One of my clients runs a car repair centre that is not an authorised MOT testing station but does offer MOTs to his customers. If a customer wants an MOT, he takes their vehicle to a local authorised MOT testing station to get it tested, doing any repairs and maintenance necessary to get the vehicle through the MOT, and then recharges his customer for his services, including the MOT. What is the VAT treatment of the MOT recharge?
Obviously, your client’s charges for their vehicle repairs etc is subject to VAT at the standard rate.
However, in regard to your client’s charge to the customer for the MOT, the VAT treatment of the charge depends upon what he charges his customer for the MOT.
If your client simply recharges the customer the exact amount the testing centre charged for the MOT, including any discount that your client may receive from the testing centre, then the recharge will be outside the scope of VAT and no VAT should be charged by/will be due from your client for the MOT. This is because the recharge is treated as a disbursement for VAT purposes.
Alternatively, if your client charges the customer more than the amount he was charged by the testing centre, then the charge represents 2 separate supplies with 2 separate VAT treatments:
HMRC provides slightly more detailed guidance on this in their online manual VTAXPER48000.
Tony Pocock – Vantage Fee Protect Tax Consultant
My client is a business…
A question that has been raised with…
My client incurs VAT on electricity that…
On the VAT helplines we are regularly asked…
My client is a VAT registered husband…
My client is a business providing security…
Having changed over to Vantage a couple of years ago we have been very satisfied with the service. Especially the claims handling and technical advice lines for both our firm and insured clients on employment and business legal matters. The webshop Vantage offer allows our clients to join and pay electronically. This positively impacts our bottom line and makes things simple and efficient for our clients.