Quick VAT question
01 December 2008, 10:33 AM
#1
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Quick VAT question
If I'd ordered a new car two months ago, and only paid a deposit. Will the outstanding amount now be paid at 15% Vat or the original 17.5%?
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01 December 2008, 10:46 AM
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These notes from HMG may help.
3.2.1 Goods provided after 1 December
I issued a VAT invoice to my customer before 1 December 2008 for a supply
of goods (e.g. a bicycle) that I provide during December 2008. I have
charged VAT at 17.5%. Can I now charge VAT on this supply at 15%
instead?
of goods (e.g. a bicycle) that I provide during December 2008. I have
charged VAT at 17.5%. Can I now charge VAT on this supply at 15%
instead?
Yes. Under the special rules (see paragraph 3.1) you may decide to charge the
new standard rate of VAT. If you decide to use the special rule you must issue a
credit note to your customer to adjust the amount of VAT charged on any original
VAT invoice you issued. This will reduce the amount of VAT you are liable to
account for on the sale. If your customer is VAT registered this will reduce the
amount of VAT she can recover on the purchase. There is no requirement to
issue a credit note if you had not previously issued an invoice.
dl
new standard rate of VAT. If you decide to use the special rule you must issue a
credit note to your customer to adjust the amount of VAT charged on any original
VAT invoice you issued. This will reduce the amount of VAT you are liable to
account for on the sale. If your customer is VAT registered this will reduce the
amount of VAT she can recover on the purchase. There is no requirement to
issue a credit note if you had not previously issued an invoice.
dl
01 December 2008, 10:55 AM
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As David says, as long as the supply takes place after 01/12/08 the VAT may be reduced. For VAT registered consumption it makes no difference as the higher value is just reclaimed as input tax, however for a normal consumer it does make a difference.
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01 December 2008, 12:13 PM
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Do remember it's no skin off their nose. It won't cost the dealer any more, just a tiny bit of extra paperwork, if that 
Nice Uncle Alistair is paying
Nice Uncle Alistair is paying
Last edited by David Lock; 01 December 2008 at 12:15 PM.
01 December 2008, 05:21 PM
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Wrong attitude. In the current market, they'd probably let you. They can keep your deposit and still sell the car. I bet the deposit is higher than the saving of 2.5%!
My advice would be to ring said dealer, and ask your salesman for the new fuigure now that the VAT has been reduced. It's no skin of his nose, he won't get paid anymore or any less!
01 December 2008, 06:20 PM
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If they haven't already raised the invoice against you then they will be breaking the law by issuing it with 17.5% from today onwards.
Just insist they issue with 15%, they almost certainly will want to do this anyway as any VAT inspection would spot this and that would cause them grief, and they won't want trouble from HMRC.
Just insist they issue with 15%, they almost certainly will want to do this anyway as any VAT inspection would spot this and that would cause them grief, and they won't want trouble from HMRC.
01 December 2008, 06:40 PM
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And, if my reading of the notes I posted is correct, your can get back the 2.5% extra VAT you paid with the deposit because the goods hadn't actually been supplied at that time. dl
01 December 2008, 06:56 PM
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sorry to be a dunce, it looks like it's already been answered but, i ordered a sofa a month ago but it won't be delivered until 10th dec and the invoice payment won't be taken until shortly before the delivery. so will the amount taken from my bank be less than the invoice states? 
01 December 2008, 07:39 PM
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No, once an invoice is created so is the tax point. Even though payment won't take place till after the VAT rate changes, the invoice was presumably created when you agreed to buy.
01 December 2008, 07:50 PM
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Another thick question,,,,,How does this affect quotes? I did a quote for someone abouts 2 weeks ago,the price was including VAT,which they accepted. We did the job today,the bill was for the total amount quoted,and this is where they questioned VAT,so was wondering what we should be doing?
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