VAT on VAT?

[TV8]

If I buy a part through a garage who is fitting the parts for me, do I only pay VAT on their labour or the total. I have checked a couple of items and I think I am paying VAT on VAT of the supplied parts which apart from the unnecessary parting of beer vouchers is a concept I despise.

Thanks

[falkster]

Maybe some sneaky garages would try and get a couple of extra quid that way but any decent garage would list the price of the part +vat then charge vat at the bottom of the bill when they charge vat on the labour etc.

[Super Slo Mo]

You'll pay VAT on the total, them's the rules.

Whether the garage gives you the parts at Nett plus VAT, or simply Gross (inc VAT) plus VAT (and therefore is making a markup equivalent to the original VAT levy, is purely down to the garage. I've not come across a garage that would supply parts at cost, unless you're a mate of the owner. Usually there's a profit margin in there somewhere for them.

Quite often, they'll source parts from a factor, and will supply them to you at the same price you'd be able to get them from the factor for. However, they'll get them at a (trade) discount, so as to be able to make a margin on the part.

Edited by Super Slo Mo on Thursday 29th October 22:44

[Paul Drawmer]

TV8 said:

I think I am paying VAT on VAT of the supplied parts which apart from the unnecessary parting of beer vouchers is a concept I despise.

Thanks

Could you give an example?

[mybrainhurts]

The garage reclaims the VAT it paid to its supplier.

It then charges you what it likes for the part, adds labour, then adds VAT to the total.

You're not paying VAT on VAT, anything your garage adds to the part price, then charges to you, is markup for the garage.

[jamoor]

You only pay VAT once, but tax twice if it's imported, you pay tax on top of tax.

[Paul Drawmer]

jamoor said:

You only pay VAT once, but tax twice if it's imported, you pay tax on top of tax.

As in paying for something with duty and VAT on it, out of taxed income? - Oh no, that's petrol, alcohol and fags and it's tax on tax on tax.

[TV8]

Paul Drawmer said:

TV8 said:

I think I am paying VAT on VAT of the supplied parts which apart from the unnecessary parting of beer vouchers is a concept I despise.

Thanks

Could you give an example?

Hi Paul,
I had a part that costs £400 ex vat or £460 including. The labour to fit was £200 giving a sub-total of £660 + VAT or £759 total. I am thinking it should be £460+£230 - £690 total. Mr Darling gets another £70 this way if it is the rule?

[Farmer]

mybrainhurts said:

The garage reclaims the VAT it paid to its supplier.

It then charges you what it likes for the part, adds labour, then adds VAT to the total.

You're not paying VAT on VAT, anything your garage adds to the part price, then charges to you, is markup for the garage.

agreed! remember also that the garrage pays the vat total it charges you to the govt. which remings me I should be doing my VAT not tooling around on the nett!

[Super Slo Mo]

TV8 said:

Paul Drawmer said:

TV8 said:

I think I am paying VAT on VAT of the supplied parts which apart from the unnecessary parting of beer vouchers is a concept I despise.

Thanks

Could you give an example?

Hi Paul,
I had a part that costs £400 ex vat or £460 including. The labour to fit was £200 giving a sub-total of £660 + VAT or £759 total. I am thinking it should be £460+£230 - £690 total. Mr Darling gets another £70 this way if it is the rule?

No, the difference is profit for the garage, they'll claim the original VAT back.

[TV8]

Farmer said:

mybrainhurts said:

The garage reclaims the VAT it paid to its supplier.

It then charges you what it likes for the part, adds labour, then adds VAT to the total.

You're not paying VAT on VAT, anything your garage adds to the part price, then charges to you, is markup for the garage.

agreed! remember also that the garrage pays the vat total it charges you to the govt. which remings me I should be doing my VAT not tooling around on the nett!

So in my example, they are paying net VAT? ie what I paid, less what they paid to the supplier?

[Farmer]

TV8 said:

Farmer said:

mybrainhurts said:

The garage reclaims the VAT it paid to its supplier.

It then charges you what it likes for the part, adds labour, then adds VAT to the total.

You're not paying VAT on VAT, anything your garage adds to the part price, then charges to you, is markup for the garage.

agreed! remember also that the garrage pays the vat total it charges you to the govt. which remings me I should be doing my VAT not tooling around on the nett!

