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Well the day has finally come. After 5 Motability cars, we have handed the last one back (early termination) and left the scheme. There have been a number of challenges in the process of transitioning back from Motability to a private vehicle and, as quite a few people are leaving the scheme (or considering doing so when their current lease ends), I thought that it might be useful to share my experience, and what I’ve learned along the way, in the hope that it might help others.
There would be way too much info for a single post, so I will split the info across a number of posts covering the multitude of different issues that we faced.
In this first post I shall address the subject of Disabled VAT exemption. As you may know, Motability have a block VAT exemption on the basic vehicle cost of all cars purchased for the scheme. The rules for private new car buyers are more complex. If the disabled person is a full time wheelchair user and requires a ‘substantial and permanent’ adaptation to the vehicle then the car can be purchased VAT free. However, both criteria must be met. A scooter user, or someone who uses a wheelchair but only occasionally will not qualify. A permanent and substantial adaptation is something that is bolted into the car and / or the cars electrical system and cannot be easily removed. My wife is a full time wheelchair user and requires a person hoist, so we qualify for VAT exemption on a new car (once every 3 years max).
Initially when I looked into this issue I interpreted the guidance as meaning that the car had to be registered in the name of the disabled person. This is not the case. A nominated driver (myself in this case) can purchase the car with their own money ex VAT and have the car registered in their own name, as I have done. There is a simple 2 page self declaration that you fill in and hand to the supplying dealer. This form has a section which allows you to state the nominated person if it’s not the disabled person.
The next issue is that, as with Motability, the rules suggest that the car can only be used for the specific benefit of the disabled person. This is to deter abuse but, as with Motability, there is some discretion on this. I was very up front with HMRC and had the same conversation with them as I’d had with Motability a few years earlier. I explained that as we are retired and my wife cannot drive, we only need one car. Consequently, there are regular occasions when I use the car for reasons that are not for my wife’s direct benefit, such as visiting family and friends etc. They assured me that this is absolutely fine but, for peace of mind, I got them to put this in writing for me, which they kindly did.
There is a very good helpline for VAT exemption enquiries – HMRC Charities Helpline tel 0300 123 1073 (0900-1800 M-F).
The final issue with VAT exemption is that, for reasons that are beyond me, not all car dealers will allow VAT free purchases. I live between two main BMW dealers. One will process VAT exempt sales and one won’t. Guess which one got my business?
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@Glos_Guy the detailed car looks fantastic. I used to work with a guy who had his car done every 6 months, he has an Alfa which is a lovely deep red and that positively glowed after a thorough going over. Did the detailer give you advice for ongoing maintenance?
Thanks Mark. The detailer recommended a couple of products, but for those customers who he has done a full ceramic coating (which has a 3 year guarantee), he offers a monthly exterior maintenance wash, with spot treatments where necessary, for £42. I did buy quite a few products and some kit prior to taking delivery of the car, but I think I’ll keep them for emergencies and get the detailer to look after the car for me. I’ll use some of the extra £330 that we will now be receiving every 4 weeks, as that’s going in to an account for car related expenditure (tyres etc)!
Thought I’d check back in and see if the post ceramic coating pics had been posted yet 😎
Wowzers!! You must have been like a Cheshire Cat when that rolled out into the Sun.
I appreciate how hard it is to capture the finish, depth and intricate detail of the paint so I know if it looks this good on here then standing next to it on a Sunny Day will blow you away!
Fantastic Mate!
I wish you and Mrs GG a happy & healthy retirement with plenty nice road trips along the way 😊
ps Once the full power of that engine is released and you start pouring milk down the sink so you “Need” to pop to the local shop for more then Firstly be careful and keep that license intact!
Secondly make sure you give it the Beans.. The Full Beans now n again when the time is just right 😇🤭
Enjoy my friend!
Hope you and anyone else in your position stick around and continue to contribute 🫡
When life hands you melons...,
Make melonade!I have further news.
After ordering and doing all the paperwork and the car being at the dealership unregistered. The dealership sent this:
Whilst HMRC’s VAT relief scheme can apply to certain adapted vehicles supplied to qualifying wheelchair users, Mercedes-Benz have confirmed that, under their current agency sales model, they are unable to supply a new vehicle as a VAT-free sale where adaptations are to be carried out by a third-party specialist.
