Setting up a trade account with builders merchants? Which address on invoice?

[CalvinHobbes]

Hello I was just trying to set up an account with the builders merchants but was asked which address? Should I use the build address with my name or do I use the rented correspondance address while we tumble and rebuild?

Also the builder asked could he use a particular supplier because he gets a lot of discount with them. Is that ok? He said he would get more discount.

Edited December 1, 2022 by CalvinHobbes

[CalvinHobbes]

Sorry for the dumb questions, I am reading this https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708#section17 too so do I have to issue a certificate to my builder to get it zero vat rated? 

 

[ProDave]

Any "supply and fit" on a new build should be zero rated by the tradesman or builder, you won't be able to claim back any VAT charged by them. You might need to provide them with some evidence like planning permission to convince them it is a new build particularly for things near the ens of the build where it might look like a finished house (almost)

 

The VAT re claim is only for materials that YOU buy to be incorporated in the build.

 

Address does not matter, we started off with our old address, then swapped part way through to the new build address when we moved into the static caravan.

[Mr Punter]

12 minutes ago, CalvinHobbes said:

do I have to issue a certificate to my builder to get it zero vat rated? 

 

No.  The certificate only applies if you are building something other than a dwelling (like a school, prison, hotel etc)

[CalvinHobbes]

25 minutes ago, ProDave said:

Any "supply and fit" on a new build should be zero rated by the tradesman or builder, you won't be able to claim back any VAT charged by them. You might need to provide them with some evidence like planning permission to convince them it is a new build particularly for things near the ens of the build where it might look like a finished house (almost)

 

The VAT re claim is only for materials that YOU buy to be incorporated in the build.

 

Address does not matter, we started off with our old address, then swapped part way through to the new build address when we moved into the static caravan.

Thank you. So if the builder buys things like for example a lintel from the builders merchants out of his own account, will they charge him VAT? If so he will pass the cost to me and how can I claim it?

Edited December 1, 2022 by CalvinHobbes

[ProDave]

10 minutes ago, CalvinHobbes said:

Thank you. So if the builder buys things like for example a lintel from the builders merchants out of his own account, will they charge him VAT? If so he will pass the cost to me and how can I claim it?

Assuming the builder is VAT registered, then no, he will reclaim the VAT and zero rate it to you.

 

If it is a small tradesman like me below the threshold for VAT registration, then I would give you a shopping list and advise you to buy the materials so you could reclaim the VAT and my labour would not have VAT on it.  If I bought the materials I would have no way to reclaim the VAT.

[markc]

15 minutes ago, CalvinHobbes said:

Thank you. So if the builder buys things like for example a lintel from the builders merchants out of his own account, will they charge him VAT? If so he will pass the cost to me and how can I claim it?

If they buy a lintel and fit then it’s zero rated and you should not be charged vat, if they just buy a lintel for you then it should have vat and you would have to (try) and reclaim it. Much better and easier for you if you supply all materials but you need to be on the ball or the subbies  will leave themselves short of stuff and blame you.

Edited December 1, 2022 by markc

[CalvinHobbes]

3 minutes ago, ProDave said:

Assuming the builder is VAT registered, then no, he will reclaim the VAT and zero rate it to you.

 

If it is a small tradesman like me below the threshold for VAT registration, then I would give you a shopping list and advise you to buy the materials so you could reclaim the VAT and my labour would not have VAT on it.  If I bought the materials I would have no way to reclaim the VAT.

Thanks. The builders merchants he told me he wants to use said I could pay in money and he can get what he needs and they will send me invoices each time. Does that sound fair?

[ProDave]

Re the earlier question do builders get a better price.  Very debatable.  they may get more "trade discount" than you could get with your own account, but they have little incentive to spend hours phoning all the different merchants to seek the best price, or look on line etc. they are more likely just to place an order with their favourite merchant and not haggle as "the customer pays"

 

So you might do what all us penny pinching under funded self builders do and spend hours getting the best deal on absolutely everything.  I guess it depends how much time you have free for that and how good you think you are at it.

