How to avoid the VAT increase.

[grober]

This from the What Car Web Site.

Land Rover has become the latest manufacturer to offer protection against the rise in VAT to 20%, but there is a way every buyer can avoid the increase – even on cars delivered six months into 2011.
Place an order before the increase in VAT on January 4, 2011, and a tax point can be created, which makes the purchase liable to the 17.5% rate. This applies even if the balance isn't paid until the car is delivered, and this can be up to six months after the order was placed. While, it doesn't apply if you're buying on finance, it does cover you if you're using a personal loan to clear the balance. The down side is you might have to come up with a big enough deposit to cover the VAT – which the dealer will have to invoice for and pay straight away – to get them on your side.
Unfortunately, some car dealers either don't want to play along, because they have to raise a VAT invoice and pay the tax due before full payment is received, or they just don't know how the system works.
Posing as car buyers, we asked 30 dealers if we could avoid paying the 20% VAT and were showered with a confusion of dates and contradictory opinions. Many told us it could be avoided only if the full balance was paid before the end of the year, or if the car was registered this year. Some simply said it could not be avoided at all. Only three dealers appeared to know the facts and offered the best help possible

 

[EDZ649]

We did exactly the same when the VAT went back up from 15% to 17.5%. We had lots of orders already sold at the 15% rate which would not be completed until way into when the 17.5% came into force so we invoiced the balance on all the remaining contacts just before th VAT went back up and just held them until the jobs were complete.

We didn't even bother going into it with our customers, we just told them we would honour the 15% rate.

As stated above, we ended up paying the VAT to HMRC a few months earlier at the end of our next VAT quarter but it worked ok.

We will be doing the same this time around too.

 

[davidjpowell]

Not surprised they are not up to speed. Unless their Accountant / FD feeds the information down to sales staff they would not have a clue.

 

[janner]

Why 6 months? As far as I know there's no limit as long as it's invoiced before Jan.
The problems begin if the dealer goes bust before you get the car.

 

[Rory]

I think the issue here for the dealers is more to do with accounting practice.

Most of them are part of big groups (sometimes public companies) and have revenue recognition rules that don't allow them to invoice for the whole value until the car is registered.