VAT Rise

[chromelover]

I have just been looking at HMRC website about the rules for charging VAT.

I have found the following information. I've taken the relevant information from this page HM Revenue & Customs: When transactions take place for VAT purposes which also links to this page HM Revenue & Customs: Instalment payments, deposits, credit sales and VAT


"Time of supply for goods and services

The time of supply (tax point) for VAT purposes is defined as follows:
For transactions where no VAT invoice is issued (for example, sales to customers who aren't registered for VAT) - the time of supply is normally the date the supply physically takes place (as defined below).
For transactions where there is a VAT invoice - the time of supply is normally the date of the invoice, even if this is before or after the date the supply physically took place (as defined below).



For goods, the time when the goods are considered to be supplied for VAT purposes is the date when one of these happens:
the supplier sends the goods to the customer
the customer collects the goods from the supplier
the goods (which are not either sent or collected) are made available for the customer to use - for example, if the supplier is assembling something on the customer's premises

Exceptions

The above general principles for working out the time of supply do not apply in the following situations:


If the supplier receives part payment before the date when the supply takes place. The time of supply becomes the date the part-payment is received (assuming no VAT invoice has been issued before this date - in which case the time of supply is the date the invoice is issued) - but only for the amount of the payment. The time of supply for the remainder will follow the normal rules - and might fall in a different VAT period, and so have to go onto a different VAT Return."




Advance payments and deposits

An advance payment, or deposit, is a proportion of the total selling price that a customer pays before you supply them with goods or services. If you ask for an advance payment, the tax point is whichever of the following happens first:
the date you issue a VAT invoice for the advance payment
the date you receive the advance payment

You include the VAT on the advance payment on the VAT Return for the period when the tax point occurs.

If the customer pays you the remaining balance before the goods are delivered or the services are performed, another tax point is created when whichever of the following happens first:
you issue a VAT invoice for the balance
you receive payment of the balance

So you include the VAT on the balance on the return for the period when the tax point occurs."


This would appear to suggest that if I pay for my car in full before the VAT rise that I will only be liable for VAT at the current 17.5% rate. Anybody know anything more about this?

[Galen10]

Quote: Originally Posted by chromelover (original)

This would appear to suggest that if I pay for my car in full before the VAT rise that I will only be liable for VAT at the current 17.5% rate. Anybody know anything more about this?

That's my understanding of the situation too. My dealer has been saying as much since I place the order in early October. If the invoice is raised and the finance is all organised (i.e. you have effectively "paid" for the vehicle), then it doesn't matter if the car is delivered after 4th Jan, any more than it would matter if you bought a TV from Comet, paid for it now but it was delayed until February; you wouldn't be expected to pay the higher VAT rate.

The only fly in the ointment would be if your car was built so late that they couldn't raise an invoice before 4th Jan I think, or if there is some reason that the invoice can't be raised until the car is built and that happened after 4th Jan?

[chromelover]

Quote: Originally Posted by Galen10 (original)

The only fly in the ointment would be if your car was built so late that they couldn't raise an invoice before 4th Jan I think, or if there is some reason that the invoice can't be raised until the car is built and that happened after 4th Jan?

But the HMRC website says

If the customer pays you the remaining balance before the goods are delivered or the services are performed, another tax point is created when whichever of the following happens first:
you issue a VAT invoice for the balance
you receive payment of the balance

So regardless of wether of not they raise an invoice, the fact that they have received the balance from me means that its is only subject to 17.5% VAT surely?

[gaza2010]

when i ordered my car in early october i clarified that the vat rate would be 17.5%, my contract and all pricing is for 17.5 % and stated delivery for mid dec 2010, so because there has been slippage due to MINI buggering it up its down to them. ( car went 1200 and down for build 5 weeks ago ). im not paying 20% will walk away first.

[Stiggy]

It's not as simple as some people might think. If it was, then all the car companies would have a 'place an order before Dec 31st' campaign. It would also effectively defraud HMRC of millions of pounds.

From what I understand the car has to be in the country, so the dealer has the VIN, or something...

[chromelover]

Quote: Originally Posted by Stiggy (original)

It's not as simple as some people might think. If it was, then all the car companies would have a 'place an order before Dec 31st' campaign. It would also effectively defraud HMRC of millions of pounds.

From what I understand the car has to be in the country, so the dealer has the VIN, or something...

Just spoken to a tax advisor at HMRC. As long as you pay the balance in full before Jan 4th and get a receipt from the dealer, this will lock in the VAT rate at 17.5% even if the invoice is not issued until the car is delivered.

This is confirmed by:

If the customer pays you the remaining balance before the goods are delivered or the services are performed, another tax point is created when whichever of the following happens first:
you issue a VAT invoice for the balance
you receive payment of the balance

[Redbournmini]

I know that it's rather academic now as there is only one full day before the VAT increase, but my garage told me that as long as they were able to register the vehicle, I could pay in full before receiving the vehicle and thus avoid the increase VAT. Fortunately i collected my vehicle on the 31 December. Now trying to go through the instruction book!!