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Where Taxpayers and Advisers Meet

VAT on Vehicle Road Fund Licence

hollis
Posts: 6
Joined: Wed Jun 10, 2009 5:15 pm

VAT on Vehicle Road Fund Licence

Postby hollis » Mon Feb 28, 2011 11:36 am

Hi

Wonder if anyone can help.

I am having an argument with a vehicle rental company that I have rented a car from for 6 weeks.

In my final bill they have listed a line as Government Road Fund Licence and charged VAT on it. The billed amount also has a profit margin built into it because when pro-rating it up to 365 days I know the Road Fund Licence is not as much as I am being charged!

On the last new car I bought, the Road Fund Licence and Govt 1st Registration Fee did not have VAT charged against them so I dont understand why I am being charged VAT on the Road Fund Licence for this transaction?

Thanks

Kitty Kat
Posts: 787
Joined: Mon Oct 04, 2010 11:18 am

Re: VAT on Vehicle Road Fund Licence

Postby Kitty Kat » Mon Feb 28, 2011 12:17 pm

Hi

Wonder if anyone can help.

I am having an argument with a vehicle rental company that I have rented a car from for 6 weeks.

In my final bill they have listed a line as Government Road Fund Licence and charged VAT on it. The billed amount also has a profit margin built into it because when pro-rating it up to 365 days I know the Road Fund Licence is not as much as I am being charged!

On the last new car I bought, the Road Fund Licence and Govt 1st Registration Fee did not have VAT charged against them so I dont understand why I am being charged VAT on the Road Fund Licence for this transaction?

Thanks
When it comes to buying a car it depends on the 'package' you are buying. If you agree £1,000 for a car including the RFL then all £1,000 is VAT'able. If you instead agree to pay £900 for a car without a RFL and ask the seller to provide you with one seperatly then VAT is only charged on the £900.

I am not sure, but perhaps a similar situation applies to rentals? Surely ALL rental cars would fall into case 1 of course, I for one wouldn't rent a car for 6 weeks without a RFL (or agree to buy one)!
My keeness to show knowledge can sometimes exceed my actual knowledge, therefore treat what I say as advice only.

Generix
Posts: 2532
Joined: Wed Aug 06, 2008 3:41 pm

Re: VAT on Vehicle Road Fund Licence

Postby Generix » Mon Feb 28, 2011 12:20 pm

Agree with Kitty, but am confused as to why it would be listed seperately?!
Do you adore to transfer your artistic and inventive qualities to renovate a part type? Perhaps your friends who tour your sanctuary head remarks about want they could levy you to change their premises.

hollis
Posts: 6
Joined: Wed Jun 10, 2009 5:15 pm

Re: VAT on Vehicle Road Fund Licence

Postby hollis » Mon Feb 28, 2011 12:35 pm

Yes well its been muddied by the fact that it was a suprise to see the line on the bill - I thought I was renting a car for a fixed price to cover all costs.

I see no reason why they would rent me a car that wasnt taxed so surely its resonable to expect this to be included in the price

And yes, showing the charge on a separate line is just confusing - this is a well-known high street brand by the way !

Kitty Kat
Posts: 787
Joined: Mon Oct 04, 2010 11:18 am

Re: VAT on Vehicle Road Fund Licence

Postby Kitty Kat » Mon Feb 28, 2011 12:42 pm

Yes well its been muddied by the fact that it was a suprise to see the line on the bill - I thought I was renting a car for a fixed price to cover all costs.

I see no reason why they would rent me a car that wasnt taxed so surely its resonable to expect this to be included in the price

And yes, showing the charge on a separate line is just confusing - this is a well-known high street brand by the way !
Based on my understanding of the VAT on purchasing a car I would say it is correct they have charged VAT on your RFL rental, effectively you have bought a rental package which included the RFL from them.
My keeness to show knowledge can sometimes exceed my actual knowledge, therefore treat what I say as advice only.

Generix
Posts: 2532
Joined: Wed Aug 06, 2008 3:41 pm

Re: VAT on Vehicle Road Fund Licence

Postby Generix » Mon Feb 28, 2011 1:06 pm

I assume its to avoid a breach of some sort of advertising law or something;

e.g. maybe they advertise, rental vehicles from £20 a week, when if fact thats excluding certain extras, like wheels, road tax, engine, fuel, seat, steering wheel etc. ;)

I agree its probably right they charge VAT on the road tax - I assume their VAT officer would have picked up on such a fundamental error otherwise.
Do you adore to transfer your artistic and inventive qualities to renovate a part type? Perhaps your friends who tour your sanctuary head remarks about want they could levy you to change their premises.

Martinrichardson
Posts: 1
Joined: Wed Jun 22, 2011 5:26 pm

Re: VAT on Vehicle Road Fund Licence

Postby Martinrichardson » Wed Jun 22, 2011 5:31 pm

This relates to the difference between disbursements and recharges.

The company bought a Vehicle Road Fund Licence for use in its business. As such it recharges that cost to you on a prorated basis and must charge VAT on this item.

When you buy a new car, the dealer buys a Vehicle Road Fund Licence on your behalf for you to use on your new car. This is not intended to be used in their business, so is a disbursement and is passed to you with no VAT charged on it.

http://www.hmrc.gov.uk/vat/managing/cha ... ements.htm

My guess is they advertise a low rate 'rental' but forget to mention that this does not include all the little extra recharges they add on once you come to pay.


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