[Closed] VAT argument with shop, am I wrong?

What does your receipt show. Does it show the VAT element to the price ?
Have they charged VAT on the accessories or the helmet as well

Deductions for what? If a helmets zero rated the price is the price, which will reflect the vat position.

I think they've got the invoice wrong as they've shown 20% VAT on the intercom, obvs the helmet price is already NETT of VAT. rrp of intercom is £260 inc VAT, I think they should have charged £216.67 as it was supplied with the zero rated helmet.

Deductions for what?

The intercom kit price would include VAT if bought separately. If the OP is correct then the price should be reduced because the VAT would be removed, hence a deduction.

Have you spoke to the shop?

Why did you pay if you weren’t happy?

Yes I've spoken to the shop, they're arguing that the price is no different either way, which I disagree with.

I paid because I didn't think about it until I got home, but looking into it I think at best they're uneducated about VAT, at worst operating a shady practice of keeping the VAT element for themselves as a bonus.

Maybe they didn't charge VAT on the intercom unit, but charged £43.33 (including VAT) for fitting of the intercom to the helmet.

Maybe that's how they want to argue it, but they'd be on shaky ground I reckon.

Maybe their just unaware of the VAT rules on this, and were just trying to provide a good service by fitting it for you ? But I agree it does smell more than a bit fishy.

Just ring the VAT fraud hotline and ask them what to do 0800 788887.

I'm not going that far, as no fraud has been committed because they have actually invoiced me incorrectly, so not gained from it in my case.

The VAT man doesn't care who's beed defrauded, there's still fraud. The invoice has VAT that shouldn't be there if I've understood correctly: fraud. I bet if you phone the shop and tell them you'll be ringing the number I've given they'll pretty much beg you to go back in for a VAT refund and exchange of invoices.

Technically they havent as they are just collecting the VAT for the gov.
Thats if they pay it. The fact they pushed for them to fit it ,could possibly mean they plan to not pay the VAT element to the gov and would therefore be committing fraud.
Would only get picked up on a VAT inspection, and then they could just say they made a mistake and pay the VAT when challenged

So let's get this right, you were buying the helmet and intercom anyway, they had to talk you into fitting it so rather than walking out the shop with the helmet and seperate intercom at price plus VAT you walked out with the helmet and intercom fitted at price plus VAT. So you paid the price you would have anyway and got the intercom fitted for you.

And now you feel hard done by?

What's the phrase again, no good deed goes unpunished?

Sounds way more likely that they dont know, or dont think its to be interpreted in that way. The person at the till is probably a minimum wage saturday kid, not a VAT expert.

Out of interest, Would you get 20% off a gopro if you stuck a mount to the new helmet?

I think you’re most likely right, but there are probably a lot of shops who don’t know that.

There was a bit of a discussion on a different forum whether an aftermarket intercom was classed as an integral part of the helmet, or whether the rules only covered OE fit. Maybe the shop does know, but errs on the side of caution and collects the VAT and pays the VAT on the intercom so the only person benefitting is HMRC, not the shop (and obviously not you).

As for the argument itself, yes you are correct.

3.3 Zero-rated accessories

If you fit accessories such as visors, ear protectors or communication systems as an integral part of a qualifying helmet, you can zero rate the supply of the complete helmet. But accessories supplied on their own are standard-rated.

https://www.gov.uk/guidance/protective-equipment-and-vat-notice-70123

TINAS - probably not. I wouldn't class a go pro as an integral helmet accessory unless the helmet had some sort of specific mounting for it. But I'm not a tax accountant.

4.5 Zero-rated accessories

If you fit accessories such as visors or ear protectors as an integral part of a qualifying helmet, you can zero rate the supply of the complete helmet. But accessories supplied on their own are standard-rated.

Come to think of it they could be interpreting it the same way if the helmet has another matching OEM kit.

So let’s get this right, you were buying the helmet and intercom anyway, they had to talk you into fitting it so rather than walking out the shop with the helmet and seperate intercom at price plus VAT you walked out with the helmet and intercom fitted at price plus VAT. So you paid the price you would have anyway and got the intercom fitted for you.

