Reply To: Taxable turnover and MOTs

Forum Categories GENERAL VAT DISCUSSIONS Taxable turnover and MOTs Reply To: Taxable turnover and MOTs

Trevor S

It’s not down to whether or not your client is VAT registered. It’s to reflect the contractual position – whether the test centre’s customer is your client, or the vehicle owner direct (with your client acting as agent).

  • If your client is the test centre’s customer, your client is making an onward supply of the test to the vehicle owner, and the full amount charged is your client’s turnover.
  • But if the vehicle owner is the test centre’s customer, your client is only acting as an agent in making the arrangements and handling the payments. So only their fee for doing so (i.e. the amount they keep) counts as their turnover.

The bit about showing the elements separately on invoices is just because there’s no way that the vehicle owner can be a direct customer of the test centre if they don’t even know what the test centre has charged. But showing the elements separately is not necessarily enough on its own – you need to consider the full guidance in section 25.4 of HMRC’s notice 700:

You can’t retrospectively change the contractual position between the parties. So you can’t exclude the test centre’s fees from your client’s taxable turnover prior to them being shown separately – and you can only exclude them after that date if the conditions in the VAT notice above are met to show that your client was acting as an agent.