VAT Question...
Discussion
Good morning all.
I'm looking for some guidance on a relatively simple VAT question.
As background, my Aston was damaged in the summer by some old boy who left his handbrake off on the Ferry to Le Mans, rear bumper damaged and my insurance and the 3rd party insurance agree that a new bumper is needed. Quote for the repairs including new bumper and repaint is £1,967.08 (plus VAT, £2,360.50 inclusive) and this cost was agreed by both parties.
Aston Martin have no new rear bumpers in stock, and are still reporting that they don't have any in production or can give a date when they are likely to be able to supply one to my local dealer. My Aston has been unrepaired now for 5 months and I'm getting more than a little frustrated.
I am pushing them to pay me out the value of the claim so that I can look to get the car repaired and repainted using a second hand bumper at my risk, something they are comfortable to do as this clears this sorry tale off their 'pending' books. Hopefully I will be able to get this done cheaper, but that is my risk and in my own time.
They have said they will send me a payment for £1,967.08, rather than the claim inclusive of VAT. As I will have to pay VAT on the repairs I arrange surly the settlement should be inclusive of the VAT and I should receive £2,360.50.
Any thoughts?
I'm looking for some guidance on a relatively simple VAT question.
As background, my Aston was damaged in the summer by some old boy who left his handbrake off on the Ferry to Le Mans, rear bumper damaged and my insurance and the 3rd party insurance agree that a new bumper is needed. Quote for the repairs including new bumper and repaint is £1,967.08 (plus VAT, £2,360.50 inclusive) and this cost was agreed by both parties.
Aston Martin have no new rear bumpers in stock, and are still reporting that they don't have any in production or can give a date when they are likely to be able to supply one to my local dealer. My Aston has been unrepaired now for 5 months and I'm getting more than a little frustrated.
I am pushing them to pay me out the value of the claim so that I can look to get the car repaired and repainted using a second hand bumper at my risk, something they are comfortable to do as this clears this sorry tale off their 'pending' books. Hopefully I will be able to get this done cheaper, but that is my risk and in my own time.
They have said they will send me a payment for £1,967.08, rather than the claim inclusive of VAT. As I will have to pay VAT on the repairs I arrange surly the settlement should be inclusive of the VAT and I should receive £2,360.50.
Any thoughts?
Jockman said:
IIRC we always pay the vat element on the company vehicles repairs as the Insurer knows we can claim it back.
As an individual, you would be unable to do so I guess?
PS sorry to hear of your misfortune.
Thanks, that is what they are saying. If they undertake the repair they can claim back the VAT so the 'value' of the repair to them is excluding VAT. For me though the payment has to be inclusive of VAT although given the hassle and constant chasing I don't feel too inclined to accept a lower figure. As an individual, you would be unable to do so I guess?
PS sorry to hear of your misfortune.
The insurer is making you an offer of compensation for the damage, so that you can get it repaired on the cheap at your discretion. How they calculate that is up to them.
Or, you can wait until Aston Martin deem to make some new ones!
Or, you can wait until Aston Martin deem to make some new ones!
Edited by PurpleMoonlight on Friday 18th November 12:48
PurpleMoonlight said:
The insurer is making you an offer of compensation for the damage, so that you can get it repaid on the cheap at your discretion. How they calculate that is up to them.
Oh, is that what they're doing.... 
The insurer is not making an offer, I have asked for a resolution on a simple no-fault claim which remains unresolved after 5 months despite the 3rd party admitting fault and there being no dispute. My request is that they pay me the value of the claim, a value that has been agreed by all parties. This isn't some back-handed horse deal trying to maximise my 'compo', I'm simply asking if such a payment should be inclusive of VAT or not.
Could you get a quote for the 2nd hand bumper/respray? If it's less than their offer of £1,967.08 then you're quids in.
If not, but including VAT still less than the insurance quote, could you send it to them and negotiate a settlement?
Are you being provided with a hire car while yours is off the road?
If not, but including VAT still less than the insurance quote, could you send it to them and negotiate a settlement?
Are you being provided with a hire car while yours is off the road?
