VAT increase where do I stand?

phill

phill

phill

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I paid a 50% deposit in October 2009 for an item that is being fitted into my home in January 2010.

I paid 15% VAT on the 50% deposit. The remaining 50% has just been taken and they have taken 17.5% VAT on the whole amount.

Is this right? I feel a little bit hard done by when I have an order form with the total at 15%.
TIA :p
 
I had a similar thing (even if it was for much less), but I believe that if you were invoiced for it including VAT @ 15%, the amount you pay shouldn't change. It didn't sound right to me, but I was assured by the secretary that it was..

Maybe wait for someone else to post. :p
 
They are trying to rip you off in my opinion.

The likelyhood is that they took the 50% and then ordered the product themselves. That is why there is a gap between the order and delivery.

The company will not have paid 17.5% on the deposit, they should not be passing this cost onto you.

In fact, I wonder if you should be paying 17.5% on any of it, as the purchase was made, and therefore the sales contract signed, when VAT was 15%.
 
It's all to do with your invoice.
If you were invoiced for the full amount before the end of the year then you get everything at 15% VAT.
However any invoice dated after 1-1-10 will have to be so at 17.5%.
 
The tax point is the earlier of the supply date and the invoice date. If these are after 1 Jan, then they have to charge 17.5%.
 
You should pay 17.5% on anything you've been billed for from the 1st Jan onwards. Anything from 2009 should be 15%.
 
Last edited:
Surfer said:
if you purchased/ordered it in 2009 then 15% should apply
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Iirc only if paid at that time.
The tax rules basically state VAT is to be paid at whatever the current rate is at the time the payments are made, so if you pay half at the time when the rate is one level (say 15%) you'll pay the VAT on that at that rate, but if the VAT changes before you pay the remainder of the balance, you'll pay the different rate of VAT on the outstanding balance.
The same situation has cropped up a lot with people buying new cars, where they've been charged VAT on the deposit at one rate, but on any payments after the first at the higher rate (and why if you could afford to pay upfront it could be worthwhile).
 
PapaLazaru said:
They are trying to rip you off in my opinion.

The likelyhood is that they took the 50% and then ordered the product themselves. That is why there is a gap between the order and delivery.

The company will not have paid 17.5% on the deposit, they should not be passing this cost onto you.

In fact, I wonder if you should be paying 17.5% on any of it, as the purchase was made, and therefore the sales contract signed, when VAT was 15%.
Click to expand...

Re-read the OP. he said he paid 15% on his deposit, it's only the balance that is 17.5%.

And they aren't ripping anybody off anyway even if that wasn't the case as the vat on the sale gets passed to HM customs.
 
Greebo said:
Re-read the OP. he said he paid 15% on his deposit, it's only the balance that is 17.5%.

And they aren't ripping anybody off anyway even if that wasn't the case as the vat on the sale gets passed to HM customs.
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Actually he says he got change 17.5% on the whole amount, not the outstanding. Now this might just be bad English and he means 17.5% on the whole bill he just got but I don't think so.

Give them a call and see if they can sort it out for you.

and yes I'm hanging my head in shame about the bad English above.
 
I see what you mean about the op not making it clear. If 17.5% on the whole amount then that's wrong.

It should be 15% on the 50% deposit and 17.5% on the balance.
 
http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-changes.htm#2

If they didn't start work until after 1st January, they're right to charge you 17.5% on the whole lot. The fact that they took a deposit could imply that some work was carried out last year, but if they just ordered an item with your deposit money to begin installation in 2010, 17.5% on the lot it should be.

Your only get out really is if you had an incl. VAT quote for the job assuming installation post 1st Jan.
 
Just to confirm my first post, I paid 15% on the 50% deposit in October 2009. When they took the remaining 50% (Jan 2010) they took VAT at 17.5% on the entire amount (as per below):-

17.5% on the remaining 50%
plus an additional 2.5% on the 50% I paid in October 09..

Still confused to who is correct here.. :confused:
 
phill said:
Just to confirm my first post, I paid 15% on the 50% deposit in October 2009. When they took the remaining 50% (Jan 2010) they took VAT at 17.5% on the entire amount (as per below):-

17.5% on the remaining 50%
plus an additional 2.5% on the 50% I paid in October 09..

Still confused to who is correct here.. :confused:
Click to expand...

That is wrong. They should only take 17.5% on the remaining balance.
 
"The normal rule is that you should account for VAT on a deposit or pre-payment
at the rate in force when you receive it. If you receive a deposit before 1 January
2010 for goods or services that you will supply on or after that date the 15% rate
of VAT will apply to the deposit and 17.5% will apply to the balance."

Taken from sec 2.6.

Seems I should not have paid the 2.5% on the 50% I already paid. Unless I am reading it wrong..
 
phill - you didn't quote the bit just after that, which says:

"You do have the option to charge 17.5% on the deposit which may simplify matters if your customer can recover the VAT (see section 3)."

So it seems to say they do have the option to charge 17.5% on the lot (for their own simplicity in paperwork terms), however it's a bit mean and you're being reasonable by requesting the refund of the extra VAT.
 
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