Quick VAT question for the accountants

[BoRED S2upid]

It’s been many many years since we covered this in Uni and I was probably hungover.

Say I pay a garage to fix my car they also do an mot via another company say £50 does the garage then charge me £50 that they paid the mortgage station or £50 plus VAT?

I thought VAT could only be charged once by the MOT station not twice.

[Beetnik]

Assuming the garage is VAT registered they'll have input and output VAT of the same amount so neutral for them. You'll pay the VAT with your bill and the MOT agent will be accountable for it to HMRC.

[BoRED S2upid]

So my MOT in this case has increased by 20% presuming both are VAT registered? Two lots of vat for the one piece of work.

[AndyAudi]

Our local Garage outsources the MOT

They charge

MOT test with no VAT
£10 handling + VAT @ 20%

[Countdown]

BoRED S2upid said:

So my MOT in this case has increased by 20% presuming both are VAT registered? Two lots of vat for the one piece of work.

No

MOT Garage charges YOUR garage £50 +vat = £60 (the VAT gets handed over to HMRC)

Your garage charges YOU £50+vat = you pay £60

Your garage offsets the £10 vat it charged you against the £10 it paid to the MOT place

Effectively the VAT you paid filters down the chain and is paid by the person/company that did the work.

It’s only paid once.

[JBM78]

Countdown said:

No

MOT Garage charges YOUR garage £50 +vat = £60 (the VAT gets handed over to HMRC)

Your garage charges YOU £50+vat = you pay £60

Your garage offsets the £10 vat it charged you against the £10 it paid to the MOT place

Effectively the VAT you paid filters down the chain and is paid by the person/company that did the work.

It’s only paid once.

There's no VAT on MOTs

[2 sMoKiN bArReLs]

MOT is outside the scope of VAT.

Probably

[Simpo Two]

JBM78 said:

There's no VAT on MOTs

Though a careless garage who subbed it out might add it...?

Anyway, according to the OP it's a mortgage

[paulrockliffe]

2 sMoKiN bArReLs said:

MOT is outside the scope of VAT.

Probably

So long as it's charged at or below the prescribed rate, if it's more than that then there's VAT on the whole cost.

[BoRED S2upid]

Countdown said:

No

MOT Garage charges YOUR garage £50 +vat = £60 (the VAT gets handed over to HMRC)

Your garage charges YOU £50+vat = you pay £60

Your garage offsets the £10 vat it charged you against the £10 it paid to the MOT place

Effectively the VAT you paid filters down the chain and is paid by the person/company that did the work.

It’s only paid once.

Thanks. Substitute mot for any other work. I had a feeling vat was only added once.

[PF62]

AndyAudi said:

Our local Garage outsources the MOT

They charge

MOT test with no VAT
£10 handling + VAT @ 20%

Correct - with a twist.

This only works if the garage you handed your car to charges you *exactly* what they were charged by the garage that did the MOT and shows that (as above) as a separate charge for any other work or arrangement fee.

So if you were charged £54.85 by your garage and they were charged £54.85 by the MOT garage then fine, as it is just passing on as a disbursement the amount you were liable to pay.

However if they were charged 'mates rates' by the MOT garage of say £30 and still charged you £54.85 for the MOT then they have made a secret profit of £24.85 on which they need to account for VAT.

[Eric Mc]

If you have a garage do work on your car, they will charge VAT on whatever they charge you. So, if the parts and labour came to £500, the total invoice will be £600 (£500 plus £100 VAT).

If they also carried out an MOT check for you, they can recover from you the MOT fee without charging VAT on that part of their invoice. So, if they carried out £500 worth of work for you and put the car through its MOT check, the bill would look like this -


Parts and labour - £500.00
MOT - £50.00

VAT - £100.00

Total Charge £650.00.