[Conor]

25 minutes ago, CalvinHobbes said:

Thank you. So if the builder buys things like for example a lintel from the builders merchants out of his own account, will they charge him VAT? If so he will pass the cost to me and how can I claim it?

You can't. If the builder is going to be using the materials and installing, they should be supplying them zero rated. You can only claim back goods in your name and address. As long as the invoice has the site address on as the delivery, then you're ok. But best using the site address as default with any merchant.

 

You're best setting up cash accounts with the three main local merchants (Haldane, macblair, Murdock) and just emailing them a list of items each time. Best grouping the lists together so you'll get better prices and save on delivery chargers. You'll soon build up a relationship with a sales rep and get the trade prices. You'll soon see you're being quoted 40% less than the list prices.

 

Edited December 1, 2022 by Conor

[CalvinHobbes]

Thanks ProDave, I would like to give it a go. Maybe if I worked out a list in advance of bigger items and phoned round and got his favourite merchants to at least price match my price? TBH I suspect the biggest items is the zinc for the roof but that won't be needed just yet. Is there anything else in particular that tends to be costly/big variations? 

 

[CalvinHobbes]

1 minute ago, Conor said:

You can't. If the builder is going to be using the materials and installing, they should be supplying them zero rated. You can only claim back goods in your name and address. As long as the invoice has the site address on as the delivery, then you're ok. But best using the site address as default with any merchant.

 

Thanks, getting it in plain english is brilliant. 

[ProDave]

8 minutes ago, CalvinHobbes said:

Thanks. The builders merchants he told me he wants to use said I could pay in money and he can get what he needs and they will send me invoices each time. Does that sound fair?

I am not sure what he is suggesting there.

 

Either the builder buys it and zero rates it to you, or you buy it on your own account from the merchant and the invoice clearly gives your name and address. You will pay the VAT up front and re claim it at the end of the year.  Obviously keep all the invoices.

[Kelvin]

That sounds like they want you to run some kind of credit account where you pay them money then call it off as you buy materials? Don’t do that if so. Buy on your credit card as you need the materials. 

[saveasteading]

Good advice above. To elaborate:

 

Small builders generally have one account at one BM. This is because it can be tricky to get much credit until a sustained period of trading. £1,000 Credit doesn't go far and the builder may be out of pocket. How much would you lend this builder?

 

They often aren't getting as much discount as they think. That needs comparisons and negotiation, and they should be too busy building. 10% is standard and you can do much better.

 

If you let them buy from their BM it helps them build a reputation, perhaps ag youf expense.

 

You can get an account but may not get credit for a while. Pay promptly and it can build up.

If it is in your skillset you can get the best prices available.

 

Waste can be expensive, whoever is measuring and buying.

 

Some contributors here have more confidence in builders' accounts skills than may be found in reality.  Some struggle with basics and vat at the best of times.

 

A builder charging at zero is out of pocket for up to 3 months as they pay 20% to the BM. Who is paying?  You probably.

 

For a well established and bigger builder, much of the above doesn't apply.

[saveasteading]

To avoid any doubt, put  your invoice address but in line 2 add the project.

Mr and mrs smith, the Bideawee Project, sunny lane,

Care of 25 current house street

XY1 23Z

 

Or there may be a 'reference ' box on the order form. The BM can write the address there

 

[Kelvin]

My invoices so far have my current address and the name of the plot as a reference. 

[Ferdinand]

1 hour ago, CalvinHobbes said:

Thanks ProDave, I would like to give it a go. Maybe if I worked out a list in advance of bigger items and phoned round and got his favourite merchants to at least price match my price? TBH I suspect the biggest items is the zinc for the roof but that won't be needed just yet. Is there anything else in particular that tends to be costly/big variations? 

 

 

See the two cost saving threads pinned in the General Forum.

https://forum.buildhub.org.uk/forum/48-general-self-build-diy-discussion/

 

Essentially one is about setting yourself up to save money, and the other is a noticeboard about discounts.

