I privately purchased a used car 18 months ago and have today received the following letter from the dealer:
Tax Issue and your car
You will recollect that we had the pleasure of selling you a car. An issue
has arisen concerning the amount of VAT we charged you. We believe that we
charged you the correct amount, but Customs and Excise think that more
should be charged. In order for Customs to increase the VAT they will be
contacting you together with some of our other customers to ask some
Put simply, we have to charge VAT on the cars we sell. We do not have to
charge you VAT on key insurance if sold separately. When we sold you the
car, we also supplied you with key insurance. We did not charge you VAT on
that insurance. We believe that we sold you two distinct things: Firstly a
car, secondly key insurance. If we are correct then no extra VAT is due.
Customs are trying to establish that we just sold you car with the insurance
thrown in. If they were right, then we undercharged you VAT of 74.47.
However, the whole thing boils down to what we agreed with you at the time.
If our agreement was for you to buy two separate things, the tax was
correct. If we agreed to sell you a car with insurance thrown in then more
tax was due.
Customs will be contacting you to discover what you thought you had bought.
We would ask you to answer accurately. If you simply cannot remember you
should say so. Please do not guess an answer. Any answer you give will be
relied upon. You may be required to explain your answer in a court of law.
We believe that the correct amount of tax was paid. We have no intention of
sending you an extra bill. In order to maintain our low prices, we are
prepared to go to court if necessary, although we hope that it will not come
I'm must admit that when I received the letter I couldn't remember anything
about any 'key insurance' so I dug out the paperwork.
I've got a 'Guarantee Booklet' with some paperwork attached. The prime
interest here was the 3 month guarantee on the used car. There's also a
small section relating to the key section. It mentions a purchase price of
499 and one of the tick boxes says that I've had the benefit explained to
me. I've signed the bottom of the proposal to say that I understand.
I paid for the car using Visa Delta. The nearest thing I've got to a receipt
is a sheet entitled 'Insurance Products Validation Certificate'. Under
'Vehical Details' it has 'Purchase Price: 4999' which is what I paid. Under
'Cover Details' it mentions again the 'Key Insurance' with a claim limit of
500 and a price of 500.
Now personally when I go to a car dealer I'm there to buy a car. I'm not
there to buy finance, insurance, warranties etc... If they want to give some
as 'added value' to separate themselves from the competition then that's
great. If I was told I was paying 500 for 'Key Insurance' I would have
declined and saved myself 500. As far as I was concerned I was buying a car
for 4999 and they are throwing in any extras as an incentive.
I'm with Customs on this one. However the wording of the letter seems to
imply that the dealer may want to charge me for the excess VAT if it comes
down to it. Where would I stand on this? Surely the deal is long done based
on the price agreed with the dealer at the time and any issue now with VAT
is their problem and not mine?
- posted 15 years ago