Cross Charging PCN's to Clients

[Stewart Setter]

Morning all,

Trying to wrap my head around PCN and VAT. I have a vehicle leasing client and receives PCN's against the vehicles.

When the PCN is cross charged back to the hirer, should VAT be applied even if the PCN itself is zero rated ? In my head, if the client makes a small markup then I guess VAT would apply, but would a straight forward cross charge be subject to VAT ?

Thanks in advance,
Stewart

 

[NicoJ]

It depends. If this is a disbursement then no VAT would be charged. If it is a recharge then it would follow the rate of supply (usually 20%).

To look at whether the cost is a disbursement or not is the first step, it is not clear cut from your question.

 

[JEREMY HAWKE]

Most PCNS we have received are from Transport for London and associated councils of London
They are not vat applicable so all transactions should be zero rated to your customer ie a simple pass on

If you mean an admin charge for your companies efforts then your should apply vat to this.
These fines and PCNS can be very time consuming when dealing with them

 

[Stewart Setter]

Most PCNS we have received are from Transport for London and associated councils of London
They are not vat applicable so all transactions should be zero rated to your customer ie a simple pass on

If you mean an admin charge for your companies efforts then your should apply vat to this.
These fines and PCNS can be very time consuming when dealing with them

Thank you Jeremy, Would you apply VAT to just the admin element or the whole bill. i.e. the PCN is £35.00 charge to Client is £40.00 do you apply the VAT to the £5 or the full £40.

 

[JEREMY HAWKE]

Thank you Jeremy, Would you apply VAT to just the admin element or the whole bill. i.e. the PCN is £35.00 charge to Client is £40.00 do you apply the VAT to the £5 or the full £40.

Vat to the £5
In my opinion though £5 admin charge is a bit low .We are renting vans from Enterprise at the moment and they charge £35 including the vat and this is quite standard
I know you never asked how much to charge but nice to see you make a better profit and it does cost to process them ??

 

[NicoJ]

Thank you Jeremy, Would you apply VAT to just the admin element or the whole bill. i.e. the PCN is £35.00 charge to Client is £40.00 do you apply the VAT to the £5 or the full £40.

Stewart, the advice given is incorrect. Please refer to my post, if it is a recharge the entire supply is vatable irrespective of the VAT status of the original expense.

 

[JEREMY HAWKE]

Stewart, the advice given is incorrect. Please refer to my post, if it is a recharge the entire supply is vatable irrespective of the VAT status of the original expense.

Something is out wack here the national companies don't charge vat on a passed on fine

Alternatively most of them pass on the fine by giving the details of the driver and charge a admin fee including vat but you cannot charge on something that is not vatable

 

[NicoJ]

Something is out wack here the national companies don't charge vat on a passed on fine

Alternatively most of them pass on the fine by giving the details of the driver and charge a admin fee including vat but you cannot charge on something that is not vatable

Please re-read my comment, it depends on whether it is a recharge or a disbursement. The national companies will have it set up so that it is a disbursement.

And yes, you can (and must) charge VAT on items that are not VATable. The most common being train travel which has no VAT on it but is VATable when you recharge travel costs to your customer.

 

[Bobbo]

Does your client's terms of business make clear that any PCNs are the responsibility of the hirer of the vehicle and these will be passed onto the hirer plus an admin charge of £x+VAT.

If so, then the documentation may be sufficient for the recharge of the PCN to be treated as a disbursement.