The Surveyor said:
I'm simply asking if such a payment should be inclusive of VAT or not.
Simple answer, their insurance payout needs to cover the cost of repairs including VAT.Put it this way, if you'd just bought a brand new car and 2 days later someone wrote it off, you'd expect the insurance to stump up the full replacement cost including VAT
CaptainCosworth said:
Are you being provided with a hire car while yours is off the road?
No hire car, otherwise I'm sure they would have resolved it by now. The car is still drivable but it's not 'Aston Martin' pretty to the point where I've only driven it 3 times since the damage. I'm looking at this from a point of what the insurance company 'should' pay out.If my telly got smashed, I wouldn't expect the insurance company to say 'your Sony telly costs £600 to replace from Curry's so he's your £500 cheque, we don't pay out the VAT', so it feels wrong that they are withholding the VAT from the agreed repair cost on my car.
The Surveyor said:
Oh, is that what they're doing....
The insurer is not making an offer, I have asked for a resolution on a simple no-fault claim which remains unresolved after 5 months despite the 3rd party admitting fault and there being no dispute. My request is that they pay me the value of the claim, a value that has been agreed by all parties. This isn't some back-handed horse deal trying to maximise my 'compo', I'm simply asking if such a payment should be inclusive of VAT or not.
They are offering you what would cost them for the authorised repair. I don't understand why you think that is unfair.The insurer is not making an offer, I have asked for a resolution on a simple no-fault claim which remains unresolved after 5 months despite the 3rd party admitting fault and there being no dispute. My request is that they pay me the value of the claim, a value that has been agreed by all parties. This isn't some back-handed horse deal trying to maximise my 'compo', I'm simply asking if such a payment should be inclusive of VAT or not.
Is the second hand repair going to cost more than what they have offered?
PurpleMoonlight said:
They are offering you what would cost them for the authorised repair. I don't understand why you think that is unfair.
Is the second hand repair going to cost more than what they have offered?
It is likely that the repair using a second hand bumper will be cheaper, but only marginally especially if the second hand one needs any work. Rear bumper covers are circa £400 new, £200 second-hand so any additional preparation needed and everything else being constant would leave the difference being small, and certainly less than the VAT using the same Aston Martin approved bodyshop. I could go somewhere else at my risk, or throw some filler at the existing and paint it with a rattle-can, but that could knock more than the value of the claim off the car so that isn't what I'm looking to do either. Is the second hand repair going to cost more than what they have offered?
I do know what you're saying so apologies if my tone is somewhat dismissive, but given the run-around I've had with this, chasing the Accident Management Company allocated by my insurer (total waste of space..), train travel to drop off and collect the car at the body shop twice, chasing the bodyshop for quotes, chasing the Aston Martin dealer for details of when they are likely to get a bumper, chasing Aston Martin themselves for the same, all without any result or indication of when (or even if) a new bumper will be available, my patience is wearing just a little thin.
I think what I'm asking is should the value of the payout be the cost for me to get it repaired (inclusive of the VAT), or what it would cost them to get it repaired (exclusive of VAT), hence the request in the finance section.
Edited by The Surveyor on Friday 18th November 14:10
Fundamentally you are entitled to be returned to the position you were before the incident I believe.
I don't think there is a law about whether that means the insurer facilitates the repair or financially compensates you for the cost of repair. I can see why they tend to use the former as the cost is less as they can recover VAT, and if the cost is less premiums for us all are less. If you are unwilling to wait for the repair and prefer the cost, I don't think it's unreasonable that should not cost the insurer more than the repair would have cost them.
Sorry, not really an answer I guess.
Life isn't always fair.
I don't think there is a law about whether that means the insurer facilitates the repair or financially compensates you for the cost of repair. I can see why they tend to use the former as the cost is less as they can recover VAT, and if the cost is less premiums for us all are less. If you are unwilling to wait for the repair and prefer the cost, I don't think it's unreasonable that should not cost the insurer more than the repair would have cost them.
Sorry, not really an answer I guess.
Life isn't always fair.
