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Vat & warranty provided by second hand car dealers

Vat treatment of warranty provided by second hand car dealers

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A second hand car dealer using the Vat magin scheme buys warranty policies from Warrantywise (specific to the car) and either resells the policy to the customer or provides the policy free of charge with the car. Warrantywise charge Vat on the policy.

Can input Vat be reclaimed on the purchase of the warranty policy and if so should output Vat be declared on the sale of the policy to the customer and finally should an element of the car sale be attributed to the warranty policy when included free of charge to the customer and output Vat declared on that element.

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RLI
By lionofludesch
15th Oct 2019 20:55

"Can input Vat be reclaimed on the purchase of the warranty policy....."

I vote yes

"... and if so should output Vat be declared on the sale of the policy to the customer ..."

I vote yes

"...and finally should an element of the car sale be attributed to the warranty policy when included free of charge to the customer and output Vat declared on that element."

I vote no. Although, in the majority of cases, it'll make no odds whether you do or not."

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By Wanderer
16th Oct 2019 02:20

https://www.gov.uk/guidance/insurance-notice-70136#vat-and-particular-su...
https://www.gov.uk/guidance/insurance-notice-70136#related-services
1 March 2019
Guidance on the specified supplies of insurance related services and the entitlement to recover input tax has been updated.

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By David Stokoe
16th Oct 2019 08:59

Thanks for pointing me in the right direction, not a straight forward area.

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Replying to David Stokoe:
RLI
By lionofludesch
16th Oct 2019 09:13

Happily, the most difficult decision has already been made for you by Warrantywise but bang goes your anonymity.

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