Stephen Nicholas
I looked into this some years ago when the VAT Office (now HMRC) informed us that if we applied a mark-up to MOT fees then we would have to charge VAT on the difference, not the whole amount.
However, since there is no (easily) reclaimable VAT element in an MOT fee I charge what my sub-contract MOT station charges me and treat it as a disbursement (where you pass a cost on).
My accountant (who is fairly brilliant at his job - thank goodness!) says that this is the best way to treat it so I simply add an MOT fee as a zero-rated addition at the bottom of my invoices and just "pass-on" the MOT charge that I pay.
Customers tend to think this is great as I don't charge extra for an MOT fee - I just charge labour for pre-MOT check, arrangement etc.
However, I recall that this was the subject of a lively discussion on here some time ago and different VAT offices apparently interpreted the regulation differently - not very helpful.
Best check with your accountant if you have any doubts!
Regards,
Steve
Message Thread MOT and VAT # - Karen Waring January 14, 2011, 11:54 pm
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