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warranties (Read 1492 times)
jon_jefferson
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warranties
Feb 25th, 2008 at 12:47pm
 
Hi there my question is i supply 6 months warranty with my cars through warrantywise ,they cost me around £115 plus 5% ipt ,i do not make a profit on these at all i give them away !
there are 2 ways of entering this into stockbook ,one is to go into costs and enter warranty ,which is the way i do it at present , or the other is in the finance screen click the warranty box and put the warranty there.
It came to me the other day that if i do it this way it will lower the price of the car and therefore lower the v.a.t i have to pay out , which way is the most profitable for me?
Thanks alot jon. Undecided
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Andrew
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Re: warranties
Reply #1 - Feb 25th, 2008 at 1:21pm
 
The government have thought of this and if you sell the warranty and reduce the car price by the same amount to save on the margin vat, then you actually have to increase the IPT rate to 17.5% to compensate.

Please see here for more information:
http://www.dragon2000.co.uk/cgi-bin/dada/mail.cgi?flavor=archive&id=200606091529...

Note that under either circumstance you should always enter the cost side to you.  The only thing to debate is whether to give the warranty away and pay more margin vat or sell it and pay more IPT.
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jon_jefferson
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Re: warranties
Reply #2 - Feb 25th, 2008 at 1:38pm
 
which one saves more money ? or is it swings and roundabouts?
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jon_jefferson
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Re: warranties
Reply #3 - Feb 25th, 2008 at 1:55pm
 
my warranty company charge me 5% regardless by the way ,thanks jon
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