Hi folks.
A question to those in the know.
I've just had an MOT and brakes done on my 320d.
Got an itemised bill broken down into parts,labour etc.
The garage have got the parts in, no doubt at trade cost and then charged me for them.
Then added the labour charge, the cost of MOT and then added VAT on the total.
So, question is, if they have bought the parts in then inflated the price can they then charge me VAT on the total. Is this how it works?

I can't help thinking iv'e been swindled

Cheers.

 

Yes garages do that all the time, customer gets charged recomended retail price, with vat on top.

The only thing i am not 100% sure on is MOT shouldn't have VAT on top ?

 

MOTs are not VAT-able. They are a government enforced test and therefore do not have VAT on them.

Matt

 

How can you charge for VAT against an item that has already had the VAT paid against it?

Genuine question

 

everything you buy in any shop anywhere has had vat paid on it multiple times at varying amounts until it reaches the final buyer which is you

 

The VAT is removed from the item before it's invoiced.
Then Vat is added to the "retail" price, obviously the amount of Vat has increased.

If the service provider is not VAT registered the original VAT amount is passed on.


.

 

Beat me to it!!

Matt

 

Correct... this is why parts suppliers quote prices without the VAT added on

 

Ahh. Makes sense.

 

Yes Mot is not vattable!!!
As for mark up on parts it's up to the garage themselves but check they are vat registered as they shouldn't charge it on labour otherwise and as said only the vat on part prices PAID should be added.
Id say if their a Mot centre doing repairs theyd almost certainly be vat registered.
Makes a big difference to the old bill 20%,people always used to turn up at my place trying to get the vat knocked off,it's not always worth it from a business owners point of view.

 

Correct, MOT is a fixed charge ?

Unless they took off the VAT before itemising it.

And garages do not make money charging VAT on goods, it costs them a bloody fortune as well as the customer.

 

it won't matter soon as they are talking of charging vat on mot's soon and setting a fixed mot price and retest fee
so no cheap mot's or free retests will be allowed to be offered by mot testing stations

 

They'll be charging VAT on top of VAT soon the robbing cunts lol

 

If they aren't VAT registered they cannot show VAT on their invoice on any element. Instead, they have to include they VAT they paid to buy parts and sundries within the charge for the item.

If the garage buys a part for Ł10 + VAT, he pays the supplier Ł12 in total.
The VAT registered garage can set the Ł2 VAT charged against the VAT he collects. so the net cost is Ł10.
The non-VAT registered garage cannot recover the Ł2 VAT so his net cost is Ł12.

They both sell the part to you, the retail customer for Ł24.
The VAT registered garage pays the VAT man Ł4 (20% of Ł20), so his gross profit on the plug is Ł10.
The non-VAT registered garage doesn't have to pay the VAT man anything from the retail sale (because he couldn't recover his input VAT) so his gross profit on the plug is Ł12.

If the part is sold to another VAT registered customer, again for Ł24 total, the customer of the VAT registered garage can recover the Ł4 charged for VAT so his net cost is Ł20.
If the VAT registered customer buys from the non-VAT registered garage there is no VAT element to recover, so his net cost is Ł24.

If the non-VAT registered garage wants to compete with VAT registered garages, he could reduce his price to his business customers, so if he charges Ł20 total to the customer, he will have to accept that his gross profit is reduced to Ł8.

 

If you are VAT registered you have to charge VAT on everything you sell with the exception of a few NON VATable items like an MOT.

So if you buy a part for 100 quid + VAT, ie 120, and you sell it for 120 then that must be plus VAT too so becomes 144.

But bear in mind that is the garage making 20 quid, as they will claim back the vat that they paid.

So if the garage isnt marking up the part, they would buy for 120 including vat, and sell for 120 including vat, and they would net the two off, so the vat you pay them cancels out the vat they paid in the first place.

 

Apologies for repeating what Iain said but just not as well as he put it, his reply wasnt there when I first hit reply on the topic.

 

I think all the above is great to explain the situation but regardless the garage can charge what they want, the legalities of VAT being added/stated/included is largely irrelevant as that's their problem if they get caught being naughty or not playing by the rules.

The charge to you is what they see fit to charge you - if you think you're being stung tell them and see what they say. If you don't then pay and job done.

