It is great that the RMOOA is getting these kits organised. Collectively sourcing hard to obtain parts is a really useful service for members.

However VAT is all on-line now, registration is very simple and quarterly returns are easy to do. It doesn't make the accounts much more complicated. Anyway accurate invoicing and good accounting is important for any association and would be reassuring for members parting with very large sums in advance for parts such as foot-brake valves.

Being registered would make a significant difference for Routemaster operators who are fortunate that they do not have to collect VAT from their passengers for their services.

My bus number (if any): RMs 238, 471 and 2213, GS17

Hi folks.

I do hesitate putting this post up as the storm it may cause but I do need to comment on the VAT issue.

In an ideal world, we would be VAT registered, as I am with my own bus company.

However the association is a volunteer run unit and as much as I would like to see it have VAT registration, it is not going to happen, so get used to it and stop bleating on about it. All the volunteers have limited time and resources to put into its daily running and we simply do not have the infrastructure and the reliability and time to go down this route. I am afraid that in this case as much as I perhaps don't like it, simplicity is the easiest and most reliable option for us.

If however, the membership feel that strong about it, then this is where the AGM comes into play and members can put themselves forward for the relevant posts and take responsibility for the changes they wish to see happen. I would back anyone who would step forward to make a positive change for the overall wellbeing of the association and the membership, where they committed themselves into putting the time and effort in to making it happen and keep it going. However like others I have no time for those who wish to bark from the outside and take no responsibility for what they say or do. So if members want change come to the AGM and put yourselves forward with your case for change and if you have a credible argument you will get my vote every day. But if not please give it a rest, as I have no time for those who wish to bark and not do anything about it. What we have may not be the best, but it does work and it is a whole lot more than most are willing to do.

Sorry for any upset, but at least thats now of my chest!!

I would have thought the main concern was having a vehicle off the road with a failed valve!

Given the total cost of the kit and the subsequent repair of the valve will be less than the £1500 I am told a replacement was around 15 years ago (feel free to correct that), I imagine this is such a bargain that a little VAT loss is inconsequential.
The kits are being manufactured exclusively for the Association so unless someone, with a VAT registered business, is willing to go through the same reverse engineering procedure and funding, then this is the best we can hope for to keep our buses moving, or more importantly stopping!

Personally I like to price goods for sale art a market value rather than a straight percentage mark up. Had I done this commercially and taking into account the large amount of time invested (free of charge when done by the association committee by the way) and the amount of outlay for the parts, I would be charging AT LEAST the price the Association are with VAT on top.

I know I have an interest in the Association (for as long as I am voted back on to it) but I think some may be missing the point. Of course members of the Association can always attend the AGM and force a debate.

One thing is for sure, those operators and repairers that do not place orders are presumably those that are holding their own stocks and may be causing the shortage in the first place. We will have to wait and see what suddenly appears on eBay, won't we?

Obviously I was typing at the same time as Mitch

My bus number (if any): M1001, RML2276, T806

You're right, the main concern from an operator's point of view IS the bus off the road with a failed foot valve. As I mentioned on here a few years back, I had 2 foot valves literally explode on me following fitment of new pipes, one of which was made with the end swaged over so wouldn't pass fluid.

I now have the remnants of 2 foot valves which could do with rebuilding, and another on the shelf that according to Imperial is beyond repair at the moment. As one of those who HAS put money into a few ventures having parts made, and keeping overhauled units on the shelf to save on down time not only for myself but others, the reclamation of VAT is a large part of cash turnover. I know we had this discussion last year on this forum.

VAT accounting is not the chore it used to be; with something like a simple Sage Accounts system it works everything out for you; all you do is press the button at the end of the quarter and the vat return wings its way through the wires in seconds (at least that's the theory). Being registered may also improve the association's finances with additional cash flow.

How much does the association pay in "other supplies" over the year? Printing, stationery, pens, badges, parts, all have a vat element. Claim it back from the point of purchase and you have 14.7% of your outlay back in a short space of time. You then only pay vat once whatever it is you've sold gets sold.

Look at it another way, I may be interested in buying 3 kits to overhaul my 3 units; if the VAT comes back, that will provide almost enough money to buy a 4th kit for on-the-shelf. Not only would that help someone in the future, but would help ROOMA funds by me taking the risk on stock, but may make the difference between the order going or not going ahead.

