VAT on warrenty

[chimi500]

Just bought 2 years warrenty for the chim from the main dealer , only when i got home i noticed i had been charged VAT on it . is the right or have i been ripped off

[angusfaldo]

I think warranty fees are considered payment for services/goods to be provided and so are subject to VAT.

You wait, we'll be paying VAT on insurance next. We already pay IPT for chrissakes.

>> Edited by angusfaldo on Thursday 27th March 16:59

[DaveM]

Yep - it is right - extended warranty is a service and is therefore VATable. Insurance is either exempt, zero rated or outside the scope, (can't remember which!) so Insurance companies cannot charge VAT (or for that matter claim it back). Therefore, you will probably find that any insurance agreement you sign will have a clause somewhere that if you are a VAT registered trader, and make a claim, say for repairs to a car, you will agree to pay the VAT, as you can claim it back, but the Insurance company can't!

Sounds like a fiddle but it is legal. However, if you are not VAT registered, then the Insurance company has to pay the VAT (but can't claim it back). In theory, if the Insurance companies could claim it back it would lower insurance premiums - BUT - then they would have to charge VAT on those premiums, so you still wouldn't be any better off.

Isn't this a boring subject!!!

[chimi500]

Thanx guys , pleased to give yet another £100 to our superb goverment