Patially VAT exempt business

[xazy]

This is a suggested question. A car garage repair owner after a year, found his turnover is £90,000 from car repairs and MOT fees ( £65,000 from repairs and £25,000 from VAT fees). MOT fees are exempt from VAT. He is not VAT registered yet. Is it now compulsory for him to register for VAT or is there another way to stay as he is.

 

[faradaykeynes]

This article on "When do I have to register for VAT?" should help further. In short to your question, answer is NO. exempt services dont count plus turnover is 12 months rolling not year end bais

 

[lesvatadvice]

and, MOT fees are not exempt, so do not affect your Partial Exemption calculation.

 

[kulture]

and, MOT fees are not exempt, so do not affect your Partial Exemption calculation.

MOT fees ARE exempt
https://www.gov.uk/getting-an-mot/mot-test-fees

 

[Scalloway]

They are outwith the scope of VAT, not exempt.

https://www.gov.uk/hmrc-internal-manuals/vat-taxable-person/vtaxper48000

The fee charged by an approved test centre for carrying out an MOT test has always been seen as outside the scope of VAT.

 

[xazy]

Sorry chaps, I am now more confused . MY question was , an owner of MOT testing station with a turnover of £65,000 from repairs and £25,000 from MOT fees, has he by law to register for VAT?
Guys, Thank you for the replies but I need simpler answer due to my little knowledge of your subject.

 

[Scalloway]

£65,000 is below the threshold for registering for VAT.

The £25,000 from MOT fees is outside the scope of VAT so does not from part of your turnover for VAT purposes.

 

[UK Contractor Accountant]

But does the turnover from MOT fees include a profit element?

I have seen garages just lump the MOT figures upwards to avoid VAT registration - this does not wash with HMRC!

 

[UK Contractor Accountant]

Do you run a MOT testing station or do you run the vehicles down the road for testing?

I think you may have a problem if you are providing a service of dropping vehicles down to the MOT station and charging more than the cost of the MOT from the testion station - i think this makes it a full taxable supply.

 

[lesvatadvice]

I agree. Unless you charge on the MOT test fee at cost, the whole price is taxable. (This has been upheld by the Tax Tribunal.)
If you do wish to make an admin charge in addition to the MOT, you need to show it separately, or include it in your labour charge.
And, I think, book a hour with your Accountant to work through the issues raised in this thread.