Mercedes-Benz have advised that they do not manufacture or supply adapted vehicles and therefore cannot verify or certify third-party adaptations prior to sale.
As a result, the vehicle would need to be purchased at the standard retail price, with any required adaptations arranged following purchase and registration of the vehicleso we really don’t know what to do next. HMRC said just to try a different dealership. I have tried contacting Mercedes head office to be say they were unhelpful would be an understatement. This is the only electric car that would fit my wheelchair with the back seats up that we can afford (with the vat relief). And I have a family so that’s quite important and the reason we want to leave motability.
if you have any recommendations or words of wisdom I would appreciate but understand we’re all in a similar boat.I think @Glos-Guy mentioned HRMC saying MB can be funny with VAT exemption.
GG is best placed to answer.
Itll be a tough fight, and honestly will likely result in nothing. Mercedes and BMW in general are difficult with and dealerships as a whole. It might be worth seeing if you could try a Skoda Enyaq (that can handle a Q100r in the boot, as well as a 150kg boot hoist if you use Des Gosling), ive heard some good things from the Skoda Dealerships atleast. Remember as long as the vehicle is vat qualifying and not on a certain scheme (I forget the name) you could get the VAT discount on it, I was looking to do rhat with a enyaq or EV5 privately before I decided to stick with motability. I had confirmation the specific used vehicles I was looking at were qualifying from both the dealership and HMRC.
Out of interest how big is the car? I can’t believe there’s no other EV that’s a similar size or bigger.
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
@bluewheels When I first called HMRC to confirm that we were eligible for VAT exemption, they mentioned that a number of Mercedes and BMW dealers were refusing to accept VAT free orders and (at the time) pointing people towards their Motability cars. Obviously they can’t do that now, but some dealerships are still refusing.
I can’t comment on Mercedes as I didn’t attempt to buy from them, but of the two BMW dealerships that I had test drives at, when I entered discussions one dealership couldn’t have been more helpful (and I don’t think it was just because it was my 3rd car from them) but the other refused point blank. I complained in writing to their MD (more as a point of principle, as it felt discriminatory) and they wouldn’t budge.
In the end I decided to buy a much higher end model than I set out to get, as I anticipated that this may be the one and only time that I could take advantage of the scheme. Also, with this government (and, to be fair, all opposition parties other than the Lib Dem’s) not being afraid to hit the disabled, I could see a scenario where even if VAT exemption remains, they could easily apply a price cap. Thankfully I now have the car and, based on my first two months experience, it could be a keeper, so I’m very glad that I persevered. Do let us know if you find a Mercedes dealership that is willing.
If it is an HMRC Law, then it does not make any difference to what make of car it is, as the HMCR Law’s are not optional and would cover all makes of car and is not at the Dealerships discretion.
If the car/adaption qualifies for VAT exception, then the dealer Must legally apply Zero VAT. HMRC does not make different law’s for so called luxury brands.
I think HMRC’s call center is like MB’s DWP’s and others and are just fobbing people off, for an easy life.
I think it call’s for an official complaint, to HMRC, about the Dealership.
Always remember that when you call an Organization’s call center, you are only speaking to an individual, some are knowledgeable and helpful, some less so. They can also be reluctant to check their fact’s out with a more knowledgeable colleague first, before giving you an answer.
You are always better to check out the written law/rules/policy, yourself.
@Callmejohn Up until last year I would have agreed with you, but having been on this journey over the last year I discovered that it is not compulsory for dealerships to participate in the HMRC scheme.
This was confirmed to me by several different people at HMRC (I queried it twice) and I wrote a stern letter to the MD of a group of BMW dealerships questioning why on earth they would turn away a potential six figure purchase over a few minutes admin. In the letter I also said that this felt discriminatory. Unfortunately I no longer have his reply, but he also stated what HMRC had told me, that it was an optional scheme that they had decided not to participate in.
If I hadn’t found a BMW dealership that was willing to sell me a car VAT free I would have taken it further (although I’m not sure how), but I was getting a very consistent message that participation (or not) is entirely at the dealerships discretion.
