VAT on excess mileage after voluntary termination

[broomy23]

If the debtor has contravened an obligation to take reasonable care of the goods or land, the amount arrived at under subsection (1) shall be increased by the sum required to recompense the creditor for that contravention, and subsection (2) shall have effect accordingly.

[atticus]

Presumably you are quoting from a finance agreement. Do you have a question? Would it help to know what subsection (1) and subsection (2) say?

[Pezza54]

OP has quoted S100(4) of CCA 74

[broomy23]

The agreement states that the excess mileage charge is inclusive of VAT. My concern is I’m being charged VAT by VWFS on an amount which in my view reflects damages arising from a statutory provision, not a contractual provision.

[Pezza54]

Is the clause relating to excess mileage and charges for damages in the agreement? Does the agreement state "charges accrue before termination of the agreement?"

[atticus]

OP has quoted S100(4) of CCA 74

I am impressed by the depth of your knowledge!

[broomy23]

1. Clause 11.4 of the Agreement states, “If this Agreement terminates early, we will reduce the Maximum Total Mileage in the proportion which the actual period of hire bears to the period of hire originally agreed. Any Excess Mileage Charge will be recalculated using that reduced Maximum Total Mileage.”.

My argument is that in this instance the Excess Mileage Charge is levied due to a failure to take reasonable care of the goods under s100(4) and therefore amounts to damages under statute, this is not a service therefore VAT should not be applied. It would be different if the Excess Milage Charge was levied due to a termination right in the Agreement.

[Pezza54]

In post 42 of RACHRAD's thread "WIN VT EXCESS MILEAGE............" started on 10.8.2017, the considerations of the judge and final decision are provided

The judge considered CCA 74 S100(4) in respect of excess mileage and reasonable care, and decided that excess mileage did not fall under reasonable care