possible VAT increase ordered New CAR

bozzly

I ordered a new car on the 28/09/2009, fitted all the options into my budget and paid £1000 deposit, delivery is due 12 weeks, so say first week in December, They printed on the order 16 weeks, which is fine end of December.

I rang them (Audi) this week and they said it could possible be in January due to factory being slow, They also said I will be liable for the 2.5% VAT increase (1st January 2010) if they deliver in January.

Surely I have placed an order for X amount, and paid a deposit and it is not my fault they are not meeting their delivery dates. So why should I suffer, we are talking another £880.

Where do I satnd ? I think this might become a common problem.

deanos

Im sure it will say in the t+c's about things out of there control which it is, have a read of them and see what it says

smcaul

it's hardly out of their control, they know when a car can be made a delivered, sounds more like the dealer causing the problem!!

I would just keep pushing the dealer to either deliver on time or they can foot the extra bill for the VAT.

darich

I'm with smcaul on this one.
You agreed to buy the car for a certain amount and paid a deposit - effectively entering into a contract where the price is agreed and the car specification also agreed. Also important is the delivery date agreed with the dealer. The agreed date is December so avoiding the increased VAT. Any later and VAT increase changes the price.
Whilst I realise the VAT change is outwith the dealer's control, the delivery of the car is not and I'd explain to the dealer that any delay in delivery resulting in a price increase due to VAT will not be paid for.

bigheadxx

Best thing might be to pay the balance before the 1st January.

JasonLVC

The VAT rate will be determined by the date the goods are made available to you. This is known as the basic tax point.

Therefore, if delviered in January they will be under the higher 17.5% rate, if delivered in December, under the current 15% rate.

Contractually, they have said they will deliver in December and so any delivery date beyond that date will be a breach of contract for which they would be liable for any additional expense/inconvenience caused to you.....or you could of course cancel/go elsewhere.

If you paid, in full, before the end of December then technically the basic tax point is over-ridden and you create an Actual tax Point upon which the date the dealer has to declare the VAT.

So arguably, if you pay the full amount in December, the dealer will have to issue you an invoice upon payment and they can only use the 15% VAT rate. But the risk is you'll be paying £xk up front without delivery of the car - so any problems in terms of delivery, etc will be hard to argue when you've paid the dealer up front.....and also assuming the dealer will allow you to pay up front (can't see why not?).

I'll mull this one over today if I may, and see if we can refine that answer a little more.

ChrisBr

I think the VAT rate issue needs closer review.

I have just ordered an Audi which is going to be delivered in late January. I have paid a £1,500 deposit on credit card and am due to pay the balance on collection.


My understanding of the VAT position is that, if a supplier raises an invoice in advance of the supply of goods, the invoice date will trigger a tax point for VAT purposes, overriding the normal delivery date based tax point. So if for example, my dealer were to invoice me on 31 December, and offer me one month of credit, then I believe VAT could be charged on my car at 15% and I would not have to pay the dealer when taking delivery on 31 January.


The only problem is that the dealer is insisting he has to quote the chassis number on my final invoice. He will not have this until January. I think this is more an internal systems issue, but if it really is a problem there may be an alternative approach.

In taking my deposit, the dealer has already triggered a 15% VAT rate on that element of the sale. Taking this a stage further, if the dealer is not able to issue a final invoice then surely he could raise a second deposit invoice on 31 December at 15% for most of the balance, again with a month's credit, and then deduct this and the £1,500 from my final bill, leaving only a nominal amount to be taxed at 17.5%.

HMRC have issued guidance on the rate change, a pdf of which is available on their site. This forum won't allow me to post a link but if you Google "VAT reversion of the standard rate to 17.5%" you will pick it up easily (make sure you select the HMRC page!).

Section 3 of the HMRC guidance states “However, there are optional change of rate rules that you may be interested in applying. You can apply the rules selectively to different customers. Also, you can adopt them without notifying HMRC.”

Sec 3.3 states: “3.3 Goods or services provided after 1 January 2010:

You can also opt to use the rules where you receive a payment or raise a VAT invoice before 1 January 2010 for goods or services you will be providing on or after that date. Under the normal rules you should account for VAT at 15% (but see section 11 about special rules to prevent avoidance for certain deposits or prepayments).”

The anti-avoidance rules are not triggered by my above proposals.


If anyone can give me a good reason why my above proposals do not work then I promise to pay my extra VAT and go quietly! If not, I'm definitely going to challenge my dealer further.

Any thoughts would be appreciated.


Thanks guys.

Chris

The_Pedant

To save peeps having to search:-
VAT reversion of the standard rate to 17.5%

It does sound reasonably clear-cut:

The normal rule is that you should account for VAT on a deposit or pre-payment at the rate in force when you receive it. If you receive a deposit before 1 January 2010 for goods or services that you will supply on or after that date the 15% rate of VAT will apply to the deposit and 17.5% will apply to the balance.

So, you pay the rate in force at the time each portion of the payment is made.

Deposits before 1st Jan, 15%
Payments after 1st Jan, 17.5%

Might not be so easy for them & their accounting mind

Print that page off (and the cover so they know what it is) and ask to make an additional pre-payment, or an adjustment to your original deposit.

As a second thought, have you agreed a price excluding VAT, or a price @15 or 17%. I'm just thinking that you want to make sure you're only paying the 2.5% extra on the final outstanding sum, if you get wjat I mean.

CharlieBilly

You might be wasting your time replying as the poster hasnt logged in since they started this post