VAT ON RFL recharge

[Ham_and_Jam]

Just had an invoice from LeaaePlan for an increase in the Road Fund Licence. This is for a car on PCH.

Not disputing the invoice as its for a valid increase in the RFL, however the invoice has the increased amount plus VAT.

Is that correct? I thought RFL was outside the scope of VAT?

is a RFL recharge different to RFL allowing it to be a VATable. Just seems odd to be charged 20% more than the actual increase.

[Bubba Zanetti]

Had similar last year. Increase was £15 for the year plus VAT at 20% so £3.

VAT is charged when a VAT-registered business sells to either another business or to a non-business customer - this includes the road fund license.

[Ham_and_Jam]

Bubba Zanetti said:

Had similar last year. Increase was £15 for the year plus VAT at 20% so £3.

VAT is charged when a VAT-registered business sells to either another business or to a non-business customer - this includes the road fund license.

Had a feeling this might be the case. Just seems wrong being charged tax on a tax

[Ryang94]

Bubba Zanetti said:

Had similar last year. Increase was £15 for the year plus VAT at 20% so £3.

VAT is charged when a VAT-registered business sells to either another business or to a non-business customer - this includes the road fund license.

Not true. The road fund license is a VAT exempt product and therefore should have no VAT. Just because the company is VAT registered does not mean everything will have VAT applied to it. It also depends on whether the product is vatable, reduced rate, zero rated or exempt.

I would ask the company to check this and reissue a corrected invoice.

Edited by Ryang94 on Friday 8th April 14:57

[Ham_and_Jam]

Ryang94 said:

Not true. The road fund license is a VAT exempt product and therefore should have no VAT. Just because the company is VAT registered does not mean everything will have VAT applied to it. It also depends on whether the product is vatable, reduced rate, zero rated or exempt.

I would ask the company to check this and reissue a corrected invoice.

Edited by Ryang94 on Friday 8th April 14:57

I’m tempted to challenge, but didn’t want to look a numpty if it was a valid.

They have stated its for a ‘RFL Recharge’, so was wondering if this is different to charging for the ‘RFL’? Maybe more them charging for their admin.

[OllieJolly]

Ham_and_Jam said:

Had a feeling this might be the case. Just seems wrong being charged tax on a tax

Haha, if I understand correctly, that happens every time we fuel up.

Fuel duty paid on the fuel, then VAT paid on top of the total.

[Ham_and_Jam]

OllieJolly said:

Haha, if I understand correctly, that happens every time we fuel up.

Fuel duty paid on the fuel, then VAT paid on top of the total.

It does, but you are actually getting a product. In this case you are actually just paying a tax on a tax.

[Ham_and_Jam]

Ryang94 said:

Not true. The road fund license is a VAT exempt product and therefore should have no VAT. Just because the company is VAT registered does not mean everything will have VAT applied to it. It also depends on whether the product is vatable, reduced rate, zero rated or exempt.

I would ask the company to check this and reissue a corrected invoice.

Edited by Ryang94 on Friday 8th April 14:57

I think it is valid. Just seen this buried in their T&Cs-

VAT and the Road Fund Licence
Value Added Tax (VAT) is charged when a VAT-registered business sells to either another business or to a non-business customer - this includes the road fund license. If you are VAT registered, you can claim back 50% of the VAT on the RFL for a car and 100% for a commercial vehicle. If you are not VAT registered, you will need to discuss this with HMRC.

[OllieJolly]

Ham_and_Jam said:

It does, but you are actually getting a product. In this case you are actually just paying a tax on a tax.

Ah, yes. Good point, I suppose you are. I guess it's worse now that they don't even send you a tax disc, at least then you actually got something tangible for your troubles.

[Dr Interceptor]

Ryang94 said:

Bubba Zanetti said:

Had similar last year. Increase was £15 for the year plus VAT at 20% so £3.

VAT is charged when a VAT-registered business sells to either another business or to a non-business customer - this includes the road fund license.

Not true. The road fund license is a VAT exempt product and therefore should have no VAT. Just because the company is VAT registered does not mean everything will have VAT applied to it. It also depends on whether the product is vatable, reduced rate, zero rated or exempt.

I would ask the company to check this and reissue a corrected invoice.

Edited by Ryang94 on Friday 8th April 14:57

Not true.

The lease/finance company owns the car, and rents/leases it to the OP. The RFL is included in the lease costs, and the RFL therefore becomes part of the service being sold and is therefore subject to VAT.

[deggles]

If they wanted, I'm sure they could technically charge the increase as a disbursement and therefore outside the scope of VAT. But that would require some (minimal) effort on their part so easier to just treat it as a sale.

[Bubba Zanetti]

What I said is correct. Just because you paid RFL for your own private vehicle and it wasn't subject to VAT doesn't mean the same applies to PCH.

See the FAQs on LeasePlan's website: https://direct.leaseplan.co.uk/faqs/category/road-...



In short you are buying (leasing) a package from them. The car, the RFL and any maintenance plan. As a result all that is subject to VAT.

If you buy a car for yourself from a dealer, that isn't PCH, they add on the road tax on your behalf and doesn't attract VAT.

[Ham_and_Jam]

Bubba Zanetti said:

What I said is correct. Just because you paid RFL for your own private vehicle and it wasn't subject to VAT doesn't mean the same applies to PCH.

See the FAQs on LeasePlan's website: https://direct.leaseplan.co.uk/faqs/category/road-...



In short you are buying (leasing) a package from them. The car, the RFL and any maintenance plan. As a result all that is subject to VAT.

If you buy a car for yourself from a dealer, that isn't PCH, they add on the road tax on your behalf and doesn't attract VAT.

Yeah, I found the same on LeasePlans website. Just feels wrong though. Tax on a tax

[Mandat]

Ham_and_Jam said:

Yeah, I found the same on LeasePlans website. Just feels wrong though. Tax on a tax

Rather than fuming about a tax on a tax, look at it as a tax on a service provided by the lease company.

[Ham_and_Jam]

Mandat said:

Rather than fuming about a tax on a tax, look at it as a tax on a service provided by the lease company.

Err….no, it’s VAT on the RFL. That’s what the invoice states. So it’s tax on a tax.

[Mandat]

Ham_and_Jam said:

Err….no, it’s VAT on the RFL. That’s what the invoice states. So it’s tax on a tax.

Who issued the invoice?