And now you feel hard done by?

What’s the phrase again, no good deed goes unpunished?

Sometimes you despair, eh?

shops normally sell products that would fall into a range of VAT categories, different food categories etc...on their back-office system they should normally easily see the components of the RRP: purchase price, markup, VAT etc.  The VAT rate will depend on what category it's been entered into the till system in and rigidly applied at point of sale. I bet what's happened here is that the intercom is listed under electronics on their system...whether it should qualify as an accessory or not I have no idea, but that may not be so straightforward.... I doubt they have done anything intentionally.

I'd imagine there are very good reasons for not being able to alter VAT coding at the point of sale.

Technically it might get past Inland Revenue but you'd be best getting it agreed before purchase, not retrospectively. You're basically asking the shop to do a shedload extra paperwork to save you a few quid, especially if refunding vat on vatable items in very specific circumstances is not set up in their accounting system. If the Inland Revenue audit and disagree they'd also be liable for the vat even if they refunded you. So all round a PITA for the shop.

So let’s get this right, you were buying the helmet and intercom anyway, they had to talk you into fitting it so rather than walking out the shop with the helmet and seperate intercom at price plus VAT you walked out with the helmet and intercom fitted at price plus VAT. So you paid the price you would have anyway and got the intercom fitted for you.

And now you feel hard done by?

What’s the phrase again, no good deed goes unpunished?

Yes, to be honest. Fitting it is less than a five minute job, I’ve done loads myself. If the VAT rules state that the accessory should be VAT free and it’s not, wouldn’t it irk you?

The VAT man doesn’t care who’s beed defrauded, there’s still fraud. The invoice has VAT that shouldn’t be there if I’ve understood correctly: fraud. I bet if you phone the shop and tell them you’ll be ringing the number I’ve given they’ll pretty much beg you to go back in for a VAT refund and exchange of invoices.

As the invoice I have is showing the VAT element on the intercom then they’ll have to pay it to HMRC anyway, unless they doctor the invoice at a later date, so technically all they’re doing is paying HMRC the VAT I have given them (incorrectly). If they’d collected it and weren’t forwarding it then that would be fraud.

I think you’re most likely right, but there are probably a lot of shops who don’t know that.

I'd venture none. That doesn't stop some going bankrupt each year when the VAT man visits and they have to pay all the VAT they've billed but not paid to the revenue. People in business are really clued up on VAT, I was, and some think they can play with the VAT rates to rip off either customer or the VAT man (usually both) - till someone like Blazing saddles phones the hotline and gives them an invoice number.

Edit: business is so cut throat that denouncing competitors is a way of reducing unfair competition. In the field I worked in business onwers used private detectives to act as customers to get their hands on exactly the kind of fraudulent invoice the OP has in his hands and then make a complaint. I got investigated but as I'd never ripped off either a customer or the VAT people I came out smelling of roses. The problem is rife all over Europe.

till someone like Blazing saddles phones the hotline and gives them an invoice number.

There are a lot of accusations and/or assumptions on this thread, really. We don’t know, for certain, if an aftermarket intercom fitted at the point of purchase should be sold without VAT.

Before shooting from the hip and going straight to HMRC, maybe ask to speak to the owner of the shop. They might know the rule and have an internal training or system need to address. They may not know and need to check with their accountants and then come back to you.

Of course you could just go straight to HMRC. It’s not exactly a friendly approach to sorting it out though, and not every shop is owned by the bogey man or shyster.

...unless they’re charging you 20% “VAT” but accounting for it as a fitting charge which you thought you were getting free. Maybe that’s why they insist on doing the fitting.

Before shooting from the hip and going straight to HMRC, maybe ask to speak to the owner of the shop

That's what I suggested.

Interesting.
The shop would have paid VAT on the BT sets when it bought them.
So there must be a way to claim that back from C&E, but of course they could say that they fitted all of the BT sets they sold and then claim all the VAT back.
Are we sure this is not for OEM kit?
Seems amazingly open to abuse, which is very unlike customs and excise.

