Fleet News

On-the-road pricing could costs fleets millions

MANUFACTURER moves to incorporate delivery charges in the on-the-road price of new cars could cost major UK fleets millions of pounds. The development, which the majority of manufacturers have now taken, jeopardises the right of fleets which buy their cars directly from manufacturers to recover VAT on delivery charges.

This right was won in a landmark case earlier this year, when British Telecom successfully challenged HM Customs & Excise (Fleet News April 26). This distinction disappears if manufacturers incorporate delivery charges into a single on-the-road price. With an average delivery charge of £500 per car, this translates into a loss of £87.50, and for fast cycle fleets the loss of such a sum borne over a short period would be of great concern. Companies buying thousands of vehicles are likely to negotiate their own delivery charges.

Sue Rathmell, VAT partner with Deloitte & Touche, said manufacturers would have to make sure they continued to show delivery separately on invoices to allow customers to continue to recover VAT. 'But if you buy cars from a dealer you will not be able to recover the VAT, because you cannot show two separate supplies,' she said.

Meanwhile, manufacturers and ACFO have called on the Society of Motor Manufacturers and Traders to issue a code of practice on delivery charges.

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