Trade Sales Explained: Selling Vehicles to the Trade in the UK

Last updated 29 September 2026.

Most dealers sell to the trade every week: the part exchange too old for the forecourt, the car that has sat for 90 days, the van a car specialist has no buyer for. The law treats these sales differently from retail. When the buyer is another business, the Consumer Rights Act drops out and the Sale of Goods Act takes over. This guide explains what a trade sale is, how to be sure the buyer really is trade, what you can put on a trade invoice, how VAT works and where trade stock goes. It applies to cars, vans, motorcycles, motorhomes and caravans alike.

This is general guidance based on the legislation and published HMRC, Trading Standards and GOV.UK guidance as of September 2026, not legal or tax advice. The contract rules below are the ones for England, Wales and Northern Ireland.

What is a trade sale?

A trade sale is a sale of a vehicle from one business to another business that is buying for its business, usually to sell on. Dealer to dealer, dealer to trader and cars sold through a trade auction are all trade sales. You will also hear it called selling to the trade, trading out or a B2B sale.

What makes it a trade sale is the buyer, not the price or the wording on the invoice. The Consumer Rights Act 2015 applies when a trader sells to a consumer: “an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession” (Consumer Rights Act 2015, section 2). Trading Standards confirm that the Sale of Goods Act 1979 “continues to apply to sales to business buyers” (Business Companion: car traders and the Consumer Rights Act).

For the retail side, see our guide to the Consumer Rights Act for used car dealers.

When is a buyer really trade?

A buyer is trade when they are buying for their business. A motor trader buying stock to resell is the clear case, and a limited company buying a van for its fleet is buying in the course of its business too.

The grey area is individuals. Because the test is “wholly or mainly”, a plumber buying a family car for weekends is still a consumer, even if they pay from their business account. So is a sole trader dealer buying a car for their partner to drive.

The burden sits with you. A trader who claims an individual was not acting wholly or mainly outside their business “must prove it” (section 2(4)). If you cannot show the buyer was trade, expect the sale to be treated as a consumer sale.

How to check a buyer is trade

Check the business before you agree the deal, and keep the evidence with the invoice:

1. Get the business name and address, and make the invoice out to the business, not the person who turned up.
2. Check the company on Companies House. The free company information service shows its registered address, officers and whether it has been dissolved.
3. Check the VAT number with GOV.UK’s check a UK VAT number service, which shows whether it is valid and the business it is registered to. If you are VAT registered, it can also prove when you checked.
4. Ask where the car is going: their forecourt, an auction, export or breaking.
5. Take payment from the business account, and keep regular buyers on a trade account you re-check now and then.

A signed line saying “I am buying in the course of my business” does not change the facts, and Trading Standards already warn against declarations that retail customers are asked to sign. If the buyer is really a consumer, sell it to them as a retail car.

What law applies to a trade sale?

The Sale of Goods Act 1979 implies three sets of terms that matter to a dealer:

• Title (section 12). You have the right to sell the car, which is why outstanding finance on a car you trade out is your problem.
• Description (section 13). Where you sell by description, the car must correspond with it (section 13).
• Quality and fitness (section 14). Where you sell “in the course of a business”, the car must be of satisfactory quality, judged against its description, price and the other circumstances, and reasonably fit for any purpose the buyer made known (section 14).

Two points favour you over a retail sale. The quality term does not cover defects specifically drawn to the buyer’s attention before the contract, or, where the buyer examined the car, defects that examination ought to have revealed (section 14(2C)). And outside Scotland, a business buyer cannot reject a car for a breach so slight that rejecting it would be unreasonable. It becomes a damages claim instead, though it is for you to show the breach was that slight (section 15A).

The 30-day right to reject, the one-repair rule and the six-month reverse burden of proof are Consumer Rights Act remedies. They do not apply to a trade sale.

Trade sale wording: what you can and cannot exclude

Between businesses, you can exclude or limit liability for description, quality and fitness, but only so far as the term is reasonable. Under the Unfair Contract Terms Act 1977, section 6, liability for title “cannot be excluded or restricted by reference to any contract term”, while liability for description, quality and fitness cannot be excluded “except in so far as the term satisfies the requirement of reasonableness”. Section 6 does not apply to consumer contracts at all. Separately, no term can exclude liability for death or personal injury caused by negligence (UCTA section 2).

What makes a trade disclaimer reasonable?

A term is reasonable if it was “a fair and reasonable one to be included” given what the parties knew or should have known when the contract was made, and it is for you, as the seller relying on it, to show that (UCTA section 11). The guidelines in Schedule 2 include the two sides’ relative bargaining strength, whether the buyer got an inducement such as a lower price to accept the term, and whether they knew or ought to have known about it, given the custom of the trade and your previous dealings.

That favours a disclaimer that is short, shown before the buyer commits and reflected in the price. A trader who has inspected a cheap part exchange and signed trade terms is in a very different position from a small business pressed into accepting small print. Wording many dealers use looks like this:

Sold to the motor trade as seen, with no warranty as to condition, mileage or fitness for purpose. The buyer confirms they are buying in the course of their business and has had the opportunity to inspect the vehicle. Known faults: [list them].

Treat that as a starting point for your solicitor, not a guaranteed template. It will not protect you from a car you described wrongly, finance you did not clear, or a buyer who turns out to be a consumer. Listing known faults still helps, because the quality term does not cover defects drawn to the buyer’s attention. Scotland has its own versions of these rules in Part II of the Unfair Contract Terms Act.