Edukator

Member
Before shooting from the hip and going straight to HMRC, maybe ask to speak to the owner of the shop

That’s what I suggested

It’s not the tone of what I’m saying at all. You said call them and threaten them that you’re calling HMRC and they’ll beg to offer a refund. I’m saying call them and offer them the chance to understand the rules and get back to you.

You’ve used the word fraud a lot. I think that’s a pretty harsh accusation - it might just be a knowledge gap.

Yes, to be honest. Fitting it is less than a five minute job, I’ve done loads myself. If the VAT rules state that the accessory should be VAT free and it’s not, wouldn’t it irk you?

No, because as you would have paid the same to do it yourself and had to be talked into it anyway I wouldn't go biting the hand that feeds.

In the field I worked in business onwers used private detectives to act as customers to get their hands on exactly the kind of fraudulent invoice the OP has in his hands

And what field was that? When did you become a UK VAT expert Walt? You were a teacher before and after you emigrated, you know as much as anyone else at this stage.

OP’s question about being diddled out of a bit of VAT heads towards the inevitable penis-clash. 😂

Well it was a question about helmets. Now we’re seeing who is the biggest helmet.

I think that you will find that the Helmet and fitted Intercom would have to be supplied to the bike shop as a boxed unit by the whoever invoices them in the UK.
I know for a fact that when a retailer buys a helmet it is invoiced by the supplier at 0% but any visor ordered in addition to the one fitted is 20%. If the helmet comes from the manufacturer with an alternative visor in the box the whole package is 0%.
The bike shop will have a suppliers invoice with 0% VAT on the helmet and 20% on the intercom as I imagine they would be sold as separate items. I think the VAT rules that you are looking at are for suppliers of complete systems rather that things that are added together at point of sale.
For example you could by a helmet and several visors along with an intercom system and pay no VAT if your interpretation is correct.
I would love to be wrong as I will be flogging helmets at the Excel Show next month and could help my customers save some money on spare visors.

Oof. I can’t believe I missed out the helmet reference. 😂

OP’s question about being diddled out of a bit of VAT heads towards the inevitable penis-clash. 😂

Indeed, the OP has never once suggested he's going to call the VAT fraud line.

Walt, who's Walt, Squirrelking? I suppose that's a cheap shot from a cheap adversary. Ran a profitable business or two for ten years, Squirrelking. Haven't worked for years. Still have non-paid responsibilities that require VAT accounting knowledge, I "raised" the VAT rate being applied by a supplier as recently as last November.

Note I say "raised". The first step is raise the issue (the OP has doen that and been fobbed off), the next step is challenge (phone the shop), if the phone call doesn't go well phone the hotline.

Sensible, progressive, determined. Nowt wrong with that approach.

May depend on nature of intercom, fitting and if it is integral

An incidental element is also regarded as an integral part of the overall single supply in that it is required to fulfil the end supply. The definition of an integral element is that it includes anything which is essential, necessary or incidental, but goes further to incorporate non-essential elements which are nevertheless integral to the nature and economic reality of the supply.

I am totally confused. If they had not fitted the item would you have had to pay the VAT? By fitting it they saved you the time/hassle and now you should be owed a VAT refund?

Looking at the guidance it states fitting items as an integral part but accessories supplied you pay VAT.

To me that reads as the intercom you bought is actually an accessory not an integral part so you should have paid VAT regardless of whether you are he shop fitted it for you.

What I think it means is if a manufacturer fits the intercom, visor etc. as part of the helmet at you wouldn't pay the VAT on those additional items.

In your situation this wasn't the case it was as an a supplied item

Probably got it wrong but that is my interpretation.

I am a business owner, so I do know ALL about the VAT related to MY business. (Construction not retail).

If I did own a shop that sold Motorcycle helmets and accessories, then, when blazing saddles placed the items on the counter, I would have said to him “ if we fit the intercom to the helmet before you buy it, then you can make a saving as you won’t have to pay the VAT on it”.
If it was a five minute job, then I would say no problems there is no charge to fit.
It’s called customer relations , you build up a trust with someone , and they come back when they buy something else. It’s no skin off your nose , and doesn’t cost you anything. They pushed him for them to fit it, so would suggest they know the score.

