There seems to be a consensus amoung the financial commentators that VAT is likely to rise in the June budget from 17.5% to probably 20%. If you have a car on order is there anything that could be done to avoid the rise, e.g. like paying for the car now?

Last time that there was a "shock" VAT increase was 1991. Norman Lamont gave his budget speech on Tuesday 19 March and the VAT rise from 15% to 17.5% was effective on 1 April. The advice I'm reading from tax advisors is that the likely effective date of any VAT change this time would be 1 July. Although duty on petrol, alcohol, and cigarettes tends to go up with effect from midgnight on the day of the budget, apparently VAT is more complex and some notice is needed for companies to change their systems. VAT returns are made on a quarterly basis, changing VAT on 1 July would also make life a lot easier for businesses and the VAT man.

My car is build week 22 (sometime 31 May - 4 June), so whilst it is unlikely to be delivered to the dealer by 22 June, it stands a better chance of making it by 30 June.

When can the dealer invoice me and trigger the tax point / tax date upon which VAT will be calculated? Usually it is when the goods are supplied, but not always, e.g. if you take out an annual service contract and pay up front, that's the tax point although the service is delivered all through the coming year.

I guess the biggest test for a car sales tax point will be when the car can be registered. Can a dealer register a car before it has been delivered to him, or if it is with him but not yet delivered to me?

Advance payments and deposits

An advance payment, or deposit, is a proportion of the total selling price that a customer pays before you supply them with goods or services. If you ask for an advance payment, the tax point is whichever of the following happens first:

* the date you issue a VAT invoice for the advance payment

* the date you receive the advance payment

You include the VAT on the advance payment on the VAT Return for the period when the tax point occurs.

If the customer pays you the remaining balance before the goods are delivered or the services are performed, another tax point is created when whichever of the following happens first:

* you issue a VAT invoice for the balance

* you receive payment of the balance

So you include the VAT on the balance on the return for the period when the tax point occurs.

The dealer will have to pay the VAT early and there is the risk that you may not pay up when the car is delivered, so its likely he'll want payment up front.

I ordered my new car at the end of March and took delivery just over a week ago. At the time of ordering I was concerned VAT might rise before the anticipated delivery date of end May/early June. Hoiwever, when I placed my order it was on the basis of "fixed price" and the Dealer agreed that even if VAT moved they would hold the price. Now, this wasn't tested of course because VAT has remained unchanged but I am inclined to believe that if it had moved then they would have honoured the fixed price deal. If you were placing an order for a new car today then things might be very different as virtually everyone anticipates it being moved to 20% in the next budget and if I was selling a product or service then I would be emphasising that the invoice would have VAT at the prevailing rate.

In your own particular case it might be worth talking to your dealer; remember he wants you to pay the balance and buy the car, as much as you want your car and want to avoid paying increased VAT!

Don't forget though, if you are getting the "VAT free" offer then it's not really VAT free but the dealer is giving a discount that equals the VAT that would be paid... I ordered my car in September when VAT was at 15% but the car didn't arrive until January by which time VAT had come back up to 17.5%

The price I paid was the same as originally agreed, just the figures changed on the invoice to reflect the different rate of VAT...

I ordered my car about a month ago. I'm pretty sure that for cars already ordered the price will remain the same.

Don't forget the dealer is after the sale so if they try and hike the price up and threaten to cancel, any decent dealer won't let you walk away.

You will have your car before the end of June. Mine was build week 20 and the car is due at the dealership tomorrow or Tuesday.

If Skoda are advertising "VAT free" then it would be very poor show if a change in VAT was passed onto the customer. Ok, the promotion is actually a reduction equal to VAT, but if the headline is "VAT free", then they should honour the agreed price. Of course, they may choose to withdraw the promotion at any time, but existing orders should be as agreed.

If Skoda are advertising "VAT free" then it would be very poor show if a change in VAT was passed onto the customer. Ok, the promotion is actually a reduction equal to VAT, but if the headline is "VAT free", then they should honour the agreed price. Of course, they may choose to withdraw the promotion at any time, but existing orders should be as agreed.

Adverts/offers clearly state that the price is discounted and offers can be withdrawn or varied at anytime.

Until 30th June 2010 we've reduced the price on Fabia models, so it'll be like not having to pay the VAT

Don't forget the small print

Offers available for new car retail orders taken before 30th June 2010, may be varied or withdrawn at anytime and not available in conjunction with ‘Happy Swapping’.

Not clear?

Adverts/offers clearly state that the price is discounted and offers can be withdrawn or varied at anytime.

Until 30th June 2010 we've reduced the price on Fabia models, so it'll be like not having to pay the VAT

Don't forget the small print

Offers available for new car retail orders taken before 30th June 2010, may be varied or withdrawn at anytime and not available in conjunction with ‘Happy Swapping’.

Not clear?

don't be daft chief, they can't amend/vary a deal that has already been done!

that refers to the fact that although they say end June 2010, they might suddenly decide to stop/change it, so you should "get in fast with your order", etc, etc.

Ive just ordered a new vrs today, I asked the dealer about this and he said once ordered that is the price you will pay as it comes under payment protection and VAT is at the rate of ordering

Regards Mike

Offers available for new car retail orders taken before 30th June 2010, may be varied or withdrawn at anytime and not available in conjunction with ‘Happy Swapping’.

As it says - available for orders taken by 30th June. Yes, they can withdraw the offer and not accept new orders at the offer rate, but that should not affect orders already placed.