So in my example, they are paying net VAT? ie what I paid, less what they paid to the supplier?

If I understand that correctly yes . They buy the part from thier supplier and claim the vat back from the govt . decide what to charge you for the part then add vat to the total , then pay that larger vat amount to the govt. They make a mark up, Gordon Brown gets another tile on his "duck house"

[Matt UK]

TV8 said:

VAT on VAT?

UK plc are working on that one in Westminster right now..

[Super Slo Mo]

Lets see if I can explain this:

Garage buys part for £400.00 plus VAT - Total £460.00

Garage is able to claim VAT back, so effectively pays £400.00 (although the process is done quarterly)

They charge you £460.00 plus VAT - Total £529.00

The difference of £60.00 is profit for the garage.

Treasury gets an additional £9.00 due to the price increase (ie instead of £60 VAT, they get £69 VAT).

Does this make sense?

Edited by Super Slo Mo on Thursday 29th October 23:17

[Farmer]

Super Slo Mo said:

Lets see if I can explain this:

Garage buys part for £400.00 plus VAT - Total £460.00

Garage is able to claim VAT back, so effectively pays £400.00 (although the process is done quarterly)

They charge you £460.00 plus VAT - Total £529.00

The difference of £60.00 is profit for the garage.

Treasury gets an additional £9.00 due to the price increase (ie instead of £60 VAT, they get £69 VAT).

Does this make sense?

Edited by Super Slo Mo on Thursday 29th October 23:17

sound ...but I wish mine was quarterly most are monthly over and above a "relatively small" turnover

[Super Slo Mo]

Farmer said:

Super Slo Mo said:

Lets see if I can explain this:

Garage buys part for £400.00 plus VAT - Total £460.00

Garage is able to claim VAT back, so effectively pays £400.00 (although the process is done quarterly)

They charge you £460.00 plus VAT - Total £529.00

The difference of £60.00 is profit for the garage.

Treasury gets an additional £9.00 due to the price increase (ie instead of £60 VAT, they get £69 VAT).

Does this make sense?

Edited by Super Slo Mo on Thursday 29th October 23:17

sound ...but I wish mine was quarterly most are monthly over and above a "relatively small" turnover

Ah, ok, I must still be below the threshold then. Not to worry.

[jamoor]

Paul Drawmer said:

jamoor said:

You only pay VAT once, but tax twice if it's imported, you pay tax on top of tax.

As in paying for something with duty and VAT on it, out of taxed income? - Oh no, that's petrol, alcohol and fags and it's tax on tax on tax.

Well lets say a wiget from china is £1.00 and has 50% import duty on it,

The widget will cost £1.50 in total, if the vendor sells this at cost price, the VAT will be added to the cost of the Widget and the Duty.

So yes, you pretty much got it righy.

[Farmer]

Super Slo Mo said:

Farmer said:

Super Slo Mo said:

Lets see if I can explain this:

Garage buys part for £400.00 plus VAT - Total £460.00

Garage is able to claim VAT back, so effectively pays £400.00 (although the process is done quarterly)

They charge you £460.00 plus VAT - Total £529.00

The difference of £60.00 is profit for the garage.

Treasury gets an additional £9.00 due to the price increase (ie instead of £60 VAT, they get £69 VAT).

Does this make sense?

Edited by Super Slo Mo on Thursday 29th October 23:17

sound ...but I wish mine was quarterly most are monthly over and above a "relatively small" turnover

Ah, ok, I must still be below the threshold then. Not to worry.

No indeed but perhaps my industry is rather unusual where a small busness (profit wise) has a very large turnover . but there again maybe I'm just like my kids ....avoiding my homework ...

[SunderJimmy]

I bought a tyre from the local place for £50.00 then a couple of weeks later when the VAT went down I bought another exactly the same from the same batch also for £50.00.

They pull more fast ones than a barmaid on amphetamines.

Edited by SunderJimmy on Thursday 29th October 23:49

[Boosted LS1]

Isn't this the idea of vat? The more hands goods pass through the more the vat rises and thus more profit for those pretending to be in government?