Trader guide to zero rating supply and fit

[Happy Valley]

We have a preference to use a local sole trader for the supply and fit of our windows in our new build. He is great value and has a good reputation, lives in the small town if anything is not correct.

 

He is a bit of glass half full chap and doesn't want to go down the zero rate route for supply and fit.

 

Is there an easy guide for a trader to understand how best to do this?

 

I presume he can request that the frames and glass that he gets are zero rated to him also?

[Bitpipe]

Someone will do his books or accounting - they need to read this and tell him it's ok.

 

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

Edited July 14, 2021 by Bitpipe

[Happy Valley]

Thanks and yes I have read that - I ideally was looking for a (simple) guide for him so can get him on board. 

[Bitpipe]

11 minutes ago, Happy Valley said:

Thanks and yes I have read that - I ideally was looking for a (simple) guide for him so can get him on board. 

 

Not sure it gets any simpler TBH, I've had the same pain with a few trades who were very iffy about it - especially those on the fixed VAT scheme. 

 

Only ever resolved by speaking to whoever does their books.

 

You could print it out and highlight the relevant bits (where it says 'windows' for example).

 

I think the bits on 'input tax' refer to his recovering any VAT he pays for the materials that are zero rated to you.

[nod]

1 hour ago, Happy Valley said:

We have a preference to use a local sole trader for the supply and fit of our windows in our new build. He is great value and has a good reputation, lives in the small town if anything is not correct.

 

He is a bit of glass half full chap and doesn't want to go down the zero rate route for supply and fit.

 

Is there an easy guide for a trader to understand how best to do this?

 

I presume he can request that the frames and glass that he gets are zero rated to him also?

If he’s not vat registered  you would be better settling the bill and claiming the vat back at the end 

If he is vat registered He will simply pay the vat and offset it against the vat from other jobs that he’s yet to pay in 

 

 

 

[Temp]

+1

 

If he's VAT registered he MUST zero rate everything to you as that's the law. As @nod said, he will pay VAT to the window company and withhold same amount from HMRC when he makes his return for other jobs. It might help to give him a certificate  (essentially a letter stating that the work relates to a new build and qualifies for zero rating, include copy of your PP, contact details etc).

 

If he still really doesn't want to do this then you could offer to buy the windows direct, pay the VAT and reclaim it. The invoice must be in your name. His labour to you must be on separate invoice and must be zero rated because you can't reclaim it. 

 

If he is not VAT registered then you must buy the windows in your name, pay the VAT and reclaim it. He must zero rate the fitting but that's not a problem if he's not vat registered.

 

 

Edited July 14, 2021 by Temp

[saveasteading]

To be fair to contractors, VAT is a pain, and especially when not standard.

Some builders struggle with the simplest accounts, and have not studied the more complex rules on VAT.

The risk is always on the contractor if HMRC decide that the project was not liable for zero rating or 5% or whatever.

He may have to prove that the project complies, not you.

 

So the contractor may have paid VAT on the materials, and not be able to claim until the next quarter, and may have to provide proof to HMRC even then.

 

The bigger the job, the more onus on the contractor. It can be a significant cash-flow matter, as well as perceived risk.

 

If the contractor continues to  refuse then there may be other solutions.

 

1. Write him a contractual letter guaranteeing that you will  immediately reimburse any monies that hmrc disputes with him, until resolved.

2. You pay for the material direct, and remove  that part of the risk, as just suggested above. (That has issues re quality, guarantees and perhaps some concealed margin, and can get awkward)

[newhome]

Here is a simple (and very high level) guide from HMRC

 

https://www.gov.uk/vat-builders

 

 

[nod]

2 hours ago, Temp said:

+1

 

If he's VAT registered he MUST zero rate everything to you as that's the law. As @nod said, he will pay VAT to the window company and withhold same amount from HMRC when he makes his return for other jobs. It might help to give him a certificate  (essentially a letter stating that the work relates to a new build and qualifies for zero rating, include copy of your PP, contact details etc).

 

If he still really doesn't want to do this then you could offer to buy the windows direct, pay the VAT and reclaim it. The invoice must be in your name. His labour to you must be on separate invoice and must be zero rated because you can't reclaim it. 

 

If he is not VAT registered then you must buy the windows in your name, pay the VAT and reclaim it. He must zero rate the fitting but that's not a problem if he's not vat registered.

 

 

Plenty won’t 

I lot of the smaller ones can’t afford to stand the vat 

Leaves a simple choice 

[Dave Jones]

builders should be getting used to this now as reverse vat rules are live.

[Happy Valley]

Thanks all.

 

He is VAT registered and is talking to his accountant today about the process.

Fingers crossed he'll come round.

[Triassic]

One of my traders people is asking for a Zero Vat Self Build Certificate for his accountant. I recall Jeremy Harris having one. Anyone got a copy I could use?

[saveasteading]

I am not confident that the typical accountant will know the rules, or be prepared to write that letter. Will be interesting to hear progress.

 

Have met a specialist in VAT who will write the letters, and take the hit if HMRC don't agree, but you don't want to know their fee level.

 

We have just had exactly the same query, since my earlier post.

We are writing to

1. State that it is a conversion and the 5% applies.

2. Enclose the planning permission.

3. Guarantee that we will pay (effectively lend) him the other 15% if it is disputed by HMRC , until resolved. (but his invoice must state 5% so we can reclaim)

 

Haven't had the response yet.

 

Firstly we hope he realises this is correct. Secondly he has the planning evidence to show hmrc if necessary.

 

To reiterate, it is not nice being the contractor that has to change the process, lose a lot of cash-flow, and have some risk of aggro from hmrc, so I sympathise.

[Temp]

5 hours ago, Triassic said:

One of my traders people is asking for a Zero Vat Self Build Certificate for his accountant. I recall Jeremy Harris having one. Anyone got a copy I could use?

 

Officially they are only needed for charity buildings. So the one in VAT 708 here needs editing a bit for self builds. The exact wording isn't critical just make sure it has your details and that of the planning application etc. 

 

https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708#section18