VAT on MOTs

Slinky

Quick question, car's been serviced and MOT'd by a garage who don't have MOT facilities, they took it to the local MOT place and had it done.

Their invoice has VAT on the MOT - is that correct?

Optimist

From HM revenue

MoT testing of vehicles supplied directly by a test centre to its customers is outside the scope of VAT, provided the statutory maximum fee is not exceeded. The statutory maximum fees can be found on the directgov website.

If a garage is not an approved test centre, it may arrange for a vehicle to be tested elsewhere as part of its service to the vehicle’s owner. Where the unapproved garage shows the exact amount charged by the test centre separately on its invoice to its customer, and meets all the other disbursement conditions of paragraph 25.1.1 of VAT Notice 700 The VAT Guide, it may treat the MoT element as a disbursement and outside the scope of VAT.

The unapproved garage will, however, have to account for VAT on the full amount of the invoice if it chooses not to treat the amount charged by the test centre as a disbursement, does not satisfy all the disbursement conditions, or makes a profit on the MoT transaction.

Paragraph 25.4 of VAT Notice 700 covers the VAT position of MoT test charges in detail.

Slinky

Thanks for that, looks like I've been charged VAT in error then as it's itemised at as a separate amount at £46 + VAT