Have you agreed 'reinstatement ' or 'indemnity ' with your insurer?
If it's on a reinstatement basis they will be paying the bill directly to the repairer and will be able to reclaim the VAT on parts and labour.
If they are willing to indemnify you, then I presume that they should pay to you the whole amount.
It would be sensible if you and your insurer could come to a Zero Sum Game situation.
If it's on a reinstatement basis they will be paying the bill directly to the repairer and will be able to reclaim the VAT on parts and labour.
If they are willing to indemnify you, then I presume that they should pay to you the whole amount.
It would be sensible if you and your insurer could come to a Zero Sum Game situation.
If you have decided you can't/won't wait for a new bumper, which seems sensible given the feedback from AM, and now want the car repaired with second hand parts... then take the car to your body repair shop of choice and ask them to quote for supplying and fitting a second hand bumper. Then ask the insurance company to pay the bill.
Not sure what's so complicated except that you're maybe hoping to make a few quid on getting your car fixed.
P.S. I'm surprised a new bumper cover from AM is only £400, I assume it's not painted so the cost to fit and paint would be no different to that of a second hand bumper cover.
Not sure what's so complicated except that you're maybe hoping to make a few quid on getting your car fixed.
P.S. I'm surprised a new bumper cover from AM is only £400, I assume it's not painted so the cost to fit and paint would be no different to that of a second hand bumper cover.
Cheers, I wasn't necessarily looking at it from a pure 'insurance' perspective, more from a VAT aspect.
Looking at the payment as being a reimbursement for the damage, is it correct for a business to pay an individual a settlement inclusive of VAT or not.
I'm not looking to swindle money out of the insurance company or inflate the claim spuriously, I'm just looking to receive the full value as indicated at the foot of the agreed repair quote.
Looking at the payment as being a reimbursement for the damage, is it correct for a business to pay an individual a settlement inclusive of VAT or not.
I'm not looking to swindle money out of the insurance company or inflate the claim spuriously, I'm just looking to receive the full value as indicated at the foot of the agreed repair quote.
Piersman2 said:
If you have decided you can't/won't wait for a new bumper, which seems sensible given the feedback from AM, and now want the car repaired with second hand parts... then take the car to your body repair shop of choice and ask them to quote for supplying and fitting a second hand bumper. Then ask the insurance company to pay the bill.
Not sure what's so complicated except that you're maybe hoping to make a few quid on getting your car fixed.
P.S. I'm surprised a new bumper cover from AM is only £400, I assume it's not painted so the cost to fit and paint would be no different to that of a second hand bumper cover.
From an insurance perspective, I did just want my car repaired some 5 months ago and that is ultimately what I'm still after. I am looking for a full and final settlement, a payment to close the claim as there is no prospect of ever getting this resolved properly. If I take the payment, all the running around that should have been done by the Claims Management Company, work that they will be taking a hefty fee for will need to be done by me, in my time, at my risk. It may come in cheaper, it may not, but rest assured if there is 'a few quid' left at the end, it will be much less that everybody else in this sad chain has taken.Not sure what's so complicated except that you're maybe hoping to make a few quid on getting your car fixed.
P.S. I'm surprised a new bumper cover from AM is only £400, I assume it's not painted so the cost to fit and paint would be no different to that of a second hand bumper cover.
As before, from a VAT perspective should an insurance settlement include VAT?
The Surveyor said:
If my telly got smashed, I wouldn't expect the insurance company to say 'your Sony telly costs £600 to replace from Curry's so he's your £500 cheque, we don't pay out the VAT', so it feels wrong that they are withholding the VAT from the agreed repair cost on my car.
Generally you'll be sent a new telly these days.MrJuice said:
Using people usually contact the insurance ombudsman when insurance companies undervalue claims?
I'm not concerned with the value of the claim as such, the repair costs have been agreed by all parties and that isn't in dispute but thanks for the guidance on the ombudsman, that may be my next step.I put this in the 'Finance' section hoping for some accounting guidance on VAT. The question being should an insurance payout based upon an agreed repair value, paid as a full and final settlement to an individual include the VAT portion or not?
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