Vehicle Scrappage Scheme - collected wisdom

[Vee4]

Posted under this heading because anyone thinking of buy a brand new van will be having a Mk7.

Early days (hours even), and it does apply to light commercials as far as I've heard, so it might be an idea to keep track of member's experiences with trying to take advantage of the scheme. I say 'trying' because it seems unlikely to be as simple as buying a new van and having GBP2000 taken off the price.

[BigNeil]

viewtopic.php?f=23&t=44420

[Vee4]

Thanks, BigNeil. I didn't see that, as I never look in 'Non-Transit Talk'.

After all, why would you want to talk about anything other than Transits?

[Vee4]

See BigNeil's topic (as above) for news on the implementation of the scheme.

[Vee4]

I've copied this summary here, as I just realised that non-members can't see the 'Non-Transit Talk' section, and I have referred other people to this forum for info:

Government's version
http://www.direct.gov.uk/en/Motoring/Bu ... /DG_177693
Ford's version
http://www.ford.co.uk/ScrappageIncentive
VAT treatment
http://www.hmrc.gov.uk/briefs/vat/brief3109.htm

How it works in practice:

1) Agree fully inclusive 'on the road' price with the dealer. Bear in mind that they will probably claw back some of the discount they would have given you outside of the scheme.
2) Subtract GBP2000 from that price.
3) That's what you pay (i.e. OTR price minus GBP2000).
4) When taking delivery of the new van, hand over the old one to the dealer.
5) If you are entitled to reclaim the VAT on a van purchase (i.e. you are VAT registered and the vehicle is for trade use), you must reduce your input VAT on the GBP1000 manufacturer subsidy as if it were a VAT inclusive discount or 'cashback'. The government subsidy of GBP1000 is outside the scope of VAT.

Update 17 June 2009 - more paperwork! You will need to provide the participating dealer with:

a) Copy of V5C (Registration Certificate or 'log book').
b) Copy of VT20 (MOT Test Certificate).
c) Turn up in person with photo ID (passport or driving licence with 'counterpart') to sign some forms.
d) You will have to sign a form (may vary from manufacturer to manufacturer) saying that you agree to
participate in the scheme, and that details of your purchase will be passed on to the Department for Business,
Enterprise and Regulatory Reform.

Update 28 August 2009 - insuring and taxing the new van:

When the new vehicle is ready and the registration number is known, an insurance cover note will be needed to obtain the tax disc. The Ford system appears to insist that the name on the insurance policy is the same as that on the vehicle order. Be prepared to argue this one out if you are a sole trader and the insurance policy is in your own name but the van has been ordered in your company name.

Example order:

Transit T260/85 GBP15,720.00
Delivery, etc. 600.00
Net total (taxable) 16,320.00
VAT 15% 2448.00
Total 18,768.00
Vehicle tax 185.00
First registration fee 55.00
On the road price GBP19,008.00
Subtract scrappage scheme subsidy (2000.00)
What you write on the cheque GBP17,008.00

On the applicable VAT return, you will reclaim the VAT (2448.00 in the example) but you must also reduce your input VAT by GBP130.43 (869.57 plus 130.43 VAT equals 1000.00). Put another way, the VAT reclaimed will be the same as if a discount of 869.57 had already been applied to the net total (16,320.00 minus 869.57 equals 15,450.43 in the example). If you look at it this way, the total subsidy is only GBP1,869.57! You could try using that as an argument to squeeze another GBP150 or so in discount from the dealer - good luck with that one!

The HMRC Brief 31/09 explains the treatment for capital allowance purposes.

Usual disclaimers! E&OE! If your business depends on it, seek professional advice!