Well the day has finally come. After 5 Motability cars, we have handed the last one back (early termination) and left the scheme. There have been a number of challenges in the process of transitioning back from Motability to a private vehicle and, as quite a few people are leaving the scheme (or considering doing so when their current lease ends), I thought that it might be useful to share my experience, and what I’ve learned along the way, in the hope that it might help others. There would be way too much info for a single post, so I will split the info across a number of posts covering the multitude of different issues that we faced. In this first post I shall address the subject of Disabled VAT exemption. As you may know, Motability have a block VAT exemption on the basic vehicle cost of all cars purchased for the scheme. The rules for private new car buyers are more complex. If the disabled person is a full time wheelchair user and requires a ‘substantial and permanent’ adaptation to the vehicle then the car can be purchased VAT free. However, both criteria must be met. A scooter user, or someone who uses a wheelchair but only occasionally will not qualify. A permanent and substantial adaptation is something that is bolted into the car and / or the cars electrical system and cannot be easily removed. My wife is a full time wheelchair user and requires a person hoist, so we qualify for VAT exemption on a new car (once every 3 years max). Initially when I looked into this issue I interpreted the guidance as meaning that the car had to be registered in the name of the disabled person. This is not the case. A nominated driver (myself in this case) can purchase the car with their own money ex VAT and have the car registered in their own name, as I have done. There is a simple 2 page self declaration that you fill in and hand to the supplying dealer. This form has a section which allows you to state the nominated person if it’s not the disabled person. The next issue is that, as with Motability, the rules suggest that the car can only be used for the specific benefit of the disabled person. This is to deter abuse but, as with Motability, there is some discretion on this. I was very up front with HMRC and had the same conversation with them as I’d had with Motability a few years earlier. I explained that as we are retired and my wife cannot drive, we only need one car. Consequently, there are regular occasions when I use the car for reasons that are not for my wife’s direct benefit, such as visiting family and friends etc. They assured me that this is absolutely fine but, for peace of mind, I got them to put this in writing for me, which they kindly did. There is a very good helpline for VAT exemption enquiries – HMRC Charities Helpline tel 0300 123 1073 (0900-1800 M-F). The final issue with VAT exemption is that, for reasons that are beyond me, not all car dealers will allow VAT free purchases. I live between two main BMW dealers. One will process VAT exempt sales and one won’t. Guess which one got my business?
Sorry it is simply the law that if someone has a Vat 1615A form and also meets the other criteria’s and the adaption’s are fitted by a third party before the car is paid for, then either the dealer is refusing to sell the customer the car due to them qualifying for zero vat,
which is in breach of the Equality Act 2010 or
They knowingly and intentionally charge the customer at the wrong rate of vat, which is illegal.
Either way, the dealer is breaking the law.
If you either don’t believe me or disagree, then please check it out and don’t just trust a car dealership or a call center worker.
Since when did Taxes, including Vat, ever become optional.
@Callmejohn As previously mentioned, I managed to buy my car of choice VAT free from a local BMW main dealer, so I had no need to pursue the matter further.
I don’t know if @bluewheels has the appetite to take on Mercedes Benz U.K legally, but that is a matter for them, especially as HMRC will tell them that dealers are not obliged to participate in VAT free sales. Hopefully @bluewheels will report back on how things progress – or don’t!
It being big was not my only requirement but also even most large suvs do not have the length in the boot to fit my chair and hoist.
I do have some experience with law so I have emailed hmrc about this as well as Mercedes head office. I was clear to mention I believe it is discrimination. I also pointed this out to the dealership and he responded saying they were being “mean”
We have after contacted many Mercedes dealerships managed to find one ex demo in the country which they said they should be able to do vat but it’s also the same price as the new one less vat so we can afford it. It’s about 4 hours away but they said as the dealership owns the demo cars and not Mercedes it’s something they can do.
I feel if I wished to pursue Mercedes I’d certainly have grounds to, especially regarding the first 2 dealerships I went to. However I’m not sure I’m well enough to and I am well aware they would win if it made it to the court of public opinion and I don’t think I’d be able to handle that. I am going to take this as far up the chain as I can at Mercedes but so far they’ve told me to call rac (I’m not even joking) so I really don’t hold much hope for that.