Ultimately a bill stating
Ł240 including VAT
Ł240
Ł200 + VAT
are all the same to the customer, the issue is how the garage deals with the VAT and the end user deals with the VAT if they are a business that is the issue. As an ordinary punter its Ł240 to pay, with thanks.

J

 

And the "profit" garages and the like make on reselling parts isn't all profit.

The profit goes towards time spent ordering, sometimes fetching, sometimes holding in stock before using on a customers car or all of the above.
The parts may also have to be paid for before the garage themselves get paid.

.

 

Shings, the question wasn't about the total of the bill, it was about VAT treatment of parts supplied.

The fact you've outlined about Ł240 being the total, and how it is made up being of little or no importance to a retail customer is absolutely right but it does matter to a VAT registered customer.

Muffster, Curry and Comet etc buy in a telly from Panasonic, then sell it to you. They pay VAT on their purchase price and Panasonic pass that VAT to the Government.
The shop then charges you VAT on their selling price and pass that to the Government, too.
Both sellers recover the VAT they paid so the government keeps collecting the difference as Value is Added (hence the name of the Tax).

Focus V8, that's why I was careful to call it Gross Profit (that is, the profit before costs and expenses)

 

I don't read the question like that at all - the clue is in the last part of the below.


AND...

Actually no it doesn't matter a bit.

If you're a business customer your bill is Ł200 + vat, Ł240 inc vat or Ł240... The VAT that you claim back against your legitimate expenses is still Ł40 regardless.

This chaps issue is that he thinks the garage has added VAT where it shouldn't to increase his bill and hence 'swindle' him.

In my opinion its clutching at straws because he doesn't like what he's being charged - now't wrong with that AT ALL so discuss it with the garage, trying to pick fault with what does and does not qualify for VAT and how it is charged wont really get him far unless he goes to the garage with plenty of knowledge to try and win with the garage.

So lets say his bill was like this.

MOT Ł50
Parts and Labour Ł150
Vat Ł40
Total Ł240

According to the above that's wrong and should be
Parts and Labour Ł150
Vat Ł30
MOT Ł50
Total Ł230

Saving Ł10 - is it worth it??? Maybe for Ł10 quid.... It's a tough one to decide but I'd imagine if you went armed with this information the garage would prob take it on the chin.

1 out of 100 that spot it... bothered!

 

It's either about the size of the bill or the VAT treatment on the bill. This looks like you agree with me?


I'm going to disagree again (getting a taste for it now!) but if the business customer doesn't get a VAT Invoice, there is no VAT content to recover so instead of paying Ł200 the job will cost Ł240.

To be valid, a business invoice has to contain 5 things:
The date of supply or tax point
The name and address of the supplying business
A description of the goods or services provided
A unique invoice number
The value to be paid on the invoice

For VAT to be reclaimable it must also provide
The vendor's VAT number
A breakdown of the cost of goods and VAT
The customer's name and address (this can be overlooked for small amounts, like a fuel purchase, for instance)

A non-VAT registered business can't provide a VAT invoice. And if a VAT Registered business doesn't give you a VAT invoice or if you get one but lose it and can't get a duplicate from your supplier, you can't reclaim the VAT (or set the value of the invoice against profits as a business expense).

 

I will claim defeat for 2 reasons.

VAT isn't my thing and I am going to the pub.

I still think we're missing the point which is the guy thinks his bill is too much and he is picking on the VAT and how it is charged as the point, rather than parts and labour being an issue.

 

VAT geek off

 

Yes there is a trade price and a retail price , so just say your air filter was 7.50 trade and
12.50 retail you would be charged 12.50 + 20 % = 2.50 so then your air filter is Ł15 total they would be paying Ł9 total , no vat on MOT's there a straight Ł54

 

Ł54 an MOT????? Where?

I pay Ł29.99 and that's at a main dealer. That's the cheapest round here, but only by a fiver or tenner compared to everywhere else.

 

if the garage is vat redgested and dosn't have an mot station, if they have an mot done for a customer by an mot station they have to add vat to the price of the mot,
i didn't know this untill one of my customers was stung for a tax bill of Ł2500 for all the mots i had supplied him over the past seven years.

cheers nick

 

halfords half price at the mo Ł27.42

 

Not if the MOT is shown as a separate charge on the invoice after VAT is added to the services provided by that (Vat registered) garage.

Just as clear as a Hot pasty on a very warm day after the latest budget.

 

CASH IS KING