£2,000 car scrappage scheme stalls in row over VAT

Published on Friday 15 May 2009 22:05

CAR buyers hoping to taking advantage of the government's scrappage initiative may be unable to drive away a new vehicle when the scheme is launched on Monday because of a VAT row.

Motor industry leaders said last night some manufacturers might delay joining the scheme after failing to reach agreement with government officials.

The measure, announced in last month's Budget in an attempt to boost sales, involves buyers receiving a 2,000 discount on a new car for trading in models at least ten years old.

The cost is being split between the government and the industry.

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 said manufacturers had signed up to the scheme and its terms and conditions were clear.