VAT cut and new car purchase

JasonLVC

Lemonade_Pockets wrote: »

Jason (or anyone else):

I have bought a new car for say £20k for easy figures. This is the figure quoted on the order form at the time it was obviously calculated as £17021.28+VAT (ignore RFL for the purposes of this). Am i obliged to pay the £20K or am i obliged to pay £17021.28+VAT which in my situation would be now 15% i.e £19574.47 in total??

Or conversley is the dealer entiled to raise the net price to 17391.30 so the total cost to me the customer remains 20K???

Have another read of my last post.

If you agreed a price of £20k incl VAT, then if the VAT rate changes before you have made final payment and before you have received the vehicle, the dealer has to, IN LAW, charge VAT at the prevailing rate. If the prevailing rate of VAT on 1 Dec is 15% then that is the VAT he must charge.

Now the daler might raise his prices to keep the selling price at £20k but then he'd be in breach of contract as that is not the price you agreed to pay.

Taking your example, you agreed a selling price of £17,391.90 for the car - the VAT is not the dealers to keep, it is for you to pay him and then he pays Mr Brown with it - it goes in and out on their books. The actual sale to the dealer is the £17,391.90 that both sides agreed to and is the main contract here.

The dealer cannot change the basic or actual tax points for VAT purposes unless he supplies the vehicle to you before the VAT rate change or demands full payment before the rate change date. If you pay or collect the car in November he will have to charge you 17.5%.

If you collect or pay 01 December, he HAS TO charge you 15% VAT but he'll not tell you this (although it must be shown in law on the invoice you recevie from the dealer), instead he'll just charge you the £20k and he'll pocket the 2.5% difference for himself. Remember, he will charge you the correct 15% rate of VAT but he'll actually be putting up the selling price by 2.5% to keep everything at £20k.

I wouldn't stand for it and unless the car is so desirable there is a 5 year waiting list, I'd tell the dealer to sod off and stop being a thieving git and that he was happy to get £17,391.90 from you last month and so he'll be happy to get £17,391.90 of you next month. If he felt the selling price of £17,391.90 was too low profit margin wise, the n he shouldn;t have agreed to sell at that price.

slipp_digby

i am in the same situation

my Audi was due for delivery this thursday, but I am waiting for the dealer to confirm if I can take delivery on monday and get the 15% VAT.

in my case, the car price, VAT etc was all written down and itemised on the order form so I guess they can rightly supply in line with my order which was placed in September.

the HMRC notes do suggest that pre-ordered goods which are delivered on or after 1 dec should be at 15%, but the businesses can take thier own decision.

I will update when I have a response from the dealer. I am hopeful that a bit of pragmatism and customer service will net me £500! if not a new s3 shoudld soften the blow a bit ;-)

Lemonade_Pockets

Jason. - Thats what i suspected i just wanted reasurance that i was right before commencing battle. So thanks for taking the time to confirm it.

I've just got home and had another look at my order form and it has a pre vat price on it too so happy days.

I'm gonna keep stumm until monday as i doubt they'll ring me of their own back. Then try sort it out Monday.

Digby good luck with your audi....although im sure you'll be smiling this weekend regardless of the out come. However the £500 would help pay for some of the speeding fines whilst your 'testing' it out!!!!

Lemonade_Pockets

I've just dug up to following two links which maybe useful to anyone else in the same situation:
http://www.hmrc.gov.uk/pbr2008/consumerqa.pdf Question 9
and
http://www.hmrc.gov.uk/manuals/vattosmanual/VATTOS2285.htm

Pricy147

I am looking to purchase a new Audi in October before the VAT increase back to 17.5% in November. Could someone advise where I legally stand regarding the VAT rate applied, as the vehicle will not be physically delivered until March 1st 2010.

I am going to need to part finance the car, which I assume will not kick in until the car is actually delivered.

sdooley

Assuming you're buying a car as an individual and not as a business - just make sure that the price you agree with the dealer is on an 'inclusive of VAT' basis - that means the price they charge you won't change when the VAT rate goes back up. (Which I think is 1st Jan not November). As a personal customer, it's the dealer that has to account to the Revenue for the right amount of VAT, not you.

Pricy147

it is as an individual, not through a business. Presume though the dealer would simply factor the VAT increase into any reduction they can offer on the list price of the vehicle.

i read something regarding what you are saying on one of the earlier links;

Law

(1) Where, after the making of a contract for the supply of goods or services and before the goods or services are supplied, there is a change in the VAT charged on the supply, then, unless the contract otherwise provided, there shall be added to or deducted from the consideration for the supply an amount equal to the change

the bold bit relating to the specification of VAT in the contract I guess you mean?

RayWolfe

sdooley is right if they want to give you a 2.5% discount, otherwise VAT is payable at the date of supply. Therefor the garage will have to account for and pay 17.5% if delivery is beyond 1st January.
Interesting how the chorus sang 2.5% VAT reduction: useless!

Pricy147

but presumably this eats into their margin right? as they still have to pay the 17.5% even if they only charge me the 15%?

So either way, any dealer reduction they offer will factor this into the equation?

slipp_digby

Pricy147 wrote: »

but presumably this eats into their margin right? as they still have to pay the 17.5% even if they only charge me the 15%?

So either way, any dealer reduction they offer will factor this into the equation?

that would be my assumption too, the stealer will probably have that in mind with a march 2010 delivery date and will factor it in. audi quotes usually have an itemised breakdown of charges VAT, tax, plates, delivery etc. It should be clear what VAT rate they are applying.