The Retail Motor Industry Federation (RMIF) has warned that VAT could be charged on the price of an MOT if government plans to increase the interval between tests become a reality.
At present, MOT tests are a statutory requirement, meaning that value-added tax cannot be levied on the fee that motorists have to pay for them.
However, if this is adapted, the government would be entitled to place a VAT charge on MOT costs, further cranking up expenses faced by car owners.
"There are suspicions that the government may be considering tampering with the statutory status of the MOT test," said Ray Holloway, director of independent membership with the RMIF.
"If this were removed, VAT would then apply, bringing with it a whole new revenue stream for the national coffers."
The tax could be levied on MOT fees as soon as April 2008, if the next review of the issue ratifies the proposals.
A pledge was given by the RMIF that it will be "keeping a watchful eye" on proceedings and will campaign against anything that could lead to higher MOT costs.