Charging Vat on Vehicle Licence Renewals

**crobbertse123@gmail.com** · 15-Nov-16, 11:14 AM

Hi there,
Can vat be included when invoicing a client for vehicle license renewals? A colleague wants to start selling vehicles.

**Mike C** · 16-Nov-16, 05:23 AM

I don't think that you can charge VAT on the licence fee, but you can charge VAT on the administration/service fee that you might charge to renew the licence.

**Dave A** · 16-Nov-16, 07:34 AM

Looking at how dealers bill me, they just add a "delivery charge" or a "transaction fee" which includes the cost of licencing rather than raising licencing as a separate line item.

**dellatjie** · 16-Nov-16, 07:51 AM

The licence fee is a disbursement, they are not selling the licence fee. So I am of the opinion that they cannot charge VAT thereon.

**Dave A** · 17-Nov-16, 05:59 AM

Originally Posted by dellatjie

The licence fee is a disbursement, they are not selling the licence fee. So I am of the opinion that they cannot charge VAT thereon.

Digging into that...

So I get billed a "transaction fee" of R850.00 + VAT and a "delivery charge" of R2900.00 + VAT on the new vehicle I have bought.
Nowhere on the bill is a charge raised for a licence fee or disbursements, and yet it is clear the dealer has paid the licence fee.

I expect they'll claim the licence fee as a cost in their hands and not claim input VAT thereon. But are they in order with the way they are raising VAT on their charges to me?

**Bertievn** · 17-Nov-16, 09:32 AM

The only time you cannot charge vat is when the licence fee is the same amount which dealership paid for issue of licence.
On a used vehicle not always possible and SARS view point if you charge more than licence fee vat must be charged
Dealership opted to charge vat on licence fees or as delivery fee to not have problems with SARS audits.

**Blurock** · 17-Nov-16, 10:58 PM

I have always wondered how dealers can charge a "delivery fee" if you have to go and collect your car from the dealership. That is after waiting 3 or 4 days (sometimes longer) for the car to be "prepared" for delivery. Are buyers resisting this ridiculous additional charge which can run into thousands when they buy? I certainly do.

My other gripe is the "admin fee" that the banks charge. What admin? They are a bank, so it's their job to do admin! Paying by debit order does not involve admin as everything is automated. If they want to earn more, the bank should increase their interest rate to reflect the real interest that is being charged, add an "admin" charge. On my last transaction the bank refused to waive the "admin" fee, but eventually agreed to adjust the interest rate to cover it.

Consumers are too gullible and should learn to stand up for their rights!

**BusFact** · 21-Nov-16, 12:50 PM

Originally Posted by Blurock

My other gripe is the "admin fee" that the banks charge. What admin? They are a bank, so it's their job to do admin! Paying by debit order does not involve admin as everything is automated. If they want to earn more, the bank should increase their interest rate to reflect the real interest that is being charged, add an "admin" charge. On my last transaction the bank refused to waive the "admin" fee, but eventually agreed to adjust the interest rate to cover it.

I so agree with this. In my case it was R57 per month. Its not a great amount, but geez it annoys me. For what? To email me a statement and receive a debit order?
Then they split it in two and charge us a "management fee" and a "service charge"! Two synonyms for the same cost.

All it does is create animosity towards the banks and their charges.

Oops, going off topic. Sorry.