Not upheld: Other regulated complaint complaint against BMW FINANCIAL SERVICES (GB) LIMITED trading as Mini Financial Services

Decision detail

Summary

Mr E complained that BMWFS wrongly charged VAT on a car with hand control adaptations required due to his disabilities, despite an initial agreement with the dealership to supply it VAT exempt. BMWFS declined to supply VAT exempt, citing HMRC guidance that the adaptations did not meet the 'substantial and permanent' test. The investigator initially upheld BMWFS but changed opinion after Mr E provided additional evidence including case law and HMRC guidance. BMWFS requested an ombudsman decision. The ombudsman determined the complaint was not upheld, finding that VAT treatment is a tax matter for HMRC to determine, BMWFS made a reasonable interpretation of the rules, Mr E was informed before agreeing to the finance, and it would be unfair to order BMWFS to refund tax collected on behalf of HMRC.

The Ombudsman's reasoning

The ombudsman concluded that this is fundamentally a tax matter rather than a financial services complaint. BMWFS, as the supplier and finance provider, are responsible for determining VAT treatment and have made a reasonable interpretation of HMRC rules. The adaptations do not meet the 'substantial and permanent' definition required by HMRC (such as bolting/welding to chassis or electrical modifications). Mr E was informed of the VAT charge before agreeing to the finance agreement, so there was no misrepresentation. The VAT collected goes to HMRC, not BMWFS, making it inappropriate for the ombudsman to order a refund without HMRC's agreement. The case law example Mr E cited was from 2011 and may not reflect current regulations or apply to hire purchase agreements specifically.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website