Why the margin scheme is not available
HMRC's guidance on the margin scheme for second-hand vehicles says you cannot use the scheme for “any vehicle purchased on an invoice which shows VAT separately”, or for a vehicle on which you reclaimed, or were entitled to reclaim, VAT. Those are the cars the trade calls VAT qualifying. You reclaim the VAT on the purchase and charge VAT on the full selling price when you sell.
What changes on the invoice
A margin scheme invoice hides the VAT and carries the margin scheme statement. A VAT qualifying sale is the opposite: the invoice is a normal VAT invoice that shows the VAT. A business buyer will expect to see the amount excluding VAT, the rate, the VAT amount and your VAT registration number so they can reclaim it.
| Detail | Margin scheme sale | VAT qualifying sale |
|---|---|---|
| VAT shown | No, never separately | Yes, the rate and the amount |
| Statement | Margin scheme — second-hand goods | Prices include VAT at 20% |
| Buyer can reclaim VAT | No | Yes, if VAT registered and entitled to |
| Stock book number required on the invoice | Yes | Keep it on the invoice anyway for your own records |
Setting it up in DealerSlip
- Dealership. Make sure your VAT registration number is saved. It prints in the invoice header.
- Price. Enter the selling price including VAT, then choose Standard VAT · 20% included as the vehicle VAT treatment.
- Read Section 3. The heading now says “Prices include VAT at 20%”. Below the total, the invoice prints the amount excluding VAT and the VAT included, worked out at one sixth of the gross figure.
- Extras. Mark each extra as including VAT or not. Extras marked as including VAT are added into the VAT line.
Illustrative sale with the Standard VAT option.
| Section 3 as printed | Amount |
|---|---|
| Vehicle selling price | £12,000.00 |
| Total | £12,000.00 |
| Amount excluding VAT | £10,000.00 |
| Included VAT at 20% | £2,000.00 |
Check the layout against your accountant's requirements
DealerSlip prints the inclusive price, the excluding-VAT amount, the VAT amount and the rate. It does not print a per-line net column or a separate “tax point” date. If your accountant or a business customer needs those, add them in the Warranty & terms box or use your accounting software for that sale. Whether a particular car is VAT qualifying is a question about how you bought it, and DealerSlip cannot check that for you.
Common questions
Can I switch a saved invoice between margin and standard VAT?
Yes. Open the invoice, change the vehicle VAT treatment in Price, review Section 3 and download a new pack. Keep the earlier version if it was already issued.
Does the private buyer care?
A private buyer pays the same inclusive price either way. The difference matters to you, to HMRC and to any business buyer who wants to reclaim the VAT.
What about a car with no VAT at all?
The third option, No VAT, prints no VAT statement. Use it only where your accountant confirms no VAT applies to the sale.