The main budget document confirms that if an agreement is reached with the EU, the Government will legislate to extend the VAT margin scheme to apply in Northern Ireland on a limited basis in respect of motor vehicles sourced from GB for the period until the second-hand motor vehicle export refund scheme is implemented. In the meantime, Chartered Accountants Ireland continues to discuss the VAT second hand margin scheme issue with HMRC and seeks regular updates on progress towards an agreement with the EU.
In accordance with the interim arrangement, motor vehicles first registered in the United Kingdom prior to 1 January 2021 are available to sell under the VAT margin scheme in Northern Ireland during that time period.
Under the second-hand motor vehicle export refund scheme, businesses that remove used motor vehicles from GB for resale in Northern Ireland or the EU may be able to claim a refund of VAT following export. This scheme is designed to ensure that Northern Ireland motor vehicle dealers will remain in a comparable position as those applying the VAT margin scheme elsewhere in the UK.
The main budget document also announced (page 63) £4.5 billion in additional funding for the Northern Ireland Executive through the Barnett formula across 2020/21 and 2021/22.