The Finance & Leasing Association has
persuaded HM Revenue & Customs (HMRC) to resolve a problem that
could have disadvantaged buyers on hire purchase (HP)-type
agreements, through the coming change in the VAT rate.
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VAT goes back up from 15 to 17.5 percent on 1
January 2010, with the ending of the temporary cut to counter the
economic recession. Generally, customers will be able to beat the
VAT rise on new cars ordered before the end of the year but
delivered early in the New Year.
As noted in Motor Finance in October, however, due
to the wording of existing VAT legislation on the timing of
transactions in HP deals, there was a risk that customers taking
point-of-sale finance might not have been able to pre-order at the
15 percent rate.
This will now be addressed by a new Parliamentary
Order amending the VAT law. All car buyers will therefore be in the
same position on the VAT rate, whatever their finance
arrangements.
Andy Thompson
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