need to pay vat increase ?

punto123

Hi there

Can i ask please , If a vehicle has been ordered (vehicle order form with breakdown of costs and terms and conditions)  and deposit paid at the current VAT rate. If VAT is increased before, taken delivery of vehicle, would the remaining balance have to be paid at the increased new VAT rate? Or at the old VAT rate, as that is when vehicle price was agreed, then order placed and and deposit taken.?

Many thanks for your help

TooManyPoints

I would say yes, though I have no authority to support that.

Think if Vehicle Excise Duty went up between ordering and taking delivery. Would you expect the dealer to swallow the increase?

Grumpy_chap

VAT is chargeable at the date of invoice, which will be the date of supply for a car.  A change in VAT-rate would be a significant impact for a car supply.

VED is chargeable at the rate at the date of registration.  Any change in VED rate would be quite small and maybe one that could be negotiated from the Dealer.

Does the OP mean VAT or VED?

punto123

Hi, as outlined in my post I am referring to VAT, reason for my query, I have read there maybe a VAT increase announced in the budget this Thursday.

If it's date of invoice , are you allowed to pay an invoice before you get the goods (car) , so if the vat rate was to increase and invoice paid at current vat rate before the rise , but dident get the goods till a couple of months later, is that allowed?

Thank you both, for your input and time 

user1977

Consumer prices are deemed to be inclusive of VAT, so any changes in the rate are at the retailer's risk (or benefit).

But what do the terms and conditions say? The contract may well allow the dealer not to go ahead if the cost to them changes.

Car_54

punto123 said:

Hi, as outlined in my post I am referring to VAT, reason for my query, I have read there maybe a VAT increase announced in the budget this Thursday.

If it's date of invoice , are you allowed to pay an invoice before you get the goods (car) , so if the vat rate was to increase and invoice paid at current vat rate before the rise , but dident get the goods till a couple of months later, is that allowed?

Thank you both, for your input and time 

Then the dealer goes bust, and you’ve got no money and no car ….

Jenni_D

user1977 said:

Consumer prices are deemed to be inclusive of VAT, so any changes in the rate are at the retailer's risk (or benefit).

But what do the terms and conditions say? The contract may well allow the dealer not to go ahead if the cost to them changes.

But orders/invoices tend to be shown as:

Cost
VAT
Total

If the VAT rate changes (and affects that transaction) don't they have the option to vary the price for the change in VAT? (I believe the answer is Yes ... but the consumer also has the option to reject the change and cancel the contract).

If the VAT rate reduced, would you be expecting to pay the old VAT amount?  

tripled

I'd be surprised if the rate of VAT was increased in this parliament. Not only would it go against the Conservative manifesto, which Sunak has said he will stick to, it would increase the rate inflation, which they are trying to reduce. Perhaps there could be some tinkering round the edges, but that shouldn't affect your car purchase.

Even if a VAT increase was announced, it is unlikely to come into effect immediately. Several months notice was given for the increase from 17.5% to 20%. They need to allow time for businesses to update their prices, websites/tills/invoices and accounting systems.

If you're still concerned, have you checked the T&C to see if they have anything about tax/VAT changes? (Edit) I've just checked the contract for a car I bought earlier this year, and the T&C state that the VAT on the order form is an estimate, and that VAT will be charged at the prevailing rate, so you would be looking to see if there was any clause similar to that.

user1977

Jenni_D said:

user1977 said:

Consumer prices are deemed to be inclusive of VAT, so any changes in the rate are at the retailer's risk (or benefit).

But what do the terms and conditions say? The contract may well allow the dealer not to go ahead if the cost to them changes.

But orders/invoices tend to be shown as:

Cost
VAT
Total

If the VAT rate changes (and affects that transaction) don't they have the option to vary the price for the change in VAT? (I believe the answer is Yes ... but the consumer also has the option to reject the change and cancel the contract).

There wouldn't be an implied ability to vary the price (VAT shouldn't be a concern of the customer in a consumer contract),. I think the question was really whether the customer can be forced to pay additional VAT, to which the answer is either (a) no, because the retailer has to sell at the VAT-inclusive price agreed, or (b) no, because the contract allows the retailer to pull out if VAT changes (or if the wholesale prices change, or if there's no availability of stock, etc etc). And if (b) then the parties can of course renegotiate terms.

Flight3287462

 user1977 said:

Jenni_D said:

user1977 said:

Consumer prices are deemed to be inclusive of VAT, so any changes in the rate are at the retailer's risk (or benefit).

But what do the terms and conditions say? The contract may well allow the dealer not to go ahead if the cost to them changes.

But orders/invoices tend to be shown as:

Cost
VAT
Total

If the VAT rate changes (and affects that transaction) don't they have the option to vary the price for the change in VAT? (I believe the answer is Yes ... but the consumer also has the option to reject the change and cancel the contract).

There wouldn't be an implied ability to vary the price (VAT shouldn't be a concern of the customer in a consumer contract),. I think the question was really whether the customer can be forced to pay additional VAT, to which the answer is either (a) no, because the retailer has to sell at the VAT-inclusive price agreed, or (b) no, because the contract allows the retailer to pull out if VAT changes (or if the wholesale prices change, or if there's no availability of stock, etc etc). And if (b) then the parties can of course renegotiate terms.

This really is nonsense, the dealer doesn't charge VAT they just collect it on behalf of the government. 

Car_54

Flight3287462 said:

 user1977 said:

Jenni_D said:

user1977 said:

Consumer prices are deemed to be inclusive of VAT, so any changes in the rate are at the retailer's risk (or benefit).

But what do the terms and conditions say? The contract may well allow the dealer not to go ahead if the cost to them changes.

But orders/invoices tend to be shown as:

Cost
VAT
Total

If the VAT rate changes (and affects that transaction) don't they have the option to vary the price for the change in VAT? (I believe the answer is Yes ... but the consumer also has the option to reject the change and cancel the contract).

There wouldn't be an implied ability to vary the price (VAT shouldn't be a concern of the customer in a consumer contract),. I think the question was really whether the customer can be forced to pay additional VAT, to which the answer is either (a) no, because the retailer has to sell at the VAT-inclusive price agreed, or (b) no, because the contract allows the retailer to pull out if VAT changes (or if the wholesale prices change, or if there's no availability of stock, etc etc). And if (b) then the parties can of course renegotiate terms.

This really is nonsense, the dealer doesn't charge VAT they just collect it on behalf of the government. 

What precisely is nonsense, and where did user1977 say the dealer charges VAT?