My bus number (if any): RML2532

Or look at it another way.
The minimal costs incurred for non resaleable items will make little difference. Some will be zero rated and overheads are quite low for the association. Little to reclaim. All other items are bought to resell. Now consider this.
If an item is bought for £1.20 and marked up by say 20% you are charged £1.44 with an association profit of 24p. If it is bought for £1 plus vat and marked up by 20% it is a 1.20 plus vat. Still 1.44. But the profit is only 20p. So every member loses the benefit of 4p so that VAT registered member can save 24p. The alternative is retain the profit amount to sell at 1.24 plus vat. You are 4p worse off but can still claim the vat, however private members are now paying 1.49. Not really fair is it?
Additionallly each member will be paying vat on their subs. That could mean a £5 increase to the member or a reduction in income from each member of £4.17 if the vat is absorbed within the current rate and simply handed over to the HMRC. Of course you reclaim the vat so you either save 4.17 or don't really have to pay the extra £5. Not really fair is it?
Don't forget. The extra 24p you pay is tax deductible. Let's assume you are on the lower rate of tax that's 5p off your tax bills or if the higher rate of you have a 10p saving and are doing quite well.
It will cost the majority to allow the few to save some money. Simple as that and really not fair. As I have said no one else is making these so I can't see the problem. When you need a fourth unit you will buy it and pay what you have to because the alternative is not acceptable. As will I and all other Routemaster owners.

There are several large commercial operators of these vehicles, we all know who they are so I won't make any attempt to list them. I will make a guess that these do not regularly see the Association as a source of (not everyday) parts for their vehicles; the VAT issue being one reason. If these companies were to be encouraged to do so or to offer RMOA the option to add to their own order, then those orders for manufactured items would be larger and unit costs lower.

I think there are fair points on both sides.

Whilst my engineering background has led me into a more and more administrative and logistics zone, I could not fill in a self certification tax return or do simple bookkeeping. It's not my forte by a long chalk.

To do the VAT, albeit much simplified now still requires bookkeeping skills and accountancy skills. These are rare skills found in trades which involve nut's and bolts & oil and dirt.

Many tradesfolk end up in a huge mess and debt with VAT, TAX and accounts.

With an association run by volunteers in spare time, unless there are members who are certificated accountants, it could be a very risky move to take on VAT.

Two main reasons

1. If anything goes wrong, an error or fraud, internal or external. Who will get the blame?

2. Who gets consulted and ratifies any decisions an accountant may have to make or action?
Who takes ultimate responsibility for cost control, stock control and sales returns?

If any of that goes awry, then it's handbags at dawn and the blame will end up with someone rightly or wrongly.

And there is a history of what happens when person or persons go off on a maverick mission. Even if well intended, it leaves a mess for others to sort.

And it's only volunteers. It's not the same as a business where you factor in accountancy or bookkeeping time.

Secondly, if it does require accountants to oversee the VAT matters then it costs. `That cost will have to go on to the retail price of an item.

That could reduce the margin on an item further making the VAT saving negligable but the overall cost higher across the board.


Surely, there must be more than a few retired accountants or businesses in or allied to the RMOOA that could handle the VAT on the Associations behalf ?

And there are ways around this. But these would need to be optioned and ratified by all members.

eg.
RMOOA Parts Ltd. Could be a stand alone operation governed by the RMOOA as a not for profit operation. (like er...TfL and it's purchasing companies)
Being a registered Charity also has VAT benefits and several private vehicle museums are such. The London Motorcycle Museum being one that I know of.

Personally, it would be a much better route to become VAT registered as it would increase sales and thus raise further capital to sink back into what will become an increasing range of components.

VAT returns are easy if you use a decent accountancy program. That is not the issue.

Unless the vast majority of members (and therefore purchasers) are VAT registered then registration by the Association will cost everyone money except the few that are registered and that is unjust. Those that are VAT registered have the option to purchase from where they wish. As, in the main, the Association only produce items not available elsewhere then the discussion is moot.

Anyone, large or small, registered for VAT or not that doesn't purchase this particular item is either:

In possession of sufficient stock to not have a concern
knowledgeable of a supply of said item
Prepared to let the vehicle come off the road
Operating an unsafe vehicle
Doesn't believe there is a problem with this part
Manufacturing their own part when needed

In all other cases they will have to buy from the Association

As for RMOOA Ltd (presumably supplier of all Routemaster parts), Why? We are no more able to do that than any other person and no one has as yet. Is it needed? As long as parts are available the Association's current policy is to not stock them. If they are in sufficiently short supply then it may be looked at but in the way these are being sold. No VAT and at the price stated.

Again. If David Colin Ltd, worldwide supplier of all things Routemaster, were producing the part, it would be at market value plus VAT not at the minimally marked-up price the Association charge. In this case it would also only be a full service exchange, not the repair kit. I think this is a bargain!

My bus number (if any): M1001, RML2276, T806

I think people are missing the point, and it's one we discussed at about this time last year.

The Association buys bits from a manufacturer. that company will invariably charge VAT on it. so, it costs £100 plus £20 VAT. the Assoc. can get the VAT back, so it still only costs the assoc £100. they make say 10% on the item, making it £110 plus VAT £22, sells at £132. Assoc is not registered, buys for £100 inc. VAT, £120. Makes 10% on £120, £12, total £132.

The retail price is the same, but the difference is to those who are registered, big and small operators who ARE registered who at the moment cannot reclaim vat on Assoc. items, making the items more expensive than they ought to be.