VAT on trade sales

VAT on a trade sale depends on the vehicle, not on the buyer being trade.

Margin scheme vehicles. A car or van you bought without VAT can be sold to the trade under the margin scheme, and HMRC lists VAT-registered dealers among the sellers a dealer can buy margin scheme vehicles from, so your buyer can use the scheme again (HMRC: buying second-hand vehicles using a margin scheme). Your invoice must show your VAT number, the buyer’s name and address, the car’s stock book number and the total price, and “you must not show VAT separately”. It must also carry the words “margin scheme - second hand goods” (GOV.UK: VAT margin schemes, keeping records).

VAT qualifying cars and VAT vans. If you recovered VAT when you bought the vehicle, you “must account for output tax on the full selling price” and “must issue a tax invoice to a VAT-registered buyer who requests one”, and it cannot go through the margin scheme (VAT Notice 700/64, sections 7.1 and 7.4). Our guide to VAT qualifying cars covers how to tell which is which.

Auctions and cash. If the car goes through an auction, HMRC says to check with the auctioneer before the sale whether it will be treated under the auctioneers’ scheme or the margin scheme. If you sell a vehicle for £10,000 or more in cash, you need to register with HMRC as a high value dealer (HMRC: selling second-hand vehicles using a margin scheme).

Selling unroadworthy vehicles to the trade

You can sell non-runners and MOT failures to the trade, provided you handle it properly. Supplying a vehicle in an unroadworthy condition is an offence, but there is a defence if it was supplied for export or you had reasonable cause to believe it would not be used on a road until made roadworthy. If you offered it for sale, you must also prove you took all reasonable steps to make sure any buyer would know its condition (Road Traffic Act 1988, section 75). Write “not roadworthy, not to be driven” on the invoice and make sure it leaves on a trailer.

DVLA and the V5C on a trade sale

It depends on whether the car has a registered keeper. A car you bought into the trade has none while you hold it, as our guide on how to put a car into the trade explains. The GOV.UK guidance we checked does not set out a separate step for passing a car from one trader to another. In practice you hand the buying dealer the V5C, including the green new keeper slip, and they tell DVLA through the selling a vehicle out of trade service when they sell it to a keeper.

If the car is registered to your business, such as a demonstrator, tell DVLA it has been sold to a motor trader, online or using the yellow section of the V5C, as our guide to putting a car into the trade explains. Either way, agree in writing who does what.

Where to sell trade stock, and at what price

Trade stock goes to the same places you buy from: trade auctions such as BCA and Manheim, online dealer-to-dealer marketplaces such as Dealer Auction, and other dealers directly, such as a specialist who wants a car outside your niche. Compare them on what lands in your bank after fees and transport, not the headline price. Our guide to where car dealers buy their stock looks at the same channels from the buyer’s side, and the part exchange guide covers which part exchanges to trade out. Our guides to where van dealers buy stock and where motorcycle dealers buy stock cover the van and bike channels.

A trade price is what one trader would pay another for the car as it stands. It sits below retail because the buyer still has to pay for preparation, warranty, advertising, holding costs and their profit. Our guide to CAP clean, retail and trade values explains the benchmarks trade buyers use.

Common mistakes

Mistake	What to do instead
Writing "trade sale" on a sale to a member of the public	Trading Standards say you must not use "trade sale" or "sold as seen" to restrict a consumer's rights. Sell it as a retail car and disclose specific faults.
Taking the buyer's word that they are trade	Check the company and VAT number, invoice the business and keep the evidence. The burden of proof is on you.
Advertising as a private seller to shift stock	Falsely creating the impression that you are not acting for your business, or presenting yourself as a consumer, is a banned practice (DMCC Act 2024, Schedule 20, paragraph 25).
Relying on a blanket disclaimer	Keep it short, show it before the sale, reflect it in the price and list the faults you know about.
Showing VAT on a margin car's trade invoice	Margin invoices must not show VAT separately. Add the margin scheme wording and stock book number.

Trading Standards give the example of a trader advertising cars as if they were a private seller (Business Companion: selling used vehicles). For the rest of the banned practices, see our guide to the legal requirements for running a used car dealership.

How Haswent helps

Each contact in Haswent has a Business Name and a VAT / Tax ID field, and a contact with a business name has their invoices addressed to the business. In car sales invoicing you add your own terms to sales invoices and can edit them on an individual invoice, so a trade sale can carry your trade terms, and your margin scheme invoices can carry the “margin scheme - second hand goods” wording. Each car is set to No VAT/Margin, Inc VAT or Ex VAT and the invoice follows it. For a one-off, our free car sales invoice generator handles margin scheme, standard VAT or no VAT.

Contact us for a demo.

Sources

• Consumer Rights Act 2015, section 2 (trader and consumer definitions, burden of proof)
• Sale of Goods Act 1979, section 13, section 14 and section 15A
• Unfair Contract Terms Act 1977, section 2, section 6, section 11 and Schedule 2
• Digital Markets, Competition and Consumers Act 2024, Schedule 20 (banned practices)
• Road Traffic Act 1988, section 75
• Business Companion: car traders and the Consumer Rights Act
• Business Companion: selling used vehicles
• HMRC: using the VAT margin scheme for second-hand vehicles, with its buying and selling pages
• GOV.UK: VAT margin schemes, keeping records
• HMRC: VAT on motoring expenses (Notice 700/64)
• GOV.UK: check a UK VAT number
• GOV.UK: get information about a company
• GOV.UK: tell DVLA you've sold, transferred or bought a vehicle

Frequently asked questions