VAT Sanity check

[crispy_wafer]

Just after a sanity check if possible please.

 

I've had a quote through for groundworks, and work to DPC, pretty much supply and fix, however this quote contains VAT on the materials being used.  We (Myself and builder) both know that labour and materials should be zero rated on new build, however with him being a small outfit he's not in a position to zero rate the VAT. I don't have accounts in place yet, to purchase materials for this stage of the job so, what my builder is suggesting is.  He's VAT registered, but I don't think he necessarily has the capital in place to swallow the VAT until his accounts submission.

 

He purchases the materials for the job on his trade accounts.  He then invoices me from his company for the materials.  I then use this invoice on my VAT reclaim at end of project.

 

Sounds OK to me, but I'm a novice in these matters.

[Mr Punter]

No, it needs to be zero rated.  The labour element will be OK for him as he will not need to pay the VAT or charge it.  He will be able to reclaim the VAT on the materials.  If he does not have the cashflow to do that you could pay for stuff like concrete directly, although if he has accounts with suppliers he should be able to bill you before he pays them.

[Bozza]

Most builders merchants offer self build cash accounts and the likes of Jewson opened mine within 24 hours.   Materials go on your account and you claim the VAT back,  obviously though this means you have to fund the VAT until you claim it back.

 

 

 

[Dreadnaught]

He must zero rate the materials to you; no choice in that.

 

To help him with his cash flow, you could offer to pay him a small cash advance roughly equal to the VAT amount to be offset in full against the invoices you will owe to him. If you do so, get a written receipt for the advance to cover yourself as its a bit risky.

[Bitpipe]

28 minutes ago, Bozza said:

Most builders merchants offer self build cash accounts and the likes of Jewson opened mine within 24 hours.   Materials go on your account and you claim the VAT back,  obviously though this means you have to fund the VAT until you claim it back.

 

I bought a lot of material during the landscaping phase - my trade used to walk me into his suppliers, he'd negotiate his usual price and I'd put in on my card there and then. Supplier was happy as they got paid on the nail (vs on account) and issued me an invoice in my name to my address to ensure my VAT reclaim was all good.

[Bozza]

6 minutes ago, Bitpipe said:

 

I bought a lot of material during the landscaping phase - my trade used to walk me into his suppliers, he'd negotiate his usual price and I'd put in on my card there and then. Supplier was happy as they got paid on the nail (vs on account) and issued me an invoice in my name to my address to ensure my VAT reclaim was all good.

Sounds perfect solution why can you not do that for your groundworks ?

[Bitpipe]

 

34 minutes ago, Bozza said:

Sounds perfect solution why can you not do that for your groundworks ?

 

As an alternative, get the supply list and organise it yourself. 

 

Many trades do not get that spectacular a discount from suppliers as their main concern is deferred payment / credit on account etc to manage cashflow.

 

The client ultimately pays the bill so the trade is not that price sensitive, some may add a small margin on the materials.

 

I guarantee you will match or beat his prices, if you shop around and play a few supplies off against each other.

[crispy_wafer]

1 hour ago, Bitpipe said:

 

 

As an alternative, get the supply list and organise it yourself. 

 

Many trades do not get that spectacular a discount from suppliers as their main concern is deferred payment / credit on account etc to manage cashflow.

 

The client ultimately pays the bill so the trade is not that price sensitive, some may add a small margin on the materials.

 

I guarantee you will match or beat his prices, if you shop around and play a few supplies off against each other.

 

I will do this for the other phases of the build next year, however time has caught up with me on this phase so like many, am spinning many plates, and responsibilities at this moment.

[crispy_wafer]

2 hours ago, Bitpipe said:

 

I bought a lot of material during the landscaping phase - my trade used to walk me into his suppliers, he'd negotiate his usual price and I'd put in on my card there and then. Supplier was happy as they got paid on the nail (vs on account) and issued me an invoice in my name to my address to ensure my VAT reclaim was all good.

 

1 hour ago, Bozza said:

Sounds perfect solution why can you not do that for your groundworks ?

 

Sounds like an idea worth exploring, thanks.

[Bitpipe]

1 hour ago, crispy_wafer said:

 

I will do this for the other phases of the build next year, however time has caught up with me on this phase so like many, am spinning many plates, and responsibilities at this moment.

 

Fair enough but if its basics like foul pipes, chambers etc then an evening on the internet will sort you out.

 

Appreciate that blocks, concrete, type 1 etc will all be more locally supplied and those vendors may be less willing to deal with a newbie.