The items HMRC lists for a margin scheme sales invoice
HMRC's guidance on keeping records for VAT margin schemes lists what a sales invoice must include when you sell an item under the scheme:
- the date
- your name, address and VAT registration number
- the buyer's name and address, or that of their business
- the item's unique stock book number
- the invoice number
- a description of the item
- the total price, and HMRC is explicit that “you must not show VAT separately”
- the statement “margin scheme - second hand goods”
For vehicles, HMRC's separate guidance on using the margin scheme for second-hand vehicles adds that you need a stock book tracking each vehicle individually and copies of every purchase and sales invoice.
Where each item appears in DealerSlip
| HMRC item | Where to enter it | Where it prints |
|---|---|---|
| Date | Payment → Invoice details & notes → Invoice date | Top right of the invoice |
| Your name, address and VAT number | Dealership → name, business address, VAT registration | Invoice header |
| Buyer's name and address | Buyer → Full name or company, Address | Section 1, Customer |
| Unique stock book number | Vehicle → VIN & stock reference → Stock reference | Section 2, Stock no. |
| Invoice number | Payment → Invoice details & notes → Invoice number | Top right, and on every page footer |
| Description of the vehicle | Vehicle → registration, make, model, derivative, colour, mileage, VIN | Section 2, Vehicle |
| Total price with no separate VAT | Price → Vehicle VAT treatment → Margin scheme | Section 3 shows the price and total only |
| Margin scheme statement | Set automatically by the Margin scheme option | Section 3 heading: “Margin scheme — second-hand goods” |
Choosing Margin scheme in the Price step removes the VAT line from the vehicle price and prints the statement beside the Price heading. Leave the Stock reference empty and the invoice prints “Not supplied”, so fill it in for every margin scheme sale.
Extras sold alongside the car
A warranty, delivery charge or paint protection sold with the vehicle is a separate supply, not part of the second-hand vehicle. DealerSlip lets you mark each extra as including VAT or not. When an extra includes VAT, the invoice adds an “Included VAT on extras” line below the total so that the vehicle price itself still carries no VAT figure. Whether a particular extra is standard-rated, and how it should appear on your invoices, is a question for your accountant.
Working out the VAT on the margin
HMRC's vehicle guidance says the VAT is due on the difference between what you paid for the vehicle and what you sold it for. The steps it gives are to work out the purchase price and selling price, take the purchase price away from the selling price to find the gross margin, then multiply the gross margin by one sixth.
Illustrative figures only.
| Margin calculation | Amount |
|---|---|
| Selling price | £8,995.00 |
| Purchase price | £7,200.00 |
| Gross margin | £1,795.00 |
| VAT due (one sixth of the margin) | £299.17 |
None of that calculation appears on the customer's invoice. It belongs in your stock book and VAT return. DealerSlip does not hold purchase prices or calculate margin VAT.
When a vehicle cannot go through the margin scheme
HMRC's vehicle guidance says you cannot use the scheme for new vehicles, vehicles imported into the UK, any vehicle purchased on an invoice which shows VAT separately, category A and B write-offs, or a vehicle on which you reclaimed or were entitled to reclaim VAT. A car bought with VAT shown on the invoice is usually sold as a VAT qualifying vehicle instead; see the VAT qualifying invoice guide.
What the stock book needs
HMRC's records page lists, for each item: a stock number in sequence, the purchase and sale dates, invoice numbers, prices, the seller's and buyer's names, a description, the margin calculation and the VAT due. Records are kept for six years. Use the same stock number on the DealerSlip invoice so the two records match.
Common questions
Does DealerSlip check that the vehicle is eligible?
No. The Margin scheme option changes what prints on the invoice. Eligibility depends on how you bought the vehicle and is your decision with your accountant.
Can I show the VAT on a margin scheme invoice if the customer asks?
HMRC's guidance says you must not show VAT separately on a margin scheme sales invoice. A VAT-registered buyer cannot reclaim VAT on a margin scheme purchase in any case.
What if I sell the car to another VAT-registered dealer?
The buyer's purchase invoice needs your stock book number as well. See the trade sale invoice guide.