Paying VAT on part

SharpShooter

Hi all,

Recently had my car repaired at Kwik Fit. The part cost £235 including VAT which they bought and billed me for.

Then the labour cost £90.

So that's £325. But then they've applied VAT on that whole £325 on the invoice bring it upto £390.

My question is should I be paying VAT "again" on the part? The £235 for the part was including the VAT, so why have they applied VAT it again?

I'm considering asking them for that money back, but just wanted to get your thoughts on it if I am misunderstanding something?

DullGreyGuy

Where are you getting that the part was £235 inc of VAT?
How is it presented on your invoice?
What was their markup on the part?

SharpShooter

I spoke to the main dealer to enquire about the part myself and then I also saw it on the invoice/receipt from the dealer.

On my invoice it's just got the total with and without VAT.

tightauldgit

The short answer is 'it depends'.

You shouldn't be paying VAT twice but Kwik Fit can and probably do charge a markup on spare parts so they don't necessarily need to charge you what they were charged by their supplier. It could be that their markup is coincidentally 20%.

SharpShooter

tightauldgit said:

The short answer is 'it depends'.

You shouldn't be paying VAT twice but Kwik Fit can and probably do charge a markup on spare parts so they don't necessarily need to charge you what they were charged by their supplier. It could be that their markup is coincidentally 20%.

I'll probably need to enquire this with the back office admin teams. Their supplier is the main dealer.

They didn't mention a makeup on price when I queried what the breakdown was, just that it's the VAT added on £325 (£235 part + £90 labour).

DullGreyGuy

SharpShooter said:

I spoke to the main dealer to enquire about the part myself and then I also saw it on the invoice/receipt from the dealer.

On my invoice it's just got the total with and without VAT.

So, given you bought the part from KwikFit not the main dealer, what had they said about the price of the part?

It sounds like you've made some assumptions that have proven to be wrong and KwikFit are probably putting a 20% markup on the part

sheramber

VAT is charged at each stage of the purchase. VAT is a tax that the seller passes onto the Government in behalf of the buyer.

there is an explanation here  https://www.avalara.com/blog/en/north-america/2021/07/what-is-vat.html

An example: A raw materials dealer sells its product to a factory for £101, £1 of which is VAT. The raw material dealer sends the £1 to the tax authority.

With the material, the factory produces laptop batteries, which it sells to a laptop manufacturer for £202. £2 is VAT — £1 of that reimburses the factory for VAT it paid to the raw materials dealer, the other £1 it pays to the government for its VAT.

The laptop manufacturer then sells the laptops to a computer retailer for £303, which includes a £3 VAT — £2 reimburses the manufacturer for VAT paid to the factory, and £1 goes to the tax authority.

Finally, the computer retailer sells a laptop for £404 — keeping £3 of VAT for reimbursement and sending £1 to the government.

Each additional £1 along the supply chain represents the value added at each stage.

bris

You need to get the VAT out your head its just confusing things .

If you go into Next to buy a coat at £24O you dont ask them to take off the VAT do you?

This is the same thing, if you didnt know there was VAT on the part you would be none the wiser.

Next sell that coat for £240 but in the VAT return they have to give the VAT man £44 (not sure the retes these days so that there abouts)

Its the same for Kwik fit they don't keep the £90 they have to give the VAT man his cut of the entire £390 which is just over £80 

So no they arent stealing the VAT from you

phillw

Did you agree a price with kwik fit before they ordered the part?

RefluentBeans

So the part would cost you (consumer) £235 including VAT. You’re assuming that QuikFit can get the part without VAT I think? From my understanding, businesses can only claim VAT back from consumables used for the operation of business - like phone services, paper and pens etc. This sounds more like goods, which follows the battery example above (by sheramber). 

Businesses do normally get a trade discount on items they supply, but not always. You can of course ask for a price reduction, but as others said, did they not give you a quote before? Or did you think the VAT was included already? 

JetpackVelociraptor

VAT registered businesses can claim VAT off the cost of anything they buy that includes VAT, and they pay VAT on every eligible item that they sell. Buy something for £120 inc vat, sell something for £240 inc vat, and your vat return for that period would be +£40 - £20 for a net of £20 to HMRC.

The real question here is did Kwikfit at any point tell you that they'd only be charged £235 including VAT for the part? I would recommend you contact them to ask if there's a mistake on the invoice because you expected the part price to include VAT, and see what they say. But if Kwikfit never told you it would include vat at that price you may be out of luck.