Charged Full 20% VAT On Used Car???

Cowea

Hi all,

Myself and my wife purchased a used car from Lookers Stockport. This cars previous keeper was 'United Rentals' in Chesterfield, it had 10,000 miles on the clock. Now the price of the car came to £ 5474.17 and then on top of that the dealer added the full 20% VAT which come to £1094.83.

After stumbling upon a government website regarding VAT on used vehicles I have been shocked to learn that the dealer should only charge the 'margin' from his buying price to the selling price. i.e. if the dealer bought the car for £3000 and sold it for £4000 only £1000 is VATable. So why have I been charged full VAT? I guess there is an explanation to this if someone out there can enlighten me! Perhaps I have been ripped off or perhaps I am entitled to a rebate due to 'error' on someones account??

Any answers greatly appreciated.

Thanks.

TradePro

It's probably correct.

As the car was originally owned by a (presumably) VAT registered business, VAT wasn't paid/was reclaimed originally, and so the car remained 'VAT qualifying'.

It doesn't really matter to be honest, you have paid £6500 or so for the car, it's unimportant to you where the money ends up.

daveyjp

The garage probably paid VAT when they purchased it, therefore they need to account for it when they sell it on.

http://www.hmrc.gov.uk/vat/sectors/motors/selling-cars.htm

Chopper_Read

Cowea wrote: »

Hi all,

Myself and my wife purchased a used car from Lookers Stockport. This cars previous keeper was 'United Rentals' in Chesterfield, it had 10,000 miles on the clock. Now the price of the car came to £ 5474.17 and then on top of that the dealer added the full 20% VAT which come to £1094.83.

After stumbling upon a government website regarding VAT on used vehicles I have been shocked to learn that the dealer should only charge the 'margin' from his buying price to the selling price. i.e. if the dealer bought the car for £3000 and sold it for £4000 only £1000 is VATaeble. So why have I been charged full VAT? I guess there is an explanation to this if someone out there can enlighten me! Perhaps I have been ripped off or perhaps I am entitled to a rebate due to 'error' on someones account??

Any answers greatly appreciated.

Thanks.

So what are yet unhappy with?

You paid the agreed price did you not?

Cowea

Yes I was happy with the agreed price at the time but if there is a chance I have been ripped off then of course I want to know if I have been

Makes me wonder what the point is buying from a dealer when I can buy private and not need to pay any VAT aslong as the car is for personal use.

TradePro

Cowea wrote: »

Yes I was happy with the agreed price at the time but if there is a chance I have been ripped off then of course I want to know if I have been

Makes me wonder what the point is buying from a dealer when I can buy private and not need to pay any VAT aslong as the car is for personal use.

You haven't paid anything extra!

The car would have been the same price from the dealer if it hadn't been VAT qualifying, the money would have just been administered differently.

longforgotten

I'll have a go explaining.......

I buy a car for £12000 ( inclusive of vat which I can't claim back) get £5000 in p/x . The garage then sells my car for £6000. The garage has to pay vat on the margin ie the profit on my car to him is £1000 , he pays £166.66 to vat man.

A company buys a car solely for business use £12000 ( £10000 + £2000 vat). It puts the car in as p/x £5000 ( £4166.66 + vat £833.34). The garage sells the car for £6000 ( £5000 + vat £1000). Please not the vat man still gets £166.66 ( £1000 less £833.34)

The price of the car is £6000 at the end whether the garage sells to an individual or a business. It's the same car its just how the vat man wants his slice of the deal.

I know what you're thinking that you would have got the vehicle at £5474.17 from a private individual but it doesn't work like that.........

Still don't think I've explained it well enough but if its any consolation when I bought my second hand car from a garage there was vat on my invoice too.

agrinnall

Cowea wrote: »

Makes me wonder what the point is buying from a dealer when I can buy private and not need to pay any VAT aslong as the car is for personal use.

So did anyone force you to decide to buy from a dealer rather than privately? Chances are a private sale would have cost considerably less, if you could find the car you wanted, but then you would have had little consumer protection, unlike buying from a dealer. As they say: "you pays yer money, you takes yer choice",

neilmcl

The following explains a bit more about the VAT Margin scheme: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&propertyType=document&id=HMCE_PROD1_030002

There a number of reasons why you have been charged full VAT, as already explained above, ie, full VAT was paid on the vehicle purchase eg "VAT qualifying".

You haven't been ripped off. If you want clarification speak to the car dealer, they must keep full records.

arcon5

There is more than one scheme for vat on new and used cars, so do you know what scheme they are using?

As for buying private, you save a good whack of money because you take on all the risk. You buy from dealers as it offers a level of protection

forgotmyname

Was the total price what you expected to pay or have they overcharged you?

When you buy a car the screen price is the price.

If its £5000. Does it matter if they have to itemise it on the invoice.

£4000 for the car £200 for some new tyres, £70 for the brakes, £130 of service items. £40 for an MOT. £100 to advertise it. £540 comission.