VAT Claim Refusal Reason Code 1

[swisscheese]

Hello All,

 

We have had our first effort at VAT claim returned from the HMRC and they have labelled a couple of invoices as refused Reason Code 1.

This is essentially saying that VAT should not have been charged.  Well it has it's on the invoice! We have paid it! Not unsubstantial either!

I guess I will have to go back to the supplier to try and plead and get the VAT back from them, is this the only option left to me?

Has anybody else been hammered under Reason Code 1, what's the best course of action.

Help appreciated!

 

SC

 

 

[ProDave]

What are the invoices for?

[Carrerahill]

1 minute ago, ProDave said:

What are the invoices for?

Yeah, I am keen to learn where VAT ought not to have been charged! I am assuming it was on services rather than materials as surely all materials are 20% VAT?

 

 

[swisscheese]

@ProDave

 

Thanks - Some not all of the roofing supply and fit.

[Carrerahill]

Just found this:

 

Construction Service	Rate of VAT	Further Information
Construction of new qualifying dwellings and communal residential buildings, and certain new buildings used by charities.	0%	Section 3
Conversion for a housing association of a non-residential building into a qualifying dwelling or communal residential building.	0%	Section 6
Conversion (other than for housing associations) of a non-residential building into a qualifying dwelling or communal residential building and conversions of residential buildings to a different residential use.	5%	Section 7
Renovation or alteration of empty residential premises.	5%	Section 8
Approved alterations to listed dwellings and communal residential buildings, and certain listed buildings used by charities (rate shown with effect from 1 October 2012)	20%	Section 9
Alterations to suit the condition of people with disabilities.	0%	Notice 701/7 VAT reliefs for disabled people
Installation of energy saving materials; and grant funded heating system measures and qualifying security goods.	5%	Notice 708/6 Energy-saving materials
Development of residential caravan parks.	0%	Section 20
First time gas and electricity connections	0%	Notice 701/19 Fuel and power
Installation of mobility aids for the elderly for use in domestic accommodation	5%	Reduced-rate VAT on mobility aids for older people
Home improvements on domestic property situated in the Isle of Man	5%	Isle of Man VAT Notice

[ProDave]

7 minutes ago, swisscheese said:

@ProDave

 

Thanks - Some not all of the roofing supply and fit.

Anything "supply and fit" on a new build house should be rated at 0% by the supplier, so they are correct you have to go back to the supplier and tell them they should have rated it at 0% and you want the over paid VAT returned from them.

[swisscheese]

29 minutes ago, ProDave said:

Anything "supply and fit" on a new build house should be rated at 0% by the supplier, so they are correct you have to go back to the supplier and tell them they should have rated it at 0% and you want the over paid VAT returned from them.

 

I feared as much - this might be blood from a stone situation, any further recourse if they are not forthcoming?

[newhome]

2 minutes ago, swisscheese said:

 

I feared as much - this might be blood from a stone situation, any further recourse if they are not forthcoming?

 

Have a read of this post. It explains how to approach your supplier if VAT is incorrectly charged. If they still won’t refund the VAT you can tell them that you are reporting them to HMRC but how far you’ll get with that is not clear. You must get it back from the supplier as you can’t get it back any other way. Water under the bridge now but this is why it’s important to ensure that you are charged VAT correctly throughout the build. 

 

https://forum.buildhub.org.uk/topic/6851-a-guide-to-the-vat-reclaim-process/?do=findComment&comment=115967

 

 

[swisscheese]

7 minutes ago, newhome said:

 

Have a read of this post. It explains how to approach your supplier if VAT is incorrectly charged. If they still won’t refund the VAT you can tell them that you are reporting them to HMRC but how far you’ll get with that is not clear. You must get it back from the supplier as you can’t get it back any other way. Water under the bridge now but this is why it’s important to ensure that you are charged VAT correctly throughout the build. 

 

https://forum.buildhub.org.uk/topic/6851-a-guide-to-the-vat-reclaim-process/?do=findComment&comment=115967

 

 

 

Yes - thanks, the roofing situation was over complicated with different materials and structures, so this got overlooked from this particular supplier.

 

[lizzie]

1 hour ago, swisscheese said:

 

I feared as much - this might be blood from a stone situation, any further recourse if they are not forthcoming?

Early on I had an electrician bill (not the one I ended up using for the main part of the build but one who did some early work). The bill had vat on and I paid it on instruction of PM (electrician contact of PM).  It was only later I found out vat should not have been charged. Have e-mailed and written to electrician and guess what no response, cant raise on phone either.  Looks like a lost cause but I will keep pecking away for a while yet.  Its very naughty its no cost to supplier they claim it back via their vat return so its just money paid in tax needlessly ....... as if we don't pay enough!

[nod]

I’ve been registered over thirty years and still get caught out 

On a private dwelling there should be no vat on labour 

Some of the rates that I regularly charge are 20% 10% & 5 %

A company that has paid me several thousand in vat at 20% 

It should have been charged at 5 % 

When you contact HMR you get a different person each time and usually a different answer

Rather than chasing the HMR 

Contact the company and ask if they will re issue The invoice 

It’s not difficult to sort it out this They will simply adjust the next quarterly payment 

Weve done it lots of times  

[Temp]

+1

 

The rule is with mixed supply the lot should be charged at the lowest applicable rate. This is in VAT 708 Labor is zero rated on a new build so materials on same invoice should be as well.

 

On a conversion labor is 5% rated and materials on same invoice should also be 5% rated and that 5% can be reclaimed.

 

Stupidly complicated system.

[nod]

1 hour ago, Temp said:

+1

 

The rule is with mixed supply the lot should be charged at the lowest applicable rate. This is in VAT 708 Labor is zero rated on a new build so materials on same invoice should be as well.

 

On a conversion labor is 5% rated and materials on same invoice should also be 5% rated and that 5% can be reclaimed.

 

Stupidly complicated system.

Yep barmy 

 

each year we do the plastering on new build TF student accommodation  Some years the labour is zero others it is 20% 

Some are sold to private landlords others come under regeneration land It makes a lot of work for us sorting it all out 

[philmx26]

I'm trying to open the "Guide to the VAT reclaim process" link but it doesn't seem to be working - can anyone suggest why?

[Gone West]

5 minutes ago, philmx26 said:

I'm trying to open the "Guide to the VAT reclaim process" link but it doesn't seem to be working - can anyone suggest why?

 

I think you have to have made ten posts before you can access it.

[newhome]

9 minutes ago, PeterStarck said:

 

I think you have to have made ten posts before you can access it.

 

Yes, the above is true. There are certain forums that are accessible by member type and for that one you need to be a ‘regular member’ and thus have made 10 posts. 

[philmx26]

Thanks guys

[swisscheese]

By way of update :

The roofing co, were jolly decent and once their accountant agreed, they repaid the incorrectly charged VAT.

[newhome]

9 minutes ago, swisscheese said:

By way of update :

The roofing co, were jolly decent and once their accountant agreed, they repaid the incorrectly charged VAT.

 

That’s good news, and proof that it’s always worth following these things up.