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What does 'VAT qualify' mean?

What does 'VAT qualify' mean. Do I have to pay VAT on top or do I get it back?

Asked on 6 October 2017 by tony louka

Answered by Honest John
Ex-rental and ex-demo fleet cars are usually 'VAT qualifying', which means that if a VAT registered trader or dealer buys them he can claim back the VAT element. So, say he pays £10,000 for a car at auction, he can reclaim £1,666.66 VAT input tax from HMRC. If he then sells the car to a member of the public for £12,000, the 20% VAT element of that is £2,000 and the trader has to pay the £2,000 to HMRC. The member of the public who buys the car pays no more than the £12,000.
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