A vehicle that leaves the UK can be zero-rated, whether you deliver it or an overseas buyer collects it, as long as it is not used here first and you hold evidence of the export within three months. A vehicle sold under the margin scheme cannot be zero-rated at all. Either way, the evidence decides.
Buyers from abroad turn up on every UK dealer's enquiry list: from Ireland, from mainland Europe, from further away. Since the UK left the EU, a sale from Great Britain to a buyer in the EU is an export like any other.
An export can be zero-rated, but only with proof. HMRC's VAT Notice 703 sets the conditions: the vehicle must actually leave the UK within the time limit, and you must hold valid evidence that it did. For motor vehicles the notice adds rules of its own.
Direct export: you deliver it
When you arrange the transport and the vehicle leaves the UK, the sale is a direct export. It can be zero-rated, so the buyer pays no UK VAT, provided the vehicle is not used or delivered in the UK before it goes, and you hold the evidence within three months of the sale.
The evidence is the export itself on paper: the customs export declaration and the transport documents that show the vehicle going from your site to the buyer abroad, matching the vehicle, the buyer and the value on your invoice. Keep them with the sale. A zero-rated invoice without them is a VAT bill waiting to happen.
Indirect export: the buyer collects
When an overseas buyer or their agent collects the vehicle and arranges the export, the sale can be zero-rated too, as long as the vehicle is used for nothing but the trip to the place it leaves the UK and you get the export evidence within three months. You are relying on the buyer to send it.
The buyer must really be an overseas customer. An indirect export cannot be zero-rated when the buyer is a private individual resident in the UK, or a business with a place of business in the UK from which it makes taxable supplies, however often they say the vehicle is going abroad.
Protect yourself until the evidence arrives. If it does not arrive in time, you account for the VAT out of the price you were paid. Many dealers take a deposit equal to the VAT and refund it once the evidence is in. If evidence arrives after you have accounted for the VAT, you can zero-rate the sale and adjust your VAT account in the period you receive it.
Private buyers and the Personal Export Scheme
A private individual who wants to use the vehicle in the UK before taking it abroad, such as a visitor touring the country, cannot buy it as an ordinary indirect export. For them the Personal Export Scheme in VAT Notice 707 sets its own conditions and paperwork.
Margin scheme vehicles
A vehicle sold under the margin scheme cannot be zero-rated on export. VAT Notice 703 (paragraph 4.15) says so in terms. You account for VAT on the profit margin exactly as you would for a sale in the UK, whoever transports it and wherever it goes.
That makes the sale treatment decisive. A vehicle sold under the margin scheme cannot be zero-rated. Settle whether the sale goes under the scheme before you quote the buyer a price.
Keep the file complete
An export sale leaves a longer paper trail than a domestic one: the sale order stating who transports the vehicle, the invoice with its VAT treatment, the export evidence, and, where a deposit was taken, proof of the refund.
Diary the three months. Evidence that arrives late, or not at all, is the most common reason an export ends up costing the dealer the VAT. A reminder on the day of the sale and a check before the deadline keep it from slipping.
