The consumer’s issue:
The consumer bought a brand-new hatchback in 2023 from a car dealership for approximately £39,500. During the sales process, the consumer made it clear to the business that they needed the vehicle price to be below the Vehicle Excise Duty (VED) tax threshold of £40,000 in order to avoid the Expensive Car Supplement (ECS) or “luxury car tax” of £440 per annum for five years, which applies to vehicles with a list price of more than this value.
Leading up to the consumer’s purchase, the dealership confirmed via email that the list price of the vehicle was within the £40,000 threshold, and it would be exempt from this additional yearly charge. Relying on this reassurance, the consumer proceeded with a lower specification vehicle than they had originally wanted.
However, after buying the car, the consumer found out that the additional tax in fact did apply, even though previous conversations with the dealership stated that this would not be the case.
As a resolution to their complaint, the consumer was seeking a reimbursement of the additional VED costs that they would incur over a five-year period (i.e. £2,200), and also raised concerns regarding the impact the higher VED could have on future market value. Even though the business offered a goodwill gesture of £1,230 in light of what had happened, this was not considered by the consumer to be an acceptable award, as this did not cover the liability of the ECS.
The case outcome:
The Motor Ombudsman adjudicator reviewed the evidence submitted by both parties. This included the sales invoice, and the email correspondence exchanged between the two parties during the purchase process.
The documentation presented showed that the dealership had indeed confirmed that the vehicle list price would remain below the £40,000 tax threshold, and that the consumer had relied on this information when it came to making the purchase.
It was therefore concluded that the business had provided incorrect information to the consumer in regards to the application of the ECS, meaning this aspect of their complaint was upheld in their favour.
When it came to considering the appropriate remedy, the adjudicator deemed it fair that the business reimbursed the consumer for the five-year additional tax liability only. However, to avoid overpayment in the event that the vehicle was sold before the end of this period, the adjudicator deemed it reasonable for the business to reimburse the consumer on a yearly basis subject to proof of payment.
In terms of the consumer’s concern about the future resale value, the claim relating to a loss of resale value was not upheld. This is because any future reduction in value could not be quantified, and would depend on multiple factors.
Conclusion:
In summary, the consumer’s complaint was partially upheld in respect to the complaint relating to the additional tax liability. Both parties accepted the outcome, and the business was directed to make the agreed award.
Key learning point:
It is important for businesses to ensure that any information provided regarding tax, vehicle specifications, or costs is accurate, and clearly explained during the sales process. This is because, consumers may reasonably rely on such information when deciding whether to proceed with the purchase of a vehicle.
