VAT on Polish imports?

[KTB]

Our window supplier/installer has just turned up with "bad news". The lorry is due to be loaded on the 20th from Poland with all our windows and bifolds etc. He is now saying he's been advised that we have to pay the VAT and duty on this upfront and then hopefully reclaim it later.

 

Surely, as a new build, we are not liable for any VAT on this and the UK already has a trade deal with Poland as part of the EU so there will be no VAT due on this job?

 

Confused.

[MikeGrahamT21]

From what i've read previously, you'll definitely need to pay the VAT, which you'll reclaim at the end of the project.

 

Not totally sure about Duty. Have a read of this: https://www.theguardian.com/money/2021/jan/21/eu-website-purchases-the-import-charges-uk-customers-have-to-pay

 

And a calculator https://customsinsights.co.uk/duty-vat-costs/

[ToughButterCup]

Supply and Fit - on a newbuild -  is Zero rated.  If you are a Domestic Client and you get charged VAT, and you pay it  for a supply and fit contract, then you will have to claim that VAT back from the supplier.

 

Read this (full post here) 

Quote

• If your arrangement is for supply and fit then both the labour costs and the materials costs must be zero rated for a new build (assuming the materials are eligible items). Your claim for those invoices will be rejected for any items that are for supply and fit where VAT has been charged incorrectly.  

 

Read the Guidance Notes on the VAT reclaim form

[Bozza]

“We have to pay”. Is that you or him.   Who is paying who for what.

[KTB]

19 minutes ago, Bozza said:

“We have to pay”. Is that you or him.   Who is paying who for what.

He is asking that we pay the VAT on the windows/doors he is importing from Poland. Don't think we should be paying anything, it's his company that is liable to defer or pay it, then sort it out. We are a new build and therefore not responsible for VAT on supply/fit.

Edited January 13, 2023 by KTB

[Blooda]

Do you have a contract with your supplier for the windows at an agreed price?  

Edited January 13, 2023 by Blooda

[KTB]

15 minutes ago, Blooda said:

Do you have a contract with your supplier for the windows at an agreed price?  

Yes 

[Bozza]

1 hour ago, KTB said:

He is asking that we pay the VAT on the windows/doors he is importing from Poland. Don't think we should be paying anything, it's his company that is liable to defer or pay it, then sort it out. We are a new build and therefore not responsible for VAT on supply/fit.

Correct, if he is importing them, and you are paying him a price to install and fit the windows, if you pay the VAT to him you have ZERO chance of claiming it back from HMRC.   it’s down to him to sort it out, namely for him to pay the VAT and claim it back or whatever businesses do.  

 

My windows were imported from Denmark.  I chose what I wanted and got a quote which was passed to my builder who ordered the windows.  No VAT was ever paid by me.  
 

I assume that’s a similar arrangement and you haven’t paid any deposit to the supplier or ordered the windows yourself.  Assuming you haven’t paid any money up front you are in a strong position.

 

 

 

 

 

 

 

 

 

 

 

[KTB]

37 minutes ago, Bozza said:

I assume that’s a similar arrangement and you haven’t paid any deposit to the supplier or ordered the windows yourself.  Assuming you haven’t paid any money up front you are in a strong position.

 

 

 

 

 

 

 

 

 

 

 

Unfortunately, we've paid him (the intermediary) half up front. He showed up, unannounced, a week before the lorry leaves with the good news. 

Edited January 13, 2023 by KTB

[Blooda]

1 hour ago, KTB said:

Yes 

He pays the VAT and "claims it back" through his normal procedures. 

He charges you the contract value. 

Which if he is VAT registered will include VAT, which in this case should be 0%.  

 

 

 

 

 

 

Edited January 13, 2023 by Blooda

[andyscotland]

A few questions:

 

* I assume your supply/fit company is registered for UK VAT?

* Who actually has the contract with & is paying the Polish company?

* Are you being asked to pay Polish VAT or UK VAT?

 

I'm not fully up to speed on post-Brexit import VAT for goods but my understanding is:

 

* The Polish company should not be charging any Polish VAT as there is no VAT due on goods for export from the EU.

* There will be UK VAT to pay when the goods arrive in the UK. Freight agents commonly charge this upfront.