I will at least be able to update people looking to leave about ex demo cars if we can get those vat free.
@bluewheels I wish you well with your search. Legal action isn’t for everyone, so finding a Mercedes dealer prepared to honour a VAT free sale is your best hope and worth holding out for. There are big discounts to be negotiated on top of the VAT exemption, including the first year VED (showroom tax). I managed to get a total discount (VAT + VED + negotiated discount) of almost 40%. As a result, even though my car is now 2 months old, the trade in value as a now used car is still £10k more than I paid for it, and the cheapest one for sale in the U.K. is a 3 year old one, and the asking price is only 10% less than I paid for my new one.
My understanding is that VAT exemption for disabled people only applies to brand new purchases, and you wouldn’t be able to get the VAT off a used car, including demonstrators or pre-registered cars. Some used cars are advertised as ‘VAT qualifying’ but when I looked into this it only applies to businesses, not private individuals. Obviously you will need to check for yourself, but if any dealer says that they can sell you a car VAT free then make sure that the price that you pay them reflects that. HMRC make it clear that private individuals cannot reclaim VAT once it has been paid. Some dealers will say differently, but they are wrong. Good luck.
We have after contacted many Mercedes dealerships managed to find one ex demo in the country which they said they should be able to do vat but it’s also the same price as the new one less vat so we can afford it. It’s about 4 hours away but they said as the dealership owns the demo cars and not Mercedes it’s something they can do.
Most used cars sold by dealers are sold under the VAT Margin Scheme. This means VAT is not chargedon the sale price, because the buyer pays the price without VAT, which is hidden in the total sale price. VAT must be charged on the full selling price if the vehicle was previously sold with VAT included. However, if the vehicle was sold with VAT included at the time of purchase, VAT cannot be reclaimed.
What concerns me, is how misleading this deal looks on paper. You are going to have to pay the price of a new car for a what is essentially a used car, just to get HMRC VAT exemption, that does not seem right!
In reality, ex demo cars are typically sold at prices that are 20% cheaper than new models, due to the initial depreciation factored into the reduced list price. Whats more you can often negotiate further reductions bettering VAT exemption, if it were allowed on used cars.
Looks like the company is playing with figurers on a used car, to get what you want and not whats in your best interest!
It being big was not my only requirement but also even most large suvs do not have the length in the boot to fit my chair and hoist. I do have some experience with law so I have emailed hmrc about this as well as Mercedes head office. I was clear to mention I believe it is discrimination. I also pointed this out to the dealership and he responded saying they were being “mean” We have after contacted many Mercedes dealerships managed to find one ex demo in the country which they said they should be able to do vat but it’s also the same price as the new one less vat so we can afford it. It’s about 4 hours away but they said as the dealership owns the demo cars and not Mercedes it’s something they can do. I feel if I wished to pursue Mercedes I’d certainly have grounds to, especially regarding the first 2 dealerships I went to. However I’m not sure I’m well enough to and I am well aware they would win if it made it to the court of public opinion and I don’t think I’d be able to handle that. I am going to take this as far up the chain as I can at Mercedes but so far they’ve told me to call rac (I’m not even joking) so I really don’t hold much hope for that. I will at least be able to update people looking to leave about ex demo cars if we can get those vat free.
@bluewheelsI have also contacted Mercedes-Benz U.K, asking a Generic question (without mentioning you), as to whether Mercedes Benz U.K. recognize disabled customer’s right to use the V1615A form, to implement Zero Vat at their dealerships, or whether they break the Law by discriminating against their disabled customers’ and breaking both the Equality Act 2010 and the HMRC Law by their dealer’s not charging the right rate of VAT, which HMRC states that they are instructed to charge the correct rate of VAT.
They have sent me a email saying that they will get back to me within three day’s.
The reality comes down to who takes the tax risk and why court isnt worth it.
Under HMRC guidance, the dealer carries 100% of the financial liability. If HMRC audits the sale later and rejects the adaptation, the dealer pays the 20% VAT out of their own pocket. There is no law forcing them to take on that tax risk.
Proving discrimination in court is an uphill battle because they arent refusing to sell you the car. They are just refusing to act as HMRC tax administrators, and courts usually accept avoiding tax liability as a valid defence.
