vat

[jd_here]

I'm going to pick up a new car, well new to me anyway, tomorrow. My question is, does the dealer charge VAT on a used car, or not? If so, then I'll postpone picking it yup until Monday and save myself �200. TIA JD

[kempie]

There are two ways in which motor dealers may handle VAT on used vehicles. Some charge VAT on the total transaction cost (i.e. the second-hand selling price achieved); others charge VAT only on the profit they make on the sale of the car.

http://www.thisismoney.co.uk/ask-an-expert/con sumer/article.html?in_article_id=441026&in_pag e_id=513

That supposed �200 difference may be much reduced.

[jd_here]

Thanks Kempie, will go armed with your answer. JD

[chas2008]

i work for a main dealer and our sales team have been told not to invoice any new cars until monday to reduce the cost to the customer.
This makes a change from invoicing everything for month end.

[anniebird]

When the used car is sold a price is agreed between buyer and seller. If the car is subject to VAT under the Used Car Margin scheme you will not see the VAT on your invoice and the dealer will account for that out of their profit margin. If the car has full VAT then the sale price you agreed will include that amount so that for instance the car is being sold for �4,700 - your invoice will show sale value �4,000 plus VAT �700 total �4,700. There will be no difference to the price you are charged as you have agreed the total amount you will pay including VAT however it is calculated.

[TWR]

If a car dealer states VAT walk away & bye elsewhere.

[kempie]

5. Existing Contracts

What impact does the rate change have on the price stipulated in an existing (pre 1 December) contract that has not yet completed? At what rate is VAT due?

The consideration payable under the contract will decrease to reflect the change in the rate of VAT where the following conditions are satisfied:

� The supply is made after 30 November (applying the tax point rules summarised in 1 above); AND
� the contract does not provide otherwise.

The Seller should, unless the agreement states otherwise, collect VAT from the Buyer at the new rate. The purchaser is therefore required to pay less than the originally agreed consideration.

http://www.theretailbulletin.com/news/vat_rate _change_the_practicalities_for_retailers_26-11 -08/

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No invoice should have been previously raised therefore the basic tax point for the transaction would occur when the lower VAT rate is in force. Having agreed a VAT inclusive price their is absolutely no justification for the seller to recalculate the pre-VAT figure to arrive at the previously agreed total.

e.g. for a car VATed on the full selling price:

agreed �9400 (inclusive of VAT) before 1st December
= �8000 + �1400 (VAT @17.5%)

if supplied on or after 1st December the price should be
=�8000 + �1200 (VAT @15%)

and not the sharp practice of
=�8173.91 + �1226.09 (VAT @15%)