New conservatory - VAT change

richard1982_2

Hi,
Back in October I had a quote from a local conservatory firm to build a new conservatory which I went with. The quote was £11,654 and on the 15th October I paid a deposit of £1,165 and I set up a Barclays loan through the conservatory firm to pay for the rest over 60 months. Work isn't due to start until January 09 and once complete my loan repayments will start.

Now that VAT has been cut to 15% I queried with the conservatory company if the loan would have to be adjusted and they said no as it was agreed to in October.

My question is am I entitled to refund of the outstanding balance due to the VAT rate cut as the company won't be paying 17.5%? I figure I will be owed around £200 which will come in handy for xmas presents.

Thanks
Richard

RayWolfe

You agreed a fixed price presumably including VAT. They can stick to that agreed price. They will only pay over 15%. They will keep the difference.
Nothing illegal or improper here. However, I would fight like hell to get a refund but you are not in a strong position because, presumably you can't cancel without loss.

Raksha

If the date on the invoice they raised is before 1st December, they will still be handing over the VAT at 17.5%. It's swings and roundabouts - if they use materials purchased before 1st December, they will be paying 17.5% VAT. There will always be winners and losers I'm afraid.

richard1982_2

Thanks for the response, I think my only argument is that as no work has been carried out, no product delivered, no invoice raised, and the company will not receive any money from the finance until the work has been completed which wont be until Feb 09 at the earliest.

Barneysmom

Can't you cancel the whole thing, and re-order in a month or two?

richard1982_2

Just found this on the hmrc.gov.uk under consumer questions:

Q9 I signed a contract before 1 December for something that I will
receive and pay for on or after 1 December. Are there any general rules
about whether the price should be adjusted?
Yes. VAT law (section 89 of the VAT Act 1994) provides that contract prices
should always be adjusted where the VAT rate changes before the sale is
made (unless the parties have agreed to a contract which explicitly removes
the need for such adjustment).

Does this mean they will have to refund?

RayWolfe

See my answer #2