New Car Discounts & VAT Query
Discussion
I've got a bit of a query if anyone can help?
The Mrs has ordered a new car and it is advertised at 10% off (Half VAT offer)
The RRP of the car is £21360
The RRP base price of the car is £17800
Am I right in assuming that the 10% discount is £17800-£1780 and then you'd pay VAT on the £16020 discounted price? Total Price = £19224
The dealer in question are knocking the 10% off the discounted base price (£16020), but are trying to charge VAT at what it would be if the car was still £17800 thus making the total price £19580 and what I believe is an overcharge of £354
HMRC states that any goods sold at a discounted rprice should have VAT charged at the discounted price, and not the original price as shown in the link below:
The Mrs has ordered a new car and it is advertised at 10% off (Half VAT offer)
The RRP of the car is £21360
The RRP base price of the car is £17800
Am I right in assuming that the 10% discount is £17800-£1780 and then you'd pay VAT on the £16020 discounted price? Total Price = £19224
The dealer in question are knocking the 10% off the discounted base price (£16020), but are trying to charge VAT at what it would be if the car was still £17800 thus making the total price £19580 and what I believe is an overcharge of £354
HMRC states that any goods sold at a discounted rprice should have VAT charged at the discounted price, and not the original price as shown in the link below:
HMRC said:
http://www.hmrc.gov.uk/vat/managing/charging/disco...
"Discounts on goods and services
If any of your goods or services are discounted, you charge VAT on the discounted price rather than the full price.
If you make an offer to a customer such as 'we will pay your VAT', VAT is actually payable to HM Revenue & Customs (HMRC) on the amount the customer would have paid on the discounted price, not the amount they have paid at the full price."
Does this not apply to cars?!"Discounts on goods and services
If any of your goods or services are discounted, you charge VAT on the discounted price rather than the full price.
If you make an offer to a customer such as 'we will pay your VAT', VAT is actually payable to HM Revenue & Customs (HMRC) on the amount the customer would have paid on the discounted price, not the amount they have paid at the full price."
Edited by *Kosta* on Monday 31st January 12:58
*Kosta* said:
The Mrs has ordered a new car and it is advertised at 10% off (Half VAT offer)
Which is it - 10% or half VAT?if it's half VAT then the higher price is correct, as that's the nett price plus half the VAT.
I notice SEAT have some cars with no VAT and they're saying "save 20%". Unless there are other discounts applied then removing the VAT would only save 16.67%.
It's the half VAT offer... even the smallprint is confusing to the average Joe like me
SEAT said:
*Half VAT reduction of 10% based on VAT at 20% on new car deliveries taken before 31st March 2011. Reduction equivalent to 10% VAT applied to original base price only excluding factory fitted options. VAT is still applicable and will be shown on the customer invoice. Price shown indicates RRP with the equivalent of half VAT(10%) plus the Road Fund License and First Reg Fee. Finance offer applies to selected Leon models only, sold and registered between 4th January 2011 and 31st March 2011. Retail Sales only. Subject to vehicle availability. Indemnities may be required. Subject to status. Available to over 18's only from participating dealers. SEAT Finance, Freepost SEAT Finance. Offer may be varied or withdrawn at any time.
Gassing Station | Finance | Top of Page | What's New | My Stuff