I am trying to fill in a stock book for a second hand car dealer who uses the margin scheme to account for their VAT. They itemise the cost of MOTs they've paid for on their sales invoices (and make no profit, just charge the same amount they paid). My question is, is the MOT figure always included within the selling price?
I don't feel right including it, because if it wasn't under the margin scheme they would not pay VAT on that part, however the HMRC guidance I found seems to suggest you should. Why isn't it treated as a disbursement, like RFL?
It is a harsh rule, and effectively creates a tax on a disbursement. However, if you choose not to pay VAT, and follow the disbursement rules, you will find HMRC assess you for the VAT. I agree with your comment that MOTs should be treated like RFL.
It really needs someone to take a case beyond the Tribunal to argue the matter properly.