[Roundtuit]

I sent a covering note with my vat reclaim explaining the different addresses on the invoices (old home, followed by rented place, followed by plot address).  It wasn't queried, so I assume it's not an unusual occurrence. 

 

Re: best terms.  I know I got some good discounts from my BM, because I was able to check them against what a small developer was paying, but I was still able to get better prices shopping around on many occasions.  Don't assume that best terms means best market price 😉

[CalvinHobbes]

17 hours ago, ProDave said:

I am not sure what he is suggesting there.

 

Either the builder buys it and zero rates it to you, or you buy it on your own account from the merchant and the invoice clearly gives your name and address. You will pay the VAT up front and re claim it at the end of the year.  Obviously keep all the invoices.

Sorry I wasn't clear. It was the builders merchants who said it was normal practice for self builders to lodge 10k with them then give the builder permission to get things using this money. A deposit account I think he said? A bit concerned our money would be protected if they went bust. I guess maybe I will keep it to 5k with regular top ups.

Edited December 2, 2022 by CalvinHobbes

[Conor]

50 minutes ago, CalvinHobbes said:

Sorry I wasn't clear. It was the builders merchants who said it was normal practice for self builders to lodge 10k with them then give the builder permission to get things using this money. A deposit account I think he said? A bit concerned our money would be protected if they went bust. I guess maybe I will keep it to 5k with regular top ups.

You're being BS'd. Don't hand over any money to anybody unless your getting something immediately.

[Moonshine]

1 hour ago, CalvinHobbes said:

was the builders merchants who said it was normal practice for self builders to lodge 10k with them then give the builder permission to get things using this money. A deposit account I think he said? A bit concerned our money would be protected if they went bust. I guess maybe I will keep it to 5k with regular top ups.

 

I have never ever heard of that, and i wouldn't want to do it that way. It could be that the BM thinks it will be easier than having to take payment from you for things each time, but that is a hell of a risk for you to take on.

 

I have accounts with the main BM's in the area that i get quotes from, and if i go ahead they take card payment not a major issue.

 

To streamline the process of the builder buying things on their account, one BM has transferred the same terms / costs onto my account. It makes the invoicing cleaner for my tax claim as its invoiced to me.

 

Edit 

 

Case in point i am just ordering my window cills, for a none trade account £140 + VAT, my trade account £84 + VAT, builder going to BM picking some stuff up and speaking to the branch manager, now its £40 + VAT a length

 

https://www.jewson.co.uk/p/sam52-25-x-294-windowboard-3-66m-fsc-F522529C

Edited December 2, 2022 by Moonshine

[Moonshine]

i can't edit the above post now, but builder has saved me £110 from the next best supplier i found

[saveasteading]

2 hours ago, Moonshine said:

builder has saved me £110 from the next best supplier i found

So that's good. Builder has mutiple contacts and shops around. 

If you had money deposited at one BM that woukd be less likely.

There is no reason to deposit money, certainly not that much: use credit card.

We are very pleased that the local BM can beat almost everybody, and generally quotes their very best price straight off. On the few occasions when they can't compete, they are grown up about it.

Another advantage is delivery. They know the site, deliver when promised, and correct any errors immediately.

 

I forgot the downside. Builder charges you no vat.

Buy materials yourself and you pay the vat and can't claim it back until the end. 200k job, 80k materials, 16k vat. ...ish.

But if you are getting good discounts that balances out and doesn't matter.

 

 

[patp]

I used to work in a Builders Merchants. There are various levels of discount depending on how much you are likely to spend. The best kind of account is a "Cash Account". This means that you pay cash (debit/credit card etc) at the time of ordering. This beats all the big boys who have "Accounts" that they promise to pay within 3 months but rarely do. Whilst it is a trade secret what the discounts are for each individual customer they are much more likely to want to deal with a cash customer than any credit customer. I phoned around for each order and our local merchant always beat them (deliveries cost money). That was all except on one occasion when I beat their price on insulation. He could not believe the price I had been quoted and I had to prove it before he approached his Area Manager so that he could supply it to me at what was cost to him!