Any VAT experts out there?

  Pine Man 08:54 17 Aug 10
Locked

I change my car every two years and I am due to buy my next one next year.

Normally I would order the car in January for delivery in March BUT in January VAT goes up and I wondered what the position would be if I ordered my car in December 2010 for delivery in March 2011.

Will I avoid the extra VAT due from January 1st onwards?

  jack 09:05 17 Aug 10

VAT would be charged for the day of delivery.

Looks like you will have to do your sums and calculate the worth of taking a December delivery.

My guess would be that at rate of 'Churning the Metal' [the complexities of 'Depreciation' A Motor Trade' device to entice 'metal churn'] and the 2.5% increase plus perhaps any 'New Model' price enhancement - would make no difference at all.

  Forum Editor 09:18 17 Aug 10

at the rate prevailing at the tax point, not the delivery date. The tax point is the date on which an invoice is raised.

Your supplier would need to raise an invoice for the full purchase price in advance of the increase.

  Pine Man 09:19 17 Aug 10

Thanks for that.

Getting a bit more complex now - on the basis that I pay a deposit in December is the new rate of VAT payable on the amount outstanding on delivery or the full price of the vehicle on delivery?

  jolorna 09:20 17 Aug 10

it should be at the date of sale, so if you pay for the car while vat is 17.5% then that should be it

  Pine Man 09:21 17 Aug 10

My last post went in at about the same time as yours.

Does that mean I have to pay the full amount in December?

  961 09:39 17 Aug 10

The problem is that the dealer has to raise an invoice in advance of the date of the vat increase

As soon as he does that he creates a tax point and has to include the invoice in the total of vat he is due to pay the Revenue, usually within 30 days of the end of his quarterly vat period

So if he gives you an invoice in December and his vat tax return is due on December 31st he must pay that vat to the Revenue by 30th January

There's no way he going to do that unless you pay him for the car by that date

And your problem is, what happens if he goes bust between then and your getting the car

Forget it. It's not a good idea

  Pine Man 10:10 17 Aug 10

Thanks for all the advice guys - I'll worry about it for the next three months;-)

  Forum Editor 10:24 17 Aug 10

Once the supplier raises an invoice a tax point is created, and VAT is chargeable at the prevailing rate. The Supplier is accountable for the VAT on the next return date after the tax point, regardless of whether you've paid for the car.

When you pay the supplier is a matter between you and them, but to beat the rate increase the invoice must be raised prior to the change date.

  Pine Man 10:28 17 Aug 10

Thanks for that.

I'll give it a try in December and see what happens.

  dms_05 11:18 17 Aug 10

I suppose you could offer to pay the VAT to the supplier at the Tax Point and then pay the balance upon delivery. But it all seems very complex and I can see lots of reasons why the supplier would decline the arrangement.

Years ago I worked for a US company with its European HQ in Geneva. All Invoices were raised there and as it was outside the EU no VAT was applicable. Did people cheer in the streets? No - it caused more problems with larger customers who had a system set up to deal with VAT and they preferred to have VAT invoices that went through their system like all others.

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