FSB warning to car-repair firms
The Federation of Small Businesses (FSB) is warning car-repair businesses which pass on MOTs to testing stations to be aware of confusing VAT regulations.
The organisation claims that many car-repair businesses that are registered to pay VAT may have unwittingly incorrectly invoiced customers.
VAT is not added to MOTs when charged to customers but a ruling by HMRC a few years ago means that unless a garage shows the actual MOT cost it passed on to customers as a separate item on the invoice, they would be liable to pay VAT on the whole bill.
The same would apply if the garage separated the costs but charged the full statutory MOT amount while keeping any discount given it by the testing station to cover service and vehicle-handling charge.
“The FSB strongly advises repair garage owners to consult their accountant with a view to appealing,” said FSB taxation chairman Bill Knox. “It doesn’t help that HMRC’s payment terms have so far been inconsistent.
“With small businesses now spending an average of seven hours per week on regulation alone, it is more important than ever to think small first, and keep things simple,” he added. “This will relieve many of unnecessary pressure, with time being spent on expansion and innovation.”
Post Date: October 9th, 2007