Accountants for Used Car Dealers

Specialist accountants for UK used car dealers. The VAT Margin Scheme is one of the most powerful tools available to your business and one of the most commonly misapplied. We know how it works, and we make sure you do too.

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Specialist accountants for used car dealers across the UK

Rhombus Accounting is a UK accountancy firm based in Goole, East Yorkshire, specialising in VAT Margin Scheme businesses. Used car dealers are one of our most common client types.

We understand how used car businesses actually operate: trade-ins, part exchanges, auction purchases, private buyers, finance commission, and the mix of new and second-hand stock that many dealers carry. You will not need to explain your business model to us.

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"Having Rhombus Accounting supporting our business has made a real difference at Pashley Motors. From sorting out our Xero to advising on the VAT Margin Scheme, their input has been invaluable. Their guidance is clear, reliable and allows us to focus on sourcing and selling vehicles without getting bogged down in the numbers"

PM Trade Group Ltd

The VAT Margin Scheme for vehicles is one of the most compliance-heavy areas of VAT law

Part exchanges, trade-ins, mixed stock and finance commission all need accounting for correctly. Getting it wrong leads to HMRC penalties, overpaid VAT and unwanted enquiries.

  • Recording every vehicle purchase and sale individually

  • Maintaining stock records that meet HMRC Margin Scheme requirements

  • Accounting for trade-ins, part exchanges and associated income correctly

  • Filing VAT returns that reflect both Margin and non-Margin transactions

  • Completing Self Assessment or Corporation Tax returns accurately

  • Planning your business structure to minimise your overall tax burden

Everything a used car dealer needs

01

Bookkeeping

Vehicle-by-vehicle tracking with purchase price, selling price and VAT treatment for every unit. Your records will stand up to HMRC scrutiny.

04

Part exchange accounting

Part exchanges treated correctly as two separate transactions, each valued and recorded individually with the right VAT treatment applied from the outset.

02

VAT Margin Scheme

Correct application to eligible stock, accurate VAT returns and a defensible position if HMRC ever comes calling. Pay VAT on your margin, not the full price.

05

Limited Company advice

We run the numbers honestly and tell you whether incorporation makes financial sense at your current stage, then handle the setup if you proceed.

03

Self Assessment and Corporation Tax

All income streams reported correctly including finance commission, warranty income and part exchange profits. Every expense claimed.

06

Tax planning

Timing stock purchases, structuring profit extraction, managing VAT registration and planning for growth. Proactive advice that saves you money.

Every cost you can claim

  • Vehicle purchase costs (cost of stock)

  • MOT and service costs before sale

  • Platform fees (AutoTrader, eBay Motors)

  • Storage and forecourt costs

  • Advertising and marketing costs

  • Preparation, valeting and repair costs

  • Auction fees and buyer's premiums

  • Finance and warranty commissions paid out

  • Insurance

  • Travel to auctions and collections

Used car dealer tax questions, straight answers

  • Not necessarily. If you are eligible for the VAT Margin Scheme and purchased vehicles from private individuals, VAT is charged on the margin only. Standard rates apply to vehicles bought from VAT-registered businesses where VAT was reclaimed.

  • Part exchanges are treated as two separate transactions: you are effectively buying the customer's vehicle and selling them one of yours. Each needs to be valued and recorded individually. The VAT treatment depends on how each vehicle was sourced and how it is sold on.

  • If you are buying second-hand vehicles from private individuals and selling them on, almost certainly yes. Failing to use the scheme means you are overpaying VAT. If you are not currently on the scheme, speak to us and we can review your position.

  • At higher profit levels a limited company can offer meaningful tax savings. We will run the numbers and give you an honest view on whether it makes sense at your current stage.