to used cars when first entering the EU.

This VAT treatment before 1993 was, I believe, because at that time no business could claim an input credit for the VAT element of the purchase price of a car used in the business (e.g. company cars). Dealers selling new cars were able to claim an input credit because they were buying new stock in trade from the distributors.

That's a very informative post and evidently you know far more on the subject than I do!

I think I made an error by referring to VAT in my post - I guess VAT will continue to apply, but I thought I had read some articles about the rate of VAT possibly increasing or a new customs duty being imposed on new cars in addition to VAT and VRT?

I was around back in the day doing calculations on the old system! Pre-interweb it required a hard copy of one of the regional versions of Autotrader and the Evening Press!

UK built new cars will also face an import duty into the EU in the event of no better arrangement through negotiation between the UK and EU. 10% on the base cost is the figure I believe.

on jap cars you have to pay vat on the price of the car + shipping + duty

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VAT is actually a EU tax. All member states have to pay it. If the UK leave, then I presume they won't be under the same VAT rules from Europe but as another poster said cars imported here will need VAT paid similar to Japanese imports.

https://en.m.wikipedia.org/wiki/Euro...alue_added_tax

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Originally Posted by ian.j

on jap cars you have to pay vat on the price of the car + shipping + duty

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More or less
You pay 13% customs charge
Then you pay €250 John Dorey fees ( guys that take the car off the boat)
Then you pay vrt And then vat on that total
amount

So basically the only UK cars to buy post Brexit will be zero rated ones where the UK vat will not be charged or may be refunded. The only Vat charged will be ROI vat at the time of registration.

Assuming they don’t change the VAT rules drastically (and there is some evidence to suggest that the UK may not be very well prepared for significant change ��), you’ll need to be VAT registered here in order to be issued with a zero rated invoice.

So let’s say you pay €5k for a car in Japan
Then Shipping of up to 1500, optional transit insurance of 500, 250 port fees in Dublin, 10% duty on the 5000+1500+500+250(7250)=725. 23% of 7250+725(7975)=1834. Then vrt based on a omsp of the total so far=9809

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Originally Posted by dergside

Assuming they don’t change the VAT rules drastically (and there is some evidence to suggest that the UK may not be very well prepared for significant change ��), you’ll need to be VAT registered here in order to be issued with a zero rated invoice.

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Not if it’s new, even a retail customer can get a refund if it’s less than 6 months old or 4K miles on it

Anyone have any inclination what will happen to a car that lands in the country a few days before Brexit, makes a VRT appointment before Brexit but the appointment is after Brexit?

Once you have dated documentation that shows the car was in the country by the Brexit date, e.g. a ferry ticket with the reg number shown, then there should be no impact on VRT charged as this isn't a customs duty. This documentation is required anyway when declaring a car for the past couple of years. Customs duties will be levied after Brexit at port, or point of entry, if Irl/NI customs infrastructure is put in place.

The only circumstances that I can see VRT being affected is if Revenue determine that the OMSP of cars changes dramatically due to the disruption to the market (impacting supply/demand balance) that arises from either logistics issues (ferry port activity, customs declarations delays, etc.) or the higher costs of imports due to the addition of duty on import.