3.3 Zero-rated accessories
If you fit accessories such as visors, ear protectors or communication systems as an integral part of a qualifying helmet, you can zero rate the supply of the complete helmet. But accessories supplied on their own are standard-rated.

That’s from HMRC, as usual you can interpret it as you see fit 😂😂

I still have think it depends on whether the intercom is classed as an integral part or a supplied accessory. To me visors etc classed as integral would be flip down tinted visor, likewise if the helmet comes with integrated Bluetooth then this would mean that any vat which the device would normally have would be exempt in the his situation as it is built into the helmet so an integral part.

To me an aftermarket device is not an integrated item rather it is an aftermarket item which you would be expected to pay VAT. I he shop say that hey would fit it for free to me is just good customer service.

Question to the OP, was the intercom the same brand as the helmet ?

this has stirred up more debate than I thought it would!

The intercom is a specific model to the helmet, you remove bits of the helmet and fit in it's place, therefore integral.

revs1972 has it exactly as I'd see it. What I would have expected, had I knew about the zero rating of accessories at the time, would to be asked if it wanted fitting therefore saving the VAT, I would then expect to pay a reasonable amount for the fitting as then I save a little and the shop makes a little. but to offer to fit if for free and then deny the VAT saving feels a bit like they were trying it on, maybe they were, maybe they weren't.

For example you could by a helmet and several visors along with an intercom system and pay no VAT if your interpretation is correct.

I don't read it that way as it says fitted accessories, you can't fit multiple visors to one helmet.

Ultimately the shop has made a cock-up. The invoice should show the both the helmet and intercom as zero-rated.

Remember the shop will not have paid VAT when buying the intercom but now has subsequently sold it with when there was no need. So the shop makes £43 for 5 minutes work, seems a bit shit tbh.

For an example, see this

https://www.motolegends.com/helmets/sena-10u-comms-system-for-klim-krios-helmets.html

Saving equates to the VAT on the product . Note it says when supplied with same brand helmet

Remember the shop will not have paid VAT when buying the intercom but now has subsequently sold it with when there was no need. So the shop makes £43 for 5 minutes work, seems a bit shit tbh.

I dont think theres anything to show thats what happened?

The shop probably/possibly bought them seperately therefore paid VAT on them. It would be wrong (iana tax accountant) to charge a zero rate.

E.g. food is zero rated. The factory would still pay vat to its suppliers of plastic packageing, machinery, and its energy supplier even though it combines them into a zero rated product. I presume they must get a refund on that vat assuming they dont make more on vat-able goods?

Hanlons Razor: Never attribute to malice that which is adequately explained by stupidity.

I interpret this a bit differently.

You bought a Helmet and an accessory and the shop offered to fit the accessory to the helmet for you before you left the shop.

Under the HMRC rules I think that VAT should have been paid as it wasn't purchased as an integral part of the helmet

howeever if the shop had a "package" that included the helmet and accessory and offered them for sale as a complete unit then the overall "package" could be VAT free.

Suspect the shop is taking a strict view and trying to stay on the right side of the VAT man.

If you buy a solar panel installation for your home and purchase a power wall at the same time it’s all at 5% VAT, if you purchase the power wall afterwards it’s 20% vat.

Same rules as above. The OP shouldn’t have been charged VAT for the headset.

I dont think theres anything to show thats what happened?

The shop probably/possibly bought them seperately therefore paid VAT on them. It would be wrong (iana tax accountant) to charge a zero rate.

But as a retailer they wouldn't have paid VAT when they bought the goods - VAT is applied at the time of sale. So they paid no VAT when they acquired the goods and then applied VAT incorrectly when they sold them. Who pockets the cash? I'm guessing not HMRC.

But as a retailer they wouldn’t have paid VAT when they bought the goods – VAT is applied at the time of sale.

They would have paid VAT to the wholesaler / distributor (assuming the supply was made in the UK and the seller was VAT registered).

