VAT on a pre-paid car service

pconnolly79

Have a tough one for you and hope you can help out.
I tried asking the question to my subscription with a certain Tax advisor but they couldn't answer it.

i have a client setting up a business where you pay a subscription on a monthly basis that covers a driver for all repairs and servicing in a year.
I wonder what vat rate would be charged on the subscription bearing in mind that both the higher and lower rate of VAT is charged on car repairs.

Any help is appreciated

Alan Shore

In general garages charge 13.5% based on the 2/3s rule.

I would have thought that 13.50% would apply to the subscription invoices and then when the repairs are carried out if the rate is wrong issue a credit note and reissue an invoice at 23%.

What do others think?

pconnolly79

That is a good idea, could it be best to use the higher rate so that you are not technically underpaying VAT during the year and claim a refund by doing this Rec at year end.

It is a tough one, revenue can't help me out

carefull now!

Garages charge 13.5% on labour and the parts fitted. Only tyres are charged at the higher rate afaik. The real question is can your client charge 13.5% for providing their service as a middle man?

swanvill

Hi,
An interesting idea, does s/he have his service up & running? Is there a website I can visit?