A court case can be a multi year process, especially with delays at the moment and if you lose, you pay their huge legal fees, its possible a charity could get involved but i doubt it as they have moee pressing matters and finite resources. Maybe threatening legal action makes a dealer nervous enough to yield, but I doubt it since the law favours them right now. Public opinion wont help us either with all the current scrutiny on Motability and disability “perks”. Raising a massive stink could just draw government attention to notice 1002 and get it capped for everyone.
Your energy is limited. It is much easier to just vote with your wallet and go with a cooperative dealer who handles these forms every day, even if that isnt Mercedes as theres plenty of other cars that would likely work.
@shaan200 I think you’ve hit the nail on the head and this explains why some dealers refuse to process VAT exempt transactions. It also fits with what I have been told by dealerships and HMRC when I challenged it.
It will be interesting to see what Mercedes say in response to @Callmejohns query. They may well just duck it by bouncing it back to dealers who, as you say, take on 100% of the risk.
@CallmeJohnThank you I really appreciate you emailing them too.
I appreciate everyone else responding too. I was previously involved in a discrimination case and it’s a lot of work and extremely stressful.
From what I know, although vat is not the area I am well versed in, an ex demo can qualify for vat relief as the dealership buys them vat free from Mercedes. If that’s the case then it will be cheaper than a new one and if not we would be wanting to negotiate it to be less. Mercedes are, from my research, well known for not haggling but we shall see if it comes to that.
I’m glad other people have a wealth of cars that are suitable for them, I do not and I’d appreciate people respecting that. I stayed up all night after I got the news to find something else that was also in my price range and did not. I even test drove a non suv but it caused a great deal of pain from only a 2 minute drive.
I also don’t think it’s worth making things much more difficult for my family to spite Mercedes when I’m just a number to them.
I don’t think that paying the same amount for a used car is right or fair but I’m sure you all know we encounter a lot of that being disabled.an ex demo can qualify for vat relief as the dealership buys them vat free from Mercedes. If that’s the case then it will be cheaper than a new one and if not we would be wanting to negotiate it to be less.
I’m assuming your refering Mercedes as the manufacturer?
From the manufacturer’s point of view there is nothing special about a dealership having a demonstrator car, so the manufacturer will charge VAT to the dealership just same as they would for any other car new car. Provided the dealership intends to sell the demonstrator within 12 months, they can recover the VAT charged – section 3.2 of VAT Notice 700/64.
Importantly: As VAT will have been recovered on the demonstrator car at purchase, the dealer will then be required to charge VAT on the full selling price.
Bearing in mind, the profit margin on a new car has a much larger impact to the buyer than VAT alone. Dealerships in the UK can be haggled with (if you know how) and if they see you as a serious buyer, the buyer can often negotiate siscounts equivulent to the VAT value and especially towards the end of a calander month!
I can’t stress enough, that buying a used car at new car money is a bad move. You are paying for depreciation, that will only have a further impact come resale and if I’m honest, your discriminating against yourself by allowing such a sale!
Fist and foremost. The Moderator’s. have to give the percipient’s, some who are stroke victim’s + . more time to wright their post.
@bluewheels @ Glos Guy Unless Mercedes -Benz and BMW, have a special and individual right’s, and arrangement with HMRC,. over every other Make and Dealership, concerning the disabled’s right to utilize their right to use Zero VAT on new cars’ using s the HMRC VAT 1615A form and qualifying under the other HMRC rules. Then we are just as well throwing the towel in, on the Zero Vat. LAW, on our new car’s, because, if Mercedes Benz and BMW can get away with, ignoring our Legal Rights, then why should any other Make or Dealership, not deny us of our legal HMRC right’s.The answer. is because we only got where we are, by fighting for our right’s.
Fist and foremost. The Moderator’s. have to give the percipient’s, some who are stroke victim’s + . more time to wright their post. @bluewheels @ Glos Guy Unless Mercedes -Benz and BMW, have a special and individual right’s, and arrangement with HMRC,. over every other Make and Dealership, concerning the disabled’s right to utilize their right to use Zero VAT on new cars’ using s the HMRC VAT 1615A form and qualifying under the other HMRC rules. Then we are just as well throwing the towel in, on the Zero Vat. LAW, on our new car’s, because, if Mercedes Benz and BMW can get away with, ignoring our Legal Rights, then why should any other Make or Dealership, not deny us of our legal HMRC right’s. The answer. is because we only got where we are, by fighting for our right’s.