Look at the half shaft offer, about £2k for a half shaft to be made. VAT on that for a business to claim back is about £400, a big difference to the registered company. VAT on brake valve kits @ £700 is £140. why give the government money when you don't have to?

You don't need to be an accountant to do VAT. I've been doing mine for over 40 years now with no problems. I've never trained in accountancy, being a spanners and big hammers person. As I said earlier, it easy now with something like a basic Sage Accounts software package. If the assoc. treasurer has to write it down, it's as quick to enter it on Sage, press the button at the end of the quarter and get the vat back on what's been bought or pay it on what's been sold. t one time I was MD of a bus company with a turnover in excess of £2m and never had a vat problem there. At the moment I do VAT for 3 businesses.

The assoc may find sales will increase if the companies feel more at home buying from a registered supplier.

My bus number (if any): RML2532

Roy. Your argument supports not being vat registered and I don't think the non registered members, or the majority if you will, are missing the point.
I've already said the handling of vat returns is of no consequence. I use Quickbooks. An idiot could do a return.

Using your figures, At the moment:
We buy at 120
Add 10%
Sell to you at 132
120 to supplier
12 for the association to further the cause.

For the benefit of a you and a few we would:
Buy at 100
Add 10%
Add vat
So 132 from you
120 to supplier
2 to HMRC
10 for the association so £2 worse off
You, however, reclaim £22
Most members can't reclaim this but more importantly they have to pay an extra £5 a year so you can. Any increase in mark up to offset the loss of revenue is also suffered by all.
Now those in the bus business, operators and repairers, have to keep buses on the road. While I would never suggest you are anything other than an important customer to the association and genuinely appreciate your purchases I suggest some honesty. Any item you have purchased has been done because.... Well because there is not an alternative. If there were you would be shopping with them and reclaiming the vat. As such nothing will encourage any company to purchase from the association except when there is no choice and that includes the fleet operators.

Why give money to the government if we don't have to? We will be giving them £2 less of members money this way

Can't see the membership voting for this can you?

I did not post to antagonise, but both Roy and David clearly set out both ends of the case for and against. And I can't really argue with either. Both kind of make sense.

But in the examples, VAT is also being payed to the supplier/manufacturer.
So not being an accountant is this a correct illustration ? ( Taken from a VAT Guidesheet online)

Cost of component from factory £100

+ VAT @ 20% £ 20

Total £120

VAT return to purchaser £20

Retail price set £110

plus 20% VAT £ 22

End user VAT registered rtn £22
End user Non VAT registered £132

So it's a bit of a conundrum for the majority of purchasers who will most probably not be VAT registered and will be the end user.

But if a VAT registered customer sells it on they will have to charge 20% in the resale, plus their own mark up.

It's when the costs escalate to £thousands that a big difference and benefit come into play.

In my corner of the transport/logistics industry, I cannot purchase, procure or engage non VAT registered suppliers or services.
It's company policy and it applies across all it's operating divisions in the EU.

Very often this is very frustrating because we can't always get the best value or indeed the best skills which may well be right next door and to hand, but end up paying far more & bringing in goods or services from afar.

So I recommend that any sole traders or small support firms register so I can hire or trade with them.

As vital parts become unserviceable and extinct and need remanufacturing, then the RMOOA has seemingly made great progress in filling in the gaps. As have a few individuals who have taken it on themselves. And, at last, joined up thinking and no duplicity which was an issue a few years back.

But if other large companies like Operators,TfL, etc.etc. and other smaller operations as well as those who provide services are also bound in such a way, then the amount of components the Assoc. can commission and shift might rise sufficiently to reduce the overall cost. Especially when the costs run into £thousands.

It might well bring into the mix a customer willing to fund a component for mutual benefit.

That could benefit the non VAT registered customers with a lower price. And provide greater capital for the next components.

I think Jack has hit the nail on the head with his post. Some of the firms I deal with are not allowed to deal with non-registered suppliers. the UK is probably the only country in the EU that has an exemption from being registered for VAT for "small" traders, the current limit being around £90k.

This to me is rather daft as the main beneficiaries of being registered will be the small traders themselves, especially in the bus industry where bus travel is zero rated. My own personal business has always been registered as has my company, even though both are well below the threshold. As a result I usually get a net repayment from HMRC as I trade a lot with EU clients and the company provides bus transport! As I pointed out above, when we get to buying new items like half shafts at about £2k each, VAT on the basic product is a big element of the total cost and if I'm going to keep high value items on the shelf then it helps to get the tax back on it.

It would be interesting to know with for instance the half shaft order how many were ordered for private individuals, non-registered for vat, and how many from registered people. likewise with the order for brake valve overhaul kits. With vat back, I would probably order 3, otherwise it'll be what I immediately need which is one, thereby possibly jeopardising the future of someone else's bus later on because no-one stocked up on these parts when they were available. there must be a limit to how many the assoc. can afford to keep on the shelf.

My bus number (if any): RML2532