F&I Management & Training

Deloitte anticipates that the automotive industry will wake up with a headache on New Years day as significant VAT changes, including the rate returning to 17.5% and the introduction of the new EU-wide VAT package, come into force.

To help clients implement the changes as smoothly as possible, Deloitte, the business advisory firm, has re-launched its VAT Hotline. The Hotline offers immediate general advice on any technical, practical and systems related questions on the 1 January 2010 VAT changes.

David Raistrick, indirect tax partner at Deloitte, comments: "In addition to the VAT rate returning to 17.5% after 13 months at 15%, 2010 also sees the introduction of the new EU-wide VAT Package. We anticipate an influx of queries from companies asking for clarification on how to adhere to the guidelines, and consequently we have doubled the number of staff manning the VAT hotline compared to the number we had on standby when the VAT rate decreased earlier in the year. Early indications show a significant number of calls have been received from a broad range of industry areas in addition to automotive.

"Not only will businesses have to contend with determining what VAT rate applies when sales span 1 January, they will also need to be prepared to overcome systems issues, such as reprogramming systems and completing VAT returns, and the practical issues including re-pricing sales tickets.

"Getting the wrong VAT rate on big ticket items such as motor vehicles could be costly to dealers or result in an unexpected cost to customers. Similarly, there is some confusion regarding leases that span the 1 January date."

The VAT Package includes changes to the rules that determine where a supply is made for VAT purposes - currently services are generally treated as being supplied in the country of the seller, from 1 January 2010 this change to the country of the customers for business to business transactions. Additionally, there will be a new requirement to file EC Sales Lists for services supplied to other EU countries and new rules simplifying the procedures for claiming back VAT incurred in other EU countries.