Hopefully you will get a positive response from Mercedes, not least because you might be able to point @bluewheels towards a dealership that will do a VAT exempt sale, but if you don’t and they say that they are under no obligation to participate in VAT exempt sales (as one BMW dealership MD said to me in an email which I sadly no longer have) then if you could please post the reply I’m sure that a number of us would find it interesting. Had I not found a different BMW dealer that was willing to do it, I would have taken it further myself.
If you need help convincing a supplier of the legitimacy of the VAT exemption declarations, or getting a refund of VAT you were charged incorrectly, contact the NABD office via office@thenabd.org.uk and we will advocate on your behalf.
https://nabd.org.uk/vat-exemption-adapted-vehicles/
@callmejohn If you need help convincing a supplier of the legitimacy of the VAT exemption declarations, or getting a refund of VAT you were charged incorrectly, contact the NABD office via office@thenabd.org.uk and we will advocate on your behalf. https://nabd.org.uk/vat-exemption-adapted-vehicles/
That paragraph from NABD is misleading @kezo HMRC make it very clear that if you pay the VAT on a new car, you cannot reclaim it.
It’s interesting to see that the HMRC guidance that they quote says that if you find a dealership that won’t process a VAT exempt transaction, search for another that will. No mention that dealers are obliged by law to do so.
@callmejohn If you need help convincing a supplier of the legitimacy of the VAT exemption declarations, or getting a refund of VAT you were charged incorrectly, contact the NABD office via office@thenabd.org.uk and we will advocate on your behalf. https://nabd.org.uk/vat-exemption-adapted-vehicles/[/quote[quote quote=376885]
@callmejohn If you need help convincing a supplier of the legitimacy of the VAT exemption declarations, or getting a refund of VAT you were charged incorrectly, contact the NABD office via office@thenabd.org.uk and we will advocate on your behalf. https://nabd.org.uk/vat-exemption-adapted-vehicles/
That paragraph from NABD is misleading @kezo HMRC make it very clear that if you pay the VAT on a new car, you cannot reclaim it. It’s interesting to see that the HMRC guidance that they quote says that if you find a dealership that won’t process a VAT exempt transaction, search for another that will. No mention that dealers are obliged by law to do so.
@Glos Guy The NABD are merely an advisory body and as you rightly say, the NABD are wrong in saying that you can claim back any VAT, which has wrongly been paid.
They are also only advising that if a dealership refuses to accept a at1615A form for Zero vat, then the person should search for another dealer. They are not quoting HMRC, as no where do HMRC state that.
What HMRC does state, is that “the correct rate of vat must be charged”, which in the case of a VAT1615A form. with all other qualifying conditions, is Zero vat. not 20% vat.
If you bought a zero vat written book, or zero rated groceries from a supermarket, which illegally charged you 20%vat, is the answer for you to have to travel, possibly another 40 miles, to find a shop that legally charges you the correct amount of vat.
Or is the answer, to insist that the illegal overcharging of vat, shop, charges you the right legal rate of zero vat price, the same as all other shops, have to.
@callmejohn If you need help convincing a supplier of the legitimacy of the VAT exemption declarations, or getting a refund of VAT you were charged incorrectly, contact the NABD office via office@thenabd.org.uk and we will advocate on your behalf. https://nabd.org.uk/vat-exemption-adapted-vehicles/
That paragraph from NABD is misleading @kezo HMRC make it very clear that if you pay the VAT on a new car, you cannot reclaim it. It’s interesting to see that the HMRC guidance that they quote says that if you find a dealership that won’t process a VAT exempt transaction, search for another that will. No mention that dealers are obliged by law to do so.
I doubt NABD would help in the case of a car, being the Association of Bikers with a Disability, but they may know some organisation that can advocate with car dealers, that may just get a little further than the average Joe.
They do however suggestCar dealerships are not required to provide VAT exemption through HMRC VAT 1615A on their webpage
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