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Recharge of road fund licence

Hi, we rent out forklifts to our customers and have to sometimes buy road fund licences for their forklifts, which I know is outside the scope of VAT when we purchase it.  When I recharge this cost onto the customer do I include VAT or not?

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09th Nov 2017 09:58

Road Fund Licence - I still call it that too. Must be 50 years since it changed ......

It depends. To whom is the licence supplied ? To you or the customer ?

You'll need to look at the contract you have with your customer. On the bald statement "we rent out forklifts", I'm guessing it's you. In which case you'd need to charge VAT. But it depends on facts which are still unclear.

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By ldb49
to lionofludesch
09th Nov 2017 11:26

Sorry this is my first post on here....

The company I work for own a fleet of forklifts, and rent them out to companies. We register the vehicles with DVLA and get the road tax for our customers annually if needed.

The previous bookkeeper didn't charge VAT onto the customers, although I think you should, so I thought I'd ask the question.

One of our customers thinks it's a disbursement and therefore the road tax shouldn't have VAT when we recharge them.

I just wanted some clarification on the matter, hopefully I've provided enough facts?

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By Ruddles
09th Nov 2017 10:51

Why are you buying Road Fund Licences for your customers' vehicles?

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to Ruddles
09th Nov 2017 11:06

Again - I'm guessing, but I suspect the OP's firm is the registered keeper.

Lots of vehicle leases come with a "free" licence included in the price.

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By ldb49
to lionofludesch
09th Nov 2017 11:28

Yes my company are the registered keeper of the forklifts and we don't provide free licences within the monthly rental fee.

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to ldb49
09th Nov 2017 11:36

Again - check your contract but it sounds like you are providing a single supply of a fork lift registered to travel on the highway.

If you hold the registration, how can that be a disbursement on behalf of the ultimate customer ?

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By ldb49
to lionofludesch
09th Nov 2017 11:51

Thank you, that's exactly what I thought. I think I'm confusing myself over this!

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By tom123
09th Nov 2017 11:16

Out of interest, do you ensure that your customers have the vehicles on their motor policy fleets if they are travelling on the highway?

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By ldb49
to tom123
09th Nov 2017 11:31

On the hire agreement there is a box that the customer has to tick to say that 'The hirer agrees to provide insurance cover for the machine which is valued at £xxxxx' although I'm not sure if the customer provides us with proof.

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to ldb49
09th Nov 2017 11:43

You could be committing an offence there.

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By ldb49
to lionofludesch
09th Nov 2017 11:54

Could you enlighten me more please.

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to ldb49
09th Nov 2017 12:09

The vehicle is registered to you.

You need to ensure it's insured.

If I lend my car to someone who's not insured, I commit an offence.

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By ldb49
to lionofludesch
09th Nov 2017 12:15

A good point, I'm new at this company so I will ask the administration team if they check the customer's insurance, thank you

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By tom123
to ldb49
09th Nov 2017 12:46

We run a forklift that crosses our car park. It is on our motor fleet, but does not require RFL, as it is not a highway as such.

So, bear in mind that even your customers who you do not provide RFL to could still require motor fleet cover.

This will be in addition to usual hired in plant cover.

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16th Nov 2017 13:17

I interpret the following: if you own the vehicles, and rent them to your customers, then you are responsible for the vehicle tax, and it becomes part of the service you provide (i.e. the rental charge) to your customer, and VAT should be charged. If you are managing customer vehicles, and your are paying vehicle tax on their behalf, then I would say VAT should not be added.

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to wedgemorgan
16th Nov 2017 13:40

Agree

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