Xero for the Motor Trade: The Add-Ons
That Save Hours (and the Margin VAT Trap)
Xero plus the right add-ons can transform a dealership’s numbers, but margin VAT is where
many motor traders come unstuck.
By Jade Stenner, Accountant
If you run a dealership, garage or used-car business, Xero can be a game-changer, but only if it is set up properly and paired with the right add-ons. And there is one issue that catches motor traders out more than any other: margin VAT.
Why Xero suits the motor trade. Cloud accounting gives you live numbers in a business where stock, cash and margins move daily. As Xero Platinum Partners, that real-time visibility is exactly what we build for our motor trade clients.
The add-ons that save time. Dext for purchase invoices, a stock or DMS integration, automated bank reconciliation, and reporting layers that turn Xero data into dealership dashboards (GP per unit, stock turn, aged stock).
The big one: margin VAT. Under the margin scheme you account for VAT on the difference between what you bought and sold a vehicle for, not the full price. Standard Xero coding does not handle this on its own. Raise a normal 20% invoice on a margin vehicle and you over-declare VAT. The fix is the right tax rates, a reliable stock book and a monthly review. Done right it is smooth. Done casually it is one of the most expensive mistakes in the trade.
