VAT on design of MVHR system without installation?

[Becca]

Hoping for some group wisdom on VAT.  Our MVHR company has invoiced for the design of the system and has charged VAT.  They will also be supplying the system, and commissioning it, but NOT installing it.  That invoice will come later once the design is finalised.  Should they be charging VAT in this case?  

 

I've read this post:

but I'm still confused.  I *think* because it's a service, and they're not installing, they could be right to add VAT, and I can't claim it back since it's a service.  But... I'm not entirely sure.  Anyone successfully claimed back design without install?  What do Wunda do on their design invoices for UFH supplies?? (That's my next purchase...)

[jack]

Where a design service like this is being supplied, it's appropriate to add VAT.

 

If you could get everything on the same invoice, it should be zero rated. Can you have them issue a proforma invoice for the design and only invoice you properly later once they're ready to bill everything else? Whether they'll go along with something like that depends on what the likely delay will be between doing the design and invoicing you for completing the other items.

 

Alternatively, could they invoice you for everything on one invoice, with a separate payment schedule taking into account the different stages?

[nod]

One of the companies in the Build it Mag was offering a free design service 

[Temp]

5 hours ago, Becca said:

I think* because it's a service, and they're not installing, they could be right to add VAT, and I can't claim it back since it's a service.  But... I'm not entirely sure.  Anyone successfully claimed back design without install?  What do Wunda do on their design invoices for UFH supplies?? (That's my next purchase...)

 

Design services are standard rated and cannot normally be reclaimed. "Mixed" invoices (eg supply and fit) should be charged at the lowest of the two rates on the lot. Since "Fitting" is zero rated the whole of a supply and fit invoice should be zero rated to you.

 

However in this case they are providing  Design Services and materials both of which are standard rated. There are at least three possibilities...

 

1) Two seperate invoices. You can only reclaim VAT on the one for the materials.

2) One invoice with design and materials separately priced. The whole lot should be standard rated but only the Vat on the materials would be reclaimable.

3) One invoice with just one figure for the total and VAT. HMRC should allow you to reclaim all of the VAT.

 

 

Edited August 15, 2021 by Temp

[Becca]

Thank you!  Will see what they will do.

On 15/08/2021 at 21:52, Temp said:

1) Two seperate invoices. You can only reclaim VAT on the one for the materials.

2) One invoice with design and materials separately priced. The whole lot should be standard rated but only the Vat on the materials would be reclaimable.

3) One invoice with just one figure for the total and VAT. HMRC should allow you to reclaim all of the VAT.

 

Thanks for this really clear explanation.  Really helpful.  

[Oldsteel]

And its worth mentioning that in my experience not all 'materials only' suppliers are willing or capable of zero-rating invoices. I have the 'certificate' mentioned in previous posts, but from some suppliers its a flat 'no we cant do that'. In the current mad construction world the threat to go elsewhere, even for a large order, is met with a shrug. Kudos though to those who do listen and zero-rate no problem. For the rest, its an HMRC reclaim ......

[newhome]

7 minutes ago, Oldsteel said:

And its worth mentioning that in my experience not all 'materials only' suppliers are willing or capable of zero-rating invoices

But they’re not allowed to zero rate supply only arrangements? They can only zero rate labour or supply & fit. Invoices for materials without labour are standard rated and the VAT has to be reclaimed at the end from HMRC. 

 

 

[Nickfromwales]

Design work is classed as professional fees. They are correct to charge you VAT as I do. 
Zero VAT comes with supply and fit packages. 

[dpmiller]

surely in the grand scheme of things the design and commissioning of some ductwork (and the VAT on it) is an almost-irrelevant cost? And you could commission it yourself if you wanted to, as well...

[Temp]

18 hours ago, Oldsteel said:

And its worth mentioning that in my experience not all 'materials only' suppliers are willing or capable of zero-rating invoices. I have the 'certificate' mentioned in previous posts, but from some suppliers its a flat 'no we cant do that'. In the current mad construction world the threat to go elsewhere, even for a large order, is met with a shrug. Kudos though to those who do listen and zero-rate no problem. For the rest, its an HMRC reclaim ......

 

Perhaps I misunderstand your post but the supply of materials only should be standard rated to you.