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So there we have it VAT increases in January 2011 by 2.5% and maybe some of you out there are considering a visit to the NEC in October and may be tempted into buying a new van. It is likely to be the case that your order is submitted to the factory and delivery will be promised sometime in the new year.

Oh, Oh, Order at 17.5% VAT and buy at 20% VAT...what can you do to save yourself that extra 2.5% or £4250 on a £17,000 Van?

First thing is to pay up front before the end of the year so that your VAT invoice and receipt is issued whilst the level is 17.5%. Thats the easy option. However, not everyone has that cash and may need to pay a deposit first and the balance on delivery; or prefer to let go of their hard earned cash when the new van is attached to the towbar.

If you are paying after January 2011 then read up on the VAT changes and any accompaning regulations that may introduce changes to the current VAT practice so that you can work within the system to save you some money.

For guidance, this is how it works at the moment........

It comes down to how the Seller deals with its VAT returns. (The Salesman on the NEC stand may not be aware of this!!!) If the Seller waits until full payment to deal with VAT, and that is after the date of the increase, then you will pay VAT at 20%. However, dealers can deal with their VAT returns on sales much earlier if they wish e.g the issue of a VAT invoice upon payment of a deposit (before the VAT increase). So they can save you 2.5% in VAT. Its up to them....and for you to haggle. So, at the NEC when negotiating the price of the van try to get them to deal with the VAT like this........

If the Seller is to play ball then it must issue a VAT invoice which must be dated before the date of the change to 20% and state that full payment is to be made on delivery of the goods or some date less than six months away whichever is the earlier. The Seller then deals with its VAT returns before the end of the year. That way you pay VAT at 17.5% even if you complete the deal once VAT has increased. It helps if you pay a deposit when that VAT invoice is issued. If this kind of arrangement still operates when the VAT changes are made (as I say check the rules) then make sure the seller guarantees to deliver within that six month window and that your contract includes for the seller to pay the extra 2.5% if they fail to so deliver 

Now, if the seller says that to make sure of saving that extra 2.5% VAT you need to pay the full cost of the goods before the change in the  VAT rate that is not true (under the present regime). As I say, its up to the Seller. If you don't ask you certainly won't get it!!!!

Phil

Might the saving be £425 not £4250?

David

Thanks Phil.  As always, really good advice.

Jim

Yes David bit of a rogue "0" in there.....

Phil

If the dealers want sales, they'll have to work with the purchasers best interests at heart won't they. It's no benefit to them if they draw the 20% Vat instead of the 17.5%, they'll still have to account for the figure on their return & pay it forward accordingly. The £425 saving on Phils £17,000 plus Vat example caravan is worth having & I'd be reluctant to order if the dealer wasn't singing from the same hymn sheet as me.

This 2.5% increase is going to make a lot of difference to a lot of people. I hope the budget doesn't push us back into the doldrums again now we've started to see a glimmer of light at the end of the tunnel. Manufacturers don't want that any more than the consumer does.

BB

Just bouncing this one back to the top for anyone thinking of visiting the Lawns, Cottingham in September (New Swifts around) or the NEC, and may be buying. See my original post at the top of this thread.

I did qualify my original post, saying,  "If this kind of arrangement still operates when the VAT changes are made (as I say check the rules)". So here is an update

The Government has implemented the same “anti--‐forestalling” Legislation which applied when the rate reverted to 17.5% from 15% in January 2010. So the advice given above remains valid for the rate change in January 2011.

Don't foget, the salesman may not understand how the VAT rate change will operate so, if you want to save a few bob, tell him and ask him to check with his company finacial advisors and if they will deal with VAT as indicated above they get the sale and you pay VAT at 17.5% even if they deliver the van after January 2011 but in less than 6 months from your order date.

Happy spending

Phil

Open another bottle of red, Nigel...cheer up...always darkest before the dawn and all that......

Phil

Word of advice - a good haggle will easily save you more than the VAT difference.

Also - make sure you are very clear about the condition of your trade in - when you come to pick up your new purchase and they inspect your old one, any saving that you negotiated could easily dissappear with that damp patch that you forgot to tell them about. We got them to write "damp in bathroom", or words to that effect, on the paperwork at the NEC.

I wouldnt worry about the VAT increase...

This will affect the dealers more than the purchaser... heres how. People will be much more reluctant to buy so the dealers will have to offer better deals. I expect their margins will be in the order of 10% so they can afford to offer between 0-10% off. So they would normally give max say 5% but now because of the VAT increase will have to give the purchaser 7.5% so the price to the purchaser will cost the same with the VAT increase.

Dont get fooled by the dealer saying " Remember the VAT increase" its their problem not yours -remember you are the purchaser you dont have to buy - and negoatiate a hard bargin. This is the problem with the VAT increase on the economy it really effects business confidence etc people wont buy. But remember you are in the driving seat.

Hi,

We have been looking at the new Swift price lists and I would not be surprised if they have already factored in the VAT increase such that they will make the offer to hold "pre-increase" prices into the new year.

Mr UM