Misleading VAT Savings On Used Cars
Tuesday, 12. January 2010
For years I’ve fought against those providing misleading advice on cars and car finance with many of the cons revealed in my book, An Insider Guide To Car Finance, my Friday FAQ’s and the new videos that will be launched very shortly. Having just read the same press release for the umpteenth time I’m now moved to make further comment on the announcement that Autoquake are very generously waving the VAT charged on used cars sold off their end of lease car sales website. Whilst I’m a great believer of online end of lease car sales, what they are announcing is absolute bull and I believe reportable to the OFT as totally misleading. They are suggesting that they will absorb the 2.5% VAT increase leaving their used cars at the same price as they were pre VAT increase. They make it appear as though they are saving you a fortune. Look, a used car is sold for whatever a dealer can sell it for, however, provided he is VAT registered he is responsible for paying the VAT included in his profit. There is no chance that a dealer works out his profit and adds a few pounds to the screen price of the car on his forecourt arguing that this is the VAT increase. In fact with used car values weaker in auction and the dire amounts of business being done during the poor weather it is unlikely that you will find a car on a dealer’s forecourt, that was there before Christmas, that hasn’t dropped in price. So what they are saying is utter nonsense. Even if the increased VAT was to be reflected in the selling price this is what happens. Take a car that has £1,000 profit in. It was bought for say £9,000 and sold for £10,000. Prior to the increased VAT he would have made in profit £869.57 + VAT (£130.43). If the dealer was looking to keep the same amount of profit he would now have to increase the selling price from £10,000 to £10,021.74. I can see that sticker on the screen of a Mercedes C Class – can’t you? As I said, bloody nonsense. Autoquake should be very careful if they progress down this route, they will not only be seen as con men but also lose precious ground to the originator of end of lease car sales online, Carsite. By Graham Hill
