Hi Guys, If anyone can help me on this I'd much appreciate it.
I ordered a new audi in November, I was told it wouldnt be delivered until end of Jan. and we agreed I woudn't take it until March for the new reg. I have just been told that the car has been built earlier than planned and is already in the UK.
To avoid the VAT increase of almost a £1000, I would like to pay in full for the car before Xmas, but still take it in March.
The dealer is saying if I want to prepay- I would have to take the car now/Jan- the reason they are giving is that they can not invoice a car if it hasnt been registered.
This is not what I want as I agreed delivery in March (it suits me due to my current car will be 3 months short of being 3 years old and I feel i've added enough miles and use to make the most of the depreciation)
The question is - what is the problem with me prepaying the dealer before Xmas to avoid the VAT increase and then registering the car March 1st?
I dont see a problem with it- are they just fobbing me off?
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VAT and vat rate payable on either the delivery date or the invoice date.
Only fly in the ointment of paying now and delivery March is that you risk the dealer going bust and you becoming a creditor ..........after the VAT man/Tax man/banks and other preferred creditors
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Vat is payable at the VAT rate applicable on the invoice date.
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Surely it must be possible to buy an un-registered car . . . How else would I but a car to modify and race?
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Vat is payable at the VAT rate applicable on the invoice date.
Regarding Building works I believe that if I invoice a customer in say mid January, but carried out the works in December then 15% is still the rate?
MD
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This has been discussed elsewhere, but probably buried in other threads.
HMRC guidance is here. Think Section 2.6 is relevant:
www.hmrc.gov.uk/vat/forms-rates/rates/rate-rise-gu...f
The thing is, it's rather up to the garage, and their business decision. There may be Audi or even their own company accounting rules which prevent that car being paid for before it's been registered. Registering it may trigger their payment to Audi so that get's messed up.
It's also fraught with other issues. The garage could go bust - you should get the car but it would be messy. Who would be responsible for the car if it got damaged / stolen / garage burned down etc, as it's yours, not theirs. Would they want you to pay storage charges?
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The thing is it's rather up to the garage and their business decision. There may be Audi or even their own company accounting rules which prevent that car being paid for before it's been registered. Registering it may trigger their payment to Audi so that get's messed up.
GAAP for many international firms is very strict following ENRON (SOx) about when revenue can be recognised, shipment to customer and customer taking title being common criteria, therefore Audi and perhaps the dealer may not be able to recognise the revenue in their accounts (or sales figures) until the car becomes yours. So if you can't physically take delivery then it isn't technically sold to you perhaps ? In fact 'storing' it on your behalf can cause problems with revenue recognition under SOx I believe.....
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VAT is going up by 2.5% and you will be paying almost £1k extra as a result??
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£35000 * 1.025 = £875
£35k before VAT is probably a bit high, even for an A6, but even if I could save half that, for no extra effort, I'd be keen.
Edited by Lou_O on 18/12/2009 at 12:48
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Yes The car is £36,321.74. The Vat on that at 17.5% is 6,356.30, the VAT at 15% is £5448.26
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My maths must be out, here's what I get:
Total price = £36321.74
ex-VAT price = £31583.48
VAT at 15% = £4738.26
VAT at 17.5% = £5527.11
Difference = £788.85
In any case, I don't blame you for wanting a way to stick that money in your own pocket instead of those of the taxman.
But from what your hearing it seems like the only way to do it is to take the car early.
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No your maths are ok, but you have misunderstood me
The car is £36,321.74.
The Vat payable on that at 17.5% is 6,356.30,
therefore the total price payable is £42,678.04
Anyway thanks for the info people, It is probablly down to the dealers rules, so I'll probablly get it early I cant be dealing with the hassle
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I was in a similar position 12 months ago, but for a different reason. The pound was plummeting and Audi don't forward guarantee prices on factory orders - in other words, the price you pay is the current price at time of delivery, not the price at time of order. Rather than wait for March 09 registration and risk a price increase, I ordered a 2009MY A6 Avant from Audi RHD stock for Jan 09 delivery and registration. For me, it will be a looooong term car, so the plate and its effect on short term resale value was not very important.
Look at it this way - you'll get to enjoy your new car 2 months earlier!
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Bibbly Bobbly, if I were you I wouldn't worry.
You're spending over £40,000 on a vehicle which will lose between half and two-thirds of its value in the next few years. In fact, you'll probably say goodbye to about £5,000 just by putting on the registration plates, without even driving off the garage forecourt.
You obviously know all that, but you still decided that you want to spend some of your spare cash on a car. Good for you -- it's your cash, and that's what you want to do with it. You have evidently decided that the £40K Audi is good enough to justify spending three times as much as you could have paid for a nearly-new Mondeo estate, so you're evidently happy to spend your cash on a luxury.
So go on and enjoy it, and don't be upsetting yourself about a figure as small as £800. Compared with the amount this car is going to cost you over the next few years, the £800 is small change.
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Just make sure they don't register it before January, so you get a 2010 car, if not the plate.
As others have said, paying the dealer in advance in the current climate is a v poor idea.
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If paying in advance and the company goes bust in the interim, do you loose the rights to the car? I would have thought since the car is actually yours (albeit with delayed delivery) that any liquidators could not actually dispose of it.
Very different from paying a deposit against a not defineditem - as in the examples of leather sofas etc.
Legal eagles to comment?
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I have had this conversation with Ford and Renault dealers re a new Fiesta or Clio.
The Ford dealer said that Ford's guidlines were that the car should be delivered when invoiced though agreed that they could raise an invoice in Dec for later delivery and VAT would be applicable on the invoice date, not the delivery date.
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You'd need to look carefully at the terms of the contract. If title (ownership) passes on delivery of the car (as normally happens), it won't be yours till you get it.
If I were you I'd take the car early: when you come to sell it there won't be a material difference between the value of a Jan. 2010 car with a 59 plate from one with a 10.
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You can pay less VAT if the dealer reduces the price of the new car. The dealer can reduce the value of the part-exchange vehicle so that they end up with their required profit.
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...You can pay less VAT if the dealer reduces the price of the new car....
To a limited extent - the vatmen are well aware of this accounting device.
For example, they will not accept a deal in which a p/ex worth £5,000 is shown as £1,000 with a £4,000 discount off the new car, thereby saving the customer the VAT on £4,000.
Edited by ifithelps on 20/12/2009 at 08:47
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