Car Purchase

sanadian

Ordered new vehicle in July for possible delivery in 3 months, car dealer informed me last week there has been a delay by the manufactures, car will not be delivered until February 2010. as every one knows the VAT increases in January 2010, they expect me to pay the difference. I am not prepared to pay anymore as this delay is not my doing.

maninthestreet

Unless the contract explicity stated a delivery date, or that time was the essence of the contract, I don't think there is much you can do. What make of car is it, and what reason has been given for the delay?

sanadian

Thank you for your response, I have been told verbally that the vehicle will be ready late October, early November, in all fairness, the dealers hands are tied. it is a new Ford KA. I guess the other way around it, is to pay in full by end of December.

bclark

Legally you can't pay the bill in full in December. The Car has to be registered before they can invoice you for it.

Inactive

sanadian wrote: »

I am not prepared to pay anymore as this delay is not my doing.

Your only option is to cancel the order then.

JasonLVC

bclark wrote: »

Legally you can't pay the bill in full in December. The Car has to be registered before they can invoice you for it.

I know of several dealers who are taking 100% payment up front and issuing an invoice. Some have been advised to do so by the manufacturer direct.

Why a customer would want to pay up front for a car that hasn't been delviered and that will be hard for them to reject if there is an issue is beyond me, but I cannot see how paying for something before you receive something is illegal. let's just call it a 100% deposit, rather than a purchase;)

bclark

JasonLVC wrote: »

I know of several dealers who are taking 100% payment up front and issuing an invoice. Some have been advised to do so by the manufacturer direct.

Why a customer would want to pay up front for a car that hasn't been delviered and that will be hard for them to reject if there is an issue is beyond me, but I cannot see how paying for something before you receive something is illegal. let's just call it a 100% deposit, rather than a purchase;)

Really? I know of manufacturers who have promised not to pass the VAT increase on such as VW and Seat but I am surprised that any are fully invoicing a car before its arrived as that is illegal. Until the Car has been manufactured and registered then you don't have anything physical to invoice against and therefore to do so is tax evasion.

pendulum

Huh? Surely its normal and routine to ask for payment up-front before beginning work on a custom made-to-order item. A car they will argue is built to a customers spec based on what options and colours they opt for.

kwaks

Guess it all kinda depends on whether or not you are using the scrappage scheme.

As Ford is one of the manufacturers who raised their prices to cover their costs in this scheme:think: or maybe just increased them due to the poor pound:rotfl: I would certainly expect a fall in list price when the scheme ends

bclark

pendulum wrote: »

Huh? Surely its normal and routine to ask for payment up-front before beginning work on a custom made-to-order item. A car they will argue is built to a customers spec based on what options and colours they opt for.

I am guessing that you have never bought a brand new Car? You don't pay for it until it arrives, even as a factory build. Normally you will pay a £500-1000 deposit but that's it.

JasonLVC

bclark wrote: »

Really? I know of manufacturers who have promised not to pass the VAT increase on such as VW and Seat but I am surprised that any are fully invoicing a car before its arrived as that is illegal. Until the Car has been manufactured and registered then you don't have anything physical to invoice against and therefore to do so is tax evasion.

Peugeot have clarified their position and are happy. Not passing on the VAT increase (or 2.5%) is basically the maufacturer not increasing their prices by 2.5%. it's the same with all these "Wel'' pay the VAT/VAT free" deals you see by double glazing firms and futniture stores.

It is not illegal to invoice for something in advance, what matters is that a tax point is created at the time money is paid over or an invoice is raised, whichever comes first.

How many of us have paid a builder up front for an extension or patio (or at least 50% say) and yet there's nothing to show for it. If you are paying a deposit for a car, say 10%, that deposoit is subject to VAT also and yet there is nothing to show for it either?. So why are dealers charging VAT on deposits then?.....becuase HMRC consider it part payment for a future supply and therefore the deposit is VATable.

It's not tax evasion if someone is paying the tax upfront today. HMRC have issued guidance on the matter (covering all scenarios, not just car dealers) http://www.hmrc.gov.uk/VAT/forms-rates/rates/rate-rise-guidance.pdf explains all, but go to section 2.6 to see about deposits and so if you pay 100% or 90% deposits, all of that will be at the lower VAT rate. Quite legal and above board.

However, we still come down to trusting a car dealer to deliver a car when they say they will. Considering the OP ordered in July 2009 and is being told March 2010, I wouldn't want to give the dealer a single penny of my money and I'd go elsewhere or the dealer can stump up the cost difference in my opinion, but that is a contractual/legal matter rather than a VAT one.