Car Garages charging VAT on parts

BTTF555

Hi, my car recently had a new radiator fitted. The garage source the rad, the item included VAT when paid for, and when I got the bill at the end, VAT was again charged at 20% on the total bill, so, I have in effect paid VAT twice (and, in fact, paid a bit on top, as it's VAT on the amount which already included VAT).
Should they be doing that? Should I have instead sourced it myself and asked the garage to fit it? I would then only pay VAT on labour.

CliveOfIndia

Are you sure they've charged you twice for the VAT?  It's very common for the VAT to be itemised separately - for instance, if a part costs £120 retail it's not unusual for the bill to say "Part=£100, VAT=£20, Total=£120".  So the total cost of the part retail is £120, but that's comprised of the cost plus the VAT added together.  The garage then just splits out the cost and the VAT elements (I think so that those who are legitimately entitled to do so can reclaim the VAT?  Don't hold me to that part though!)

Car_54

OP, the rad should be listed on your invoice at the ex-VAT price. Isn't that the case?

DullGreyGuy

BTTF555 said:

Hi, my car recently had a new radiator fitted. The garage source the rad, the item included VAT when paid for, and when I got the bill at the end, VAT was again charged at 20% on the total bill, so, I have in effect paid VAT twice (and, in fact, paid a bit on top, as it's VAT on the amount which already included VAT).
Should they be doing that? Should I have instead sourced it myself and asked the garage to fit it? I would then only pay VAT on labour.

Why do you think that?

A part costs the garage £100 + VAT

They charge the customer £120 + VAT

That means they are charging a 20% markup on the part... garages, like shops and most other businesses add a markup on whatever they buy and then sell to a customer. When you buy a TV from Curry's for £1,000 + VAT do you think they bought it for £1,000 net?

You can ask them if you can source the part yourself but certainly some wont use other's parts and when it fails in 2 months it then becomes a fight over if its their service or your part that caused the problem

Freecall

How big is the garage?  Have you considered that they may be registered under the HMRC Flat Rate Scheme.

RandomTourist

BTTF555 said:

Hi, my car recently had a new radiator fitted. The garage source the rad, the item included VAT when paid for, and when I got the bill at the end, VAT was again charged at 20% on the total bill, so, I have in effect paid VAT twice (and, in fact, paid a bit on top, as it's VAT on the amount which already included VAT).
Should they be doing that? Should I have instead sourced it myself and asked the garage to fit it? I would then only pay VAT on labour.

The garage buys the part from a factor at (say) £100 and the factor charges VAT of £20. Factor pays HMRC £20.

Garage reclaims £20 VAT from HMRC as input tax. Charges you £100 for the part and £20 VAT. Charges you (say) £200 for labour and £40 VAT. Therefore pays HMRC £60 as output tax.

Thus the garage effectively charges you £40 tax for the added value of the radiator now being in your car and not on the shelf, and £20 tax on the part itself.

If you had bought the part yourself, you'd have paid £20 VAT on that, and then paid £40 VAT on the garage's added value, so you'd still be giving £60 to HMRC.

facade

RandomTourist said:

BTTF555 said:

Hi, my car recently had a new radiator fitted. The garage source the rad, the item included VAT when paid for, and when I got the bill at the end, VAT was again charged at 20% on the total bill, so, I have in effect paid VAT twice (and, in fact, paid a bit on top, as it's VAT on the amount which already included VAT).
Should they be doing that? Should I have instead sourced it myself and asked the garage to fit it? I would then only pay VAT on labour.

The garage buys the part from a factor at (say) £100 and the factor charges VAT of £20. Factor pays HMRC £20.

Garage reclaims £20 VAT from HMRC as input tax. Charges you £100 for the part and £20 VAT. Charges you (say) £200 for labour and £40 VAT. Therefore pays HMRC £60 as output tax.

Thus the garage effectively charges you £40 tax for the added value of the radiator now being in your car and not on the shelf, and £20 tax on the part itself.

If you had bought the part yourself, you'd have paid £20 VAT on that, and then paid £40 VAT on the garage's added value, so you'd still be giving £60 to HMRC.

I think the OP is suggesting that the garage paid £100 + VAT = £120 (and claimed back the £20 so no VAT has been paid on the radiator) and then charged the OP £120 + VAT = £144 at point of sale.

So the bill ought to be

Radiator £100

labour    £200

VAT         £60

Total       £360

But it actually is

Radiator £100 + VAT  = £120

Labour                        = £200

Total                            =£320

VAT                             =  £64

Total                            =£384

Doesn't seem right to me, the garage wouldn't quote the radiator as including VAT then apply VAT again, but they could mark up the radiator exVAT price by 20% and increase their profit (then they would pay £4 of the profit as tax, but that isn't the OPs problem)