VAT Dispute Affects Scrappage Scheme Car Dealers

Car buyers planning on purchasing new cars through the Government’s Car Scrappage Scheme may find they’re unable to drive-off the forecourts when the scheme goes live on Monday 18th May, due to a VAT row between manufacturers and the Government.

Manufacturing bosses are claiming the Car Scrappage Scheme has plunged into chaos due to a Government error with the scheme’s details. Motor industry leaders are saying this weekend that some manufacturers may delay joining the scheme having failed to reach agreement with the Government. The dispute is apparently affecting all 39 carmakers who are signed up to the scheme.

The cost of the Car Scrappage Scheme is being split between the Government and the motor industry, however the Society of Motor Manufacturers and Traders said: “The dispute probably means some manufacturers will not be able to deliver vehicles to customers on Monday. We are seeking clarification about the VAT split between manufacturers and dealers, and how it is administered.”

The Department for Business insisted that manufacturers who had signed up to the scheme were made very clear of the terms and conditions.