MICHAEL McALEERanswers reader's questions
How will VAT increase affect the price of car I've already ordered?
From RoK: I'm just wondering how prices will be affected after the 2012 increase in VAT? I have a car ordered for January and a set price agreed for the cost of change. Would the fact that I've signed a document agreeing to the price at the time be enough to save me incurring the extra 2 per cent VAT hike or do you think I should be expecting to pay the extra if the dealer puts up the prices straight away?
It depends on the contract you signed, as many will stipulate that the price is subject to the taxation applicable at the time of sale and in this case it would be the tax on registration of the vehicle in January. In a common order contract for cars it states that 'if after the date of this contract, the manufacturer's or distributor's recommended retail price of the vehicle is altered, then the dealer will inform the customer in writing.' Then the customer may agree to pay the dealer the increase in the retail price or inform the dealer within 14 days that the deal is off and get back the deposit. There is a case that the price change is due to the Government, not the car firm. Ideally, you should talk this through with the dealer and ask that they bear some of the burden. In reality I don't think they'll want to lose a sale or your custom.
From RD: I recently purchased a car in Northern Ireland. I booked my VRT appointment and showed up to have the car assessed. This was on a Friday. Because you can't pay by cheque, and the amounts you can pay by cash or credit card are limited, I opted for a bank draft. However, I couldn't get the draft until I knew the amount. So, on being told how much the Vehicle Registration Tax (VRT) would be, I asked if there was any problem with me going to the bank and dropping the draft in on Monday as the NCT centre was closing at 12.30pm that day, so Monday would be the earliest I could return with the draft. On Monday, we were told the amount of VRT owed was now over €100 higher, because we had failed to pay within 24 hours of being told the charge. At no point were we warned about this. I have discovered that over the weekend Revenue increased the OMSP (open market selling price - the value upon which VRT is charged) of the car I bought. There is also a discount which is applied to the value of a car if the mileage is high. Until that Friday, this was capped at €1,270. Revenue have changed that cap to €850.
A spokeswoman for the Revenue accepted that the information on the website had not been updated in time. However she did state that the Revenue can change the OMSP and they seem to take no account of the weekend. The payment system seems incredibly rigid and certainly not in the consumer's interest. Your best option is to appeal. On a separate matter those importing cars should be aware that Revenue tells us there is a recent provision in the law whereby if a car is not re-registered within the 30-days after it arrives in the country, additional VRT is charged. This charge is calculated on a daily basis and represents an annual rate of 36 per cent. Got a query? Send it to motorshelp@irishtimes.com