Small bill not zero rated

[Water]

Hi all, 

 

Finishing a new build house and one tradesmen is unwilling at the moment to zero rate his work, it's only £14 in VAT but I feel why should I throw the money away?  He was good and came out quickly but still argh!

 

What would you do?  

[ProDave]

What trade and why does he think it should not be zero rated?

 

Pay his bill net of the VAT and see if he bothers chasing it (but make sure you don't need him back)?

[Water]

I have paid the net as I didn't want to hold it up. Electrician.

 

The reason *I think* is because he paid vat on some material which obviously makes no difference as he can still reclaim.

Edited August 10, 2022 by Water

[nod]

A lot of companies Especially smaller ones won’t zero rate 

Just put it in your reclaim 

[Water]

will hmrc actually repay it though? don't want my reclaim held up

[ProDave]

12 minutes ago, nod said:

A lot of companies Especially smaller ones won’t zero rate 

Just put it in your reclaim 

But if hmrc actually read your VAT claim, they will reject that, and instruct you to go and get the VAT back from the contractor.

 

We had that on first build for some ground work, only the contractor had croaked before we finish and I did not have the heart to try chasing his widow for the VAT.

[Temp]

Try offering him a certificate. I think officially they are only needed for work on a charity building but they have helped in the past. There is an example on the VAT 708 in section 18.

 

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

 

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

 

Will need editing. 

[saveasteading]

Vat is complicated and worries some small businesses. He probably doesn't want the hassle or perceived risk of a new, to him, procedure. I would let it go. If needed again, you buy the materials.

[shuff27]

Is he vat registered? If not, my understanding from reading the HMRC notes is that you can still reclaim it as he would have paid the vat on the materials.

I have a similar situation with my kitchen fitter who buys the cabinets and doors with vat added but he is not vat registered. I will be reclaiming the vat even though it is not separated on his invoice to me. 

[saveasteading]

4 minutes ago, shuff27 said:

I will be reclaiming the vat even though it is not separated on his invoice to me. 

Do you need to attach his purchase invoice to prove the value?

[Water]

11 minutes ago, saveasteading said:

Do you need to attach his purchase invoice to prove the value?

 

and if the invoice is in his name they will probably reject it.

[shuff27]

4 minutes ago, Water said:

 

and if the invoice is in his name they will probably reject it.

The invoice will be in my name as it is the kitchen fitter's invoice to me.

 

@saveasteading this is covered in section E on the reclaim form and no mention of needing the fitter's invoice from his supplier. Presumably HMRC could follow it up if they wish to with the fitter which is a limited company with proper accounting but that's not down to me. 

[saveasteading]

Interesting. Doesn't sound like the vat inspectors I have met.

[Water]

40 minutes ago, shuff27 said:

Is he vat registered? If not, my understanding from reading the HMRC notes is that you can still reclaim it as he would have paid the vat on the materials.

I have a similar situation with my kitchen fitter who buys the cabinets and doors with vat added but he is not vat registered. I will be reclaiming the vat even though it is not separated on his invoice to me. 

 

But he wouldnt have charged you vat so you can't reclaim what hasnt been charged.

 

If he paid for some materials in say screwfix and just had a till receipt which he gave you then maybe 

Edited August 10, 2022 by Water

[Water]

the guidance also states

 

"Note Please note that all invoices must be for goods that have been supplied to you. We may ask you to prove that you’ve paid for them"

 

Sorry if I've missed your point

[andyscotland]

15 minutes ago, shuff27 said:

The invoice will be in my name as it is the kitchen fitter's invoice to me.

 

@saveasteading this is covered in section E on the reclaim form and no mention of needing the fitter's invoice from his supplier. Presumably HMRC could follow it up if they wish to with the fitter which is a limited company with proper accounting but that's not down to me. 

 

The notes on section E of the reclaim form say this:

 

 

Note the comment "You should check that the invoice has the name and VAT registration number of the trader who has supplied you with the building materials.)"

 

In other words section E is for things like the retail scheme where you have bought from a VAT-registered trader who has provided a simplified retail receipt which shows their details inc VAT number but not an actual breakdown/amount of VAT charged.

 

If you are buying from a non-VAT-registered trader then even if they paid VAT on the stuff they bought, and even if that is included in the price they charge you, it is not "VAT" when you pay it and it cannot be reclaimed by you.

 

That's a basic principle of VAT accounting and as far as I know there is no special exemption for that on the self-build scheme although I am not an expert.

[Water]

agreed. Sadly.

[nod]

3 hours ago, ProDave said:

But if hmrc actually read your VAT claim, they will reject that, and instruct you to go and get the VAT back from the contractor.

 

We had that on first build for some ground work, only the contractor had croaked before we finish and I did not have the heart to try chasing his widow for the VAT.

They didn’t bother with us 

We found a company that would supply and fit the block and beam floor for the price that I could buy the materials 

They wouldn’t zero rate 

Just put block and beam supply 

We claimed the vat back without any issues 

[Water]

nod are you a self builder? I remember someone on here had a construction company