They would have paid VAT to the wholesaler / distributor (assuming the supply was made in the UK and the seller was VAT registered).

No, they wouldn't. VAT is applied once and only once and at the point of sale.

No, they wouldn’t. VAT is applied once and only once and at the point of sale.

How do you get input and output VAT then?

The wholesaler will have charged VAT, which the retailer will have paid.

Jeez... I thought Brexit was complex!

Personally I'd only push things a bit further with the shop if I don't intend going there again. I do see your point though op.

No, they wouldn’t. VAT is applied once and only once and at the point of sale.

Dunno how it works in every business but wherever Ive worked its always been paid to suppliers, and charged to customers, then at the end of the accounting period you calculate the net and pay that to HMRC.

Otherwise at what point are you defining the 'sale'?

Its value added tax. The clues in the name. You pay hmrc 20% tax on the value you added.

In relation to the original question: yes, it's a pavlova.

When you go to McD's do you ask for a VAT reduction when you buy takeaway rather than eat-in?

I expect if he had a £260 McDonald’s bill it would be feasible , but then again, that would be the least of his problems 😂

I read it as the headset is an accessory fitted by the shop for free so is vat payable

I just had a look on the website of the equivalent, in the Motorcycle world, to CRC/Wiggle. I put a Shoei helmet and a Shoei specific intercom in to my basket and there was no reduction in VAT. Granted it was not actually fitted but this leads me to believe that this scenario is open to interpretation.
If the retailer fitted a tinted visor at time of sale and left the originally supplied clear one in the box, should VAT be charged on the tinted visor?

When you go to McD’s do you ask for a VAT reduction when you buy takeaway rather than eat-in?

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Posted 8 hours ago

No because VAT is charged on takeaways and eat in .

No, they wouldn’t. VAT is applied once and only once and at the point of sale.

Totally wrong .

GlennQuagmire is very wrong. When I buy goods from the distributor they charge me vat, when I apply those good to my client I charge vat and give the difference to HMRC.

I read it as the headset is an accessory fitted by the shop for free so is vat payable

I'm with TJ on this one.

Wow, this is still going. Well played everyone.

My reading of the HMRC website, and running a VAT registered business myself, I would have expected not to pay VAT on the headset, but as people say it seems the shop interpreted it differently.

VAT IS paid to suppliers on VAT-able items and then charged on to customers with the mark up and returned to HMRC. On zero rated stuff at sale, the retailer applies for the refund from HMRC so doesn’t loose out. In my trade (construction) I often work new build which is zero rated, when I invoice I just rate it zero and don’t add any VAT, when I file my returns I then claim back all the VAT I’ve paid out as the difference between the figures, which is what the shop should also do IMO.

I'm not sure it's as clear cut as that.
What's to stop the shop buying 500 headsets and stating that every one was fitted by them so they claim the vat on every one regardless if whether it was fitted or not.

If this was a scam they didn't actually need to fit your headset.... Just tell HMRC they did.
HMRC do not allow loopholes.

I think they did the right thing.
Anyway.... I expect you can/will claim the vat back yourself anyway seeing as you probably go to work in the bike sometimes!

GlennQuagmire is very wrong. When I buy goods from the distributor they charge me vat, when I apply those good to my client I charge vat and give the difference to HMRC.

Yep, looks like I am - I was passing on info I had been told but looks like that info is not correct.

Well, despite my earlier reservations, it appears that the zero rating can apply to certain accessories fitted at point of sale. My source is a Company Director of a Franchised Dealer that sells a lot of helmets with intercoms fitted.
Every day is a school day.

I think they did the right thing.
Anyway…. I expect you can/will claim the vat back yourself anyway seeing as you probably go to work in the bike sometimes!

I expect you’re wrong! Not everyone in the building industry are scumbag tax evaders and VAT fraudsters! I don’t claim for anything I don’t directly use for work. I don’t use my bike for work so don’t claim for it.

Go back to the shop and ask them to remove the intercom. Then it'll all be square and you'll be happy.

Did the headset come with a crown race?