VAT Exempt Vehicle Servicing

A large UK dealership refused to confirm they would or could process any claim for vat exempt servicing, despite the vehicle being significantly adapted for a disabled user and purchased, second hand, through a specialist provider at zero rated vat. Eventually, after sharing the UK gov guidelines with them, and submitting the original sale invoice, they said they do not consider it appropriate, as they were not the original provider. They refused to comment if they would adopt the process if they had been the original supplier. I believe they are wrong but cannot see how I can take any further action. I had to pay the vat. I believe it is their responsibility to ensure vat is applied correctly. Is my only recourse to find another garage.?

The issue might be that the vehicle was purchased second hand. A new car adapted for disability use would be zero rated by the dealership. When the same car is traded in by the owner, the dealership acquires that vehicle without VAT (not zero rated, zero rate is a rate of VAT, I mean the vehicle is acquired without any VAT whatsoever as the seller is a consumer/individual who is not VAT registered, the seller cannot sell a car at zero or standard rate of VAT as they are not VAT registered. If the car was purchased under the 2nd hand margin scheme, the invoice will state "margin scheme applies" somewhere on the invoice, if that is the case, then technically the vehicle you bought was not zero rated, it was sold to you with VAT being charged on the sale but without the VAT showing on the invoice. Margin scheme works like this. Dealer buys trade in car from customer for £10k and manages to sell it for £11k. The profit margin is £1k and the dealer declares output tax on that £1k (£1k x 1 /6 = £166 VAT) but dealer not allowed in law to show the VAT, the sales invoice will just show £11k and wording that says "sold under margin scheme" or something to that effect. Have a look at the Notice again https://www.gov.uk/guidance/vat-relief-on-adapted-motor-vehicles-for-disabled-people-and-charities-notice-1002#sec8 but check out section 9 which talks about 2nd hand cars What it says is when you bought the 2nd hand car, the dealer could have just zero rated the sale to you (and thus qualify as an adapted vehicle) or they could have used the margin scheme whereupon they probably charged VAT albeit on the margin and not shown on the invoice. If the invoice clearly shows zero rated VAT then no issue, but if it makes reference to margin schemes or shows no VAT at all, then that may be why the garage are being a bit prickly about things. garage is perhaps being a bit unhelpful but clearly not prepared to take any risk whatsoever.

Hi,

Please speak to our charities team who deal with disability goods and adapted vehicles. 

Charities and Community Amateur Sports Clubs

Thank you.

Thank you both for taking the time to respond. This was my first post so hopefully I am following the correct process. Apologies if not. As far as I can see the margin scheme didn't apply, but vat exemption did on the basis of the vehicle being adapted and the claimant having a valid disability exemption. I will follow up with the Charities team, as suggested.