All articles by Andy Thompson
Andy Thompson
ANDY THOMPSON: Voluntary terminations – FLA looks at legal challenge
Voluntary termination (VT) rights under the Consumer Credit Act 1974 have long been a concern in motor finance.
Convictions in “long firm” case
A significant car leasing fraud has resulted in successful recent prosecutions, and another pending trial. In November last year, four men were convicted at Birmingham Crown Court of a fraud worth some £500,000 involving cars and other goods.
US state help for GMAC and Chrysler Financial
General Motors’ former captive GMAC has won a reprieve, after fears it could be forced to file for bankruptcy. The US Federal Reserve has injected $6bn (£4.3bn) of capital into GMAc, after the motor finance provider won its bid to become a bank holding company at the end of December.
Problems with rental invoices
The standard rate of VAT has been changed under the government’s fiscal plans to relieve the economic recession. The rate went down from 17.5 to 15 per cent on December 1 2008, and will return to the original rate at the end of 2009. The main impact on motor finance will be on the rentals in contract hire and other leasing operations. Prior to this year, the standard VAT rate had not changed since 1991 and had never been reduced since 1974, so most lessors will have no recent experience of some of the administrative difficulties that could arise. Lessees who are end-users of business cars can recover only 50 per cent of the VAT on the rentals, even if these businesses are VAT-registered and have to account for VAT on all their own sales. They therefore have an interest in paying VAT at the lower rate on any monthly or quarterly rental where possible. Invigors partner George Tonks commented: There are two alternative ways for lessors to invoice for VAT on lease rentals. Probably the more commonly used one in contract hire is to issue annual schedules in advance for the rentals due in the following year. In this case, under VAT law the ‘tax point’ (i.e. the relevant date for VAT) will be the due date for payment. So schedules covering the current period will need to be re-issued with revised details of the periodic VAT rates to reflect the reduction from December 1.
Managing the risks
Managing the risks Andy Thompson finds out about vehicle finance fraud at a recent FLA conference The Finance & Leasing Association (FLA)’s Automotive Financial Crime Conference in Coventry on June 24 gave opportunities for a useful exchange of views among finance houses, dealers and professional advisers It is vital to know your customer, what you are financing and where the risks are, said Martin Parr, fraud and compliance manager at BMW Financial Services
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Lenders take cover on all fronts
Lenders take cover on all fronts The credit crunch is taking its toll on underwriting capacity across the motor finance markets The effect in recent months has been most obvious in the sub-prime sector, with Welcome Car Finance withdrawing its facilities from all unconnected dealerships and British Credit Trust (BCT) also heavily reducing its new business One finance broker commented: It is the bank-owned lenders that are most jittery
£5 a day for the Fiat 500
£5 a day for the Fiat 500 Fiat Financial Services is offering an innovative 24-month contract hire deal for consumers on the Fiat 500 model series
More change on credit agreements
New European rules are about to force more changes in UK consumer finance agreements This follows soon after lenders had to cope with a major round of changes determined at national level, through the 2006 Consumer Credit Act (CCA) and new regulations since 2004 in such areas as credit advertising and early settlement A new Consumer Credit Directive (CCD), under preparation since 2002, is now being finalised
Ruling favours car trade on bonuses
Ruling favours car trade on bonuses Motor dealers, and to a lesser extent lessors, have come a step closer to recovering large amounts of VAT overpaid in past years
Appeal ruling goes against Lombard
Royal Bank of Scotland has lost an appeal on the VAT treatment of costs incurred in the Lombard group’s hire purchase (HP) business