If you purchased VAT free goods during the VAT free period and collect & Pay for them after the VAT free period ends, you will be charged VAT on the goods. However, didn’t Motability say they would cover this in their Q&A’s or one of the video’s and may have decided to be sly and hide it in Q2 AP’s? – I wouldn’t put it past them! @Glos-Guy Yes, but as you say yu should be exempt.
So this is the difference between Motability as an organisation and us as individuals. I really should have thought that through, you are always liable for taxes, including VAT on the period within which the goods change ownership. In this case, when the car is delivered and Motability have bought the car. Their price guarantee has, as far as their current messaging is concerned, remained in place, so if I were to order June 30th I wouldn’t be exposed to the VAT increase. However, if someone ordered in March and takes delivery of the car in August, that car will also be liable for VAT as applied on July 1st.
Mark, I’ve already shown that VAT applies to all leases that go in-life after the 1st July earlier in this thread, with evidence. And how applications made before 1st July may end up being subject to VAT. Motabilty has to cover that VAT liability somehow. So, yes, I strongly believe that the April APs are higher, as quite honestly anything else doesn’t make any business sense. My idea for how that may have been done to be equitable to all parties was just that – an idea. But I’ve unintentionally pulled the thread way too far from the original question, and that’s not fair to the OP. So I’ll stop.
I apologise, my somewhat focused mind was fixated on the costs to the customer. As I’ve said above VAT will be recoverable from Motability Ops for all cars where the PIN is entered from July 1st.
@kdwolf cars ordered on the current 60,000 mile contract will be expected to depreciate more than on the new 30,000 one. That is the key saving where Motability won’t have to take such a hit on vehicles that have taken a significant proportion or full allowance. They can also reduce the Insurance Premium as the scheme now allows only 30,000 miles in total, any car after that would be outside of the core contract and subject to an agreed fee for further cover (we remain insured but a chunk of that 25p excess goes to DLM). Those two would very likely reduce scheme costs, which SHOULD be passed on to the customer. A number of people on various FaceBook groups who are in or were in the trade have said that the lower limit will have a significant impact on depreciation, however, that’s only for vehicles that would have gone beyond the 30,000 and how many customers that actually effects will be known only by Motability based on previous disposals.
The technical accounting would be something like:
Purchase price less depreciation (to give a disposal value) plus/minus variation on disposal. In most cases, if we believe the 7,500 average, that should be a positive variation. However, if they’ve decided to depreciate at an expected average mileage plus a margin for error (say, 10,000) then a large number of cars would be coming in at a significant loss on disposal, which stands up in their accounts.
To put some (very rough) numbers in:
purchase price 30,000 30,000
Depreciation 15,000 15,000
Adjusted value 15,000 15,000
Mileage on disposal 7,500 60,000
Disposal income 16,000 10,000
Profit (Loss) 1,000 (5,000)
Now multiply that loss by how ever many hundred thousand exceed 10,000 miles and that’s the huge losses on disposal explained away. If they don’t lose 5 million, and share that between us, we might save £500 off current APs.
I'm Autistic, if I say something you find offensive, please let me know, I can guarantee it was unintentional.
I'll try to give my honest opinion but am always open to learning.
Mark