VAT reclaim on combined service & materials.

[Matt60]

I've had a look through other VAT threads, and the VAT reclaim form, but cannot really make myself certain with regards to the answer to my question;

 

If I have a quote from a plumber and or an electrician to do a full install on my new build and their quotes are + VAT. Presumably, I need a breakdown so I can claim VAT back on the materials element and tell them I should not charge me VAT on the labour element. Is that correct? That appears to be what the form says although it does not give this combined service/labour type example.

 

One of the quotes I've received mentions prices being + VAT unless there is a a valid VAT exemption certificate in place. I'm assuming that is something different to simply being a self-builder?

 

Many thanks,

 

Matt.

[newhome]

Supply & fit invoices should be zero rated in their entirety in addition to labour only. You can’t reclaim any VAT charged on an invoice that is for supply and fit. 
 

You shouldn’t need a certificate to prove that work can be zero rated if you are a self builder. Most trades will accept a copy of the planning permission but if they really won’t there is a certificate here that you can use and adapt appropriately as it’s not meant for self builders. 

 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/824616/VAT_notice_708_certificate_18.1_Zero-rated_and_reduced-rated_building_work.pdf

 

More details about the certificates are here 

 

https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708#section17
 

 

 

 

 

[Temp]

36 minutes ago, Matt60 said:

If I have a quote from a plumber and or an electrician to do a full install on my new build and their quotes are + VAT. Presumably, I need a breakdown so I can claim VAT back on the materials element and tell them I should not charge me VAT on the labour element

 

If someone quotes to "supply and fit" on one invoice then the whole lot should be zero rated to you. You should ask them to revise their quote to remove the "+VAT" or change it to "inc VAT at 0%". Do this before you accept the quote. 

 

See..

https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708#section11

Quote

 

11. Supplies of building materials by contractors

Snip

11.2 Goods ‘incorporated’ by a builder

If you’re a builder, the rate of VAT you charge for your work normally determines the rate of VAT you charge on any goods you ‘incorporate’ in the building (or its site) - see paragraph 13.3 - whilst carrying out that work. So, if your work is zero-rated or reduced-rated, then so are the goods.
 

 

 

The contractor should reclaim the VAT they pay on materials when they do their VAT return.

 

Some contractors will be hesitant about this. In such cases it might help if you give them a "certificate" which is a letter certifying that your project is a new build that qualifies for zero rating. Include your contact details, planning ref, site address etc. Officially theses are only needed for work on charity buildings but can help convince a contractor to do the right thing.

 

Avoid using non-VAT registered trades as they can't reclaim the VAT they pay. 

 

Its slightly different for conversions.

 

 

 

 

Edited June 6, 2021 by Temp

[nod]

The labour will be zero rated But with some trades they  may want you to pay the materials vat and claim it yourself 

Others will zero rate the whole amount 

 

[newhome]

8 minutes ago, nod said:

But with some trades they  may want you to pay the materials vat and claim it yourself 

They may want you to but it’s not lawful for them to ask you to do that. If the labour and materials are on the same invoice HMRC won’t refund the VAT paid on materials. If they are insistent the only way is to have the materials invoiced separately from the labour. 

[nod]

3 minutes ago, newhome said:

They may want you to but it’s not lawful for them to ask you to do that. If the labour and materials are on the same invoice HMRC won’t refund the VAT paid on materials. If they are insistent the only way is to have the materials invoiced separately from the labour. 

Asking for cash in hand isn’t exactly lawful 

But many individual trades will ask and expect

 

[newhome]

2 minutes ago, nod said:

Asking for cash in hand isn’t exactly lawful 

But many individual trades will ask and expect

 

It’s not the payment in cash that’s unlawful, it’s the failure of the builder to declare the entirety of their income to HMRC that’s unlawful. 

[nod]

9 minutes ago, newhome said:

It’s not the payment in cash that’s unlawful, it’s the failure of the builder to declare the entirety of their income to HMRC that’s unlawful. 

Exactly 

But when you pay cash you know exactly why they want cash 

You will find companies or individuals that simply can’t or won’t zero rate materials 

You then make the decision to go elsewhere Or claim it back at the end 

 

We spent 3k on gates and motors 

He simply wouldn’t zero rate 

The nearest price was nearly 6k With vat He had no problem Zero rating 

It was no hardship to claim it back at the end 

 

 

Edited June 6, 2021 by nod

[dpmiller]

8 hours ago, nod said:

 

But when you pay cash you know exactly why they want cash 

 

And that is your business how?

[patp]

8 hours ago, nod said:

Exactly 

But when you pay cash you know exactly why they want cash 

You will find companies or individuals that simply can’t or won’t zero rate materials 

You then make the decision to go elsewhere Or claim it back at the end 

 

We spent 3k on gates and motors 

He simply wouldn’t zero rate 

The nearest price was nearly 6k With vat He had no problem Zero rating 

It was no hardship to claim it back at the end 

 

 

Who was that supplied your gates and motors please?

[NSS]

1 hour ago, dpmiller said:

 

And that is your business how?

Surely it should be everyone's business if the intention is to evade paying the tax that would otherwise be due.

[nod]

2 hours ago, patp said:

Who was that supplied your gates and motors please?

Gates Gates 

[nod]

When I do the the plastering tiling - render for self builders I give them a clear choice Buy the materials yourself or pay the vat on the materials 

[Bitpipe]

If you are doing the supply then you need to buy the materials from a vat registered merchant with your name and address on the invoice.

 

The trade can't buy the materials 'on your behalf'.

 

I had a labour only deal with my landscaper and now and again I would to go to a merchants with him so that he could leverage his discount with the goods were on my account or some other fudge i.e. use his account but my details were on the invoice.

 

Bottom line was that I had a clean invoice for the HMRC reclaim that was in my name and address and I had proof of purchase (CC receipt) - not that this is needed for the reclaim but useful to have.

[dpmiller]

6 hours ago, NSS said:

Surely it should be everyone's business if the intention is to evade paying the tax that would otherwise be due.

 

 

why would you presume that tax evasion is the only reason for preferring cash? It costs money to lodge into many business accounts -whether cheque or cash- and so if you're going to (say) need cash to buy the shopping with, there's no need to drag it through multiple bank accounts as long as you note it in your books as income.

 

I know, I do it.

[NSS]

49 minutes ago, dpmiller said:

 

 

why would you presume that tax evasion is the only reason for preferring cash? It costs money to lodge into many business accounts -whether cheque or cash- and so if you're going to (say) need cash to buy the shopping with, there's no need to drag it through multiple bank accounts as long as you note it in your books as income.

 

I know, I do it.

Which is why I said if.

[DragsterDriver]

I charge zero vat on a new build.

 

it can get complex when hire charges are involved I:e scaffolding. 

[Matt60]

Thanks for all the replies on this, that is much clearer and actually more straight forward than I was expecting. There's some good advice here that I have already acted upon such as asking for the quotation to acknowledge that I am zero rated. Thanks again. 

[NSS]

32 minutes ago, DragsterDriver said:

I charge zero vat on a new build.

 

it can get complex when hire charges are involved I:e scaffolding. 

 

More interestingly, what class of dragster do you drive?