VAT on VAT?

[H_Kan]

No you aren't paying VAT twice.

Assuming we are working on UK sales only, VAT is only intended to be incurred by the end consumer, hence VAT on business expenses can usually be reclaimed.

In your situation, the garage paid £460 gross. They will claim £60 back, meaning the total cost to them is £400.

They have in effect, charged you £460 net, and the £660 is the total net, with VAT applied to that. The £60 is basically pure profit for them.

Basically forget VAT and think- net cost to garage 400, net cost to you 460.

[Matt UK]

H_Kan said:

Basically forget VAT and think- net cost to garage 400, net cost to you 460.

Consider it 15% mark-up as opposed to 15% VAT

[gumshoe]

Personally I think it looks more as if the garage don't have a clue what they are doing with their invoice/receipt. If the part was listed as £400 + VAT, then there's an obvious cock up on their invoice. They aren't under any obligation to give you the cost to them of the part, so why would they list it that way? And then what, add VAT to it once more? Err... not likely.

Some of the replies on this thread insisting that is what they have done as a way of calculating their profit margin are pretty silly. Ask the garage themselves why they have charged VAT twice, see what they say. I've seen this happen sooooo many times, with red faces and sheepish smiles whilst trying to rectify the error once they get over the initial shock of how thick they are being.

Also with regards to the import duty, you need to add duty/vat to the freight costs too if the invoice total for the goods isn't inclusive of shipping to UK (eg. if it's FOB).

[pdw]

Farmer said:

sound ...but I wish mine was quarterly most are monthly over and above a "relatively small" turnover

Other way round. Quarterly is the norm but below a certain threshold you can opt to pay monthly installments.

[Farmer]

pdw said:

Farmer said:

sound ...but I wish mine was quarterly most are monthly over and above a "relatively small" turnover

Other way round. Quarterly is the norm but below a certain threshold you can opt to pay monthly installments.

I stand corrected sir . As farming buys inputs retail and sells food wholsale we are usualy claimers rather than payers so to claim monthly is obviously better

[Paul Drawmer]

TV8 said:

Paul Drawmer said:

TV8 said:

I think I am paying VAT on VAT of the supplied parts which apart from the unnecessary parting of beer vouchers is a concept I despise.

Thanks

Could you give an example?

Hi Paul,
I had a part that costs £400 ex vat or £460 including. The labour to fit was £200 giving a sub-total of £660 + VAT or £759 total. I am thinking it should be £460+£230 - £690 total. Mr Darling gets another £70 this way if it is the rule?

AS others have said, it looks as if they are charging you 460 + VAT for the part. Which is 60 profit for them.
Does the figure of £400 for the part appear on the invoice anywhere? Or do you just know that's what they paid for it?

[Westy Pre-Lit]

SunderJimmy said:

I bought a tyre from the local place for £50.00 then a couple of weeks later when the VAT went down I bought another exactly the same from the same batch also for £50.00.

They pull more fast ones than a barmaid on amphetamines.

Edited by SunderJimmy on Thursday 29th October 23:49

Ever tried running a company?

Do you think everybody changed their price list because this idiotic government changed the VAT rate causing untold hassle at the time only to be changed back again ( maybe higher )in a years time.

I'm not making excuses for them, but that's probably the reason.

Edited by Westy Pre-Lit on Friday 30th October 07:47

[sploosh]

Doesn't matter what they paid for the part, you're buying the part off them not the parts wholesaler, or the part manufacturer or the foundry etc. etc. There is a chain until the component parts are bits of stuff in the ground.

As long as everyone in the chain is VAT registered they claim the tax back, it's the person at the end of the chain that pays the tax. With enough steps in the chain something that started off as a few pence + VAT costs you £200 + VAT.

If they've any sense they shouldn't show you the price they paid though...

[LuS1fer]

They probably don't charge you for the run in the van down to the motor factors to get the part your car requires though, do they?

[TV8]

Thanks everyone. I queeried when I had the bill and they told me it was the ex-vat price and I took it at face value. It was only when I was looking at the manufacturing companies web-site yesterday, to pick either part a,b or c for the next up-grade when I realised that their prices are lower than I had been quoted. I checked with the manufacturer and these were the ex-vat prices and it is clear to me that I had been cherged the + vat price for the last item.

In total, over the next three jobs, the parts bill is £1,900, so clarity on this point is important.
Re comments about overheads, fully understand this (I work in B2B reselling) and everyone is entitled to make a good living.

Time for a chat with them.

[TV8]

All sorted. Mistake in my next quote. Not sure what the last part was but I am happy. Particularly with not paying double tax.
Thanks everyone.

[skeggysteve]

TV8 said:

I am happy.

Well don't look at the tax on petrol then.

I'm not 100% sure but I think it's someting like tax on tax on tax.

[r1chardb]

gumshoe said:

Personally I think it looks more as if the garage don't have a clue what they are doing with their invoice/receipt. If the part was listed as £400 + VAT, then there's an obvious cock up on their invoice. They aren't under any obligation to give you the cost to them of the part, so why would they list it that way? And then what, add VAT to it once more? Err... not likely.

Some of the replies on this thread insisting that is what they have done as a way of calculating their profit margin are pretty silly. Ask the garage themselves why they have charged VAT twice, see what they say. I've seen this happen sooooo many times, with red faces and sheepish smiles whilst trying to rectify the error once they get over the initial shock of how thick they are being.

Also with regards to the import duty, you need to add duty/vat to the freight costs too if the invoice total for the goods isn't inclusive of shipping to UK (eg. if it's FOB).

This one makes most sense to me. Of course there will be mark up on goods (that is the point of being in business), but if it described on the bill as VAT, then VAT is added to the end, then they are asking you to pay it twice and i'd be questioning it.

[Mpeers90]

Hi today I picked up my car from an independent dealer, it had some work done which I was told would be £400, initially I was going to pay by card, I then asked if I could pay by cash, this was ok with the garage and the guy said he would prefer cash as he won’t have to pay vat, I then asked if I could pay by card but the guy said if I could do a bank transfer as he has taken off the vat? Am I in the wrong here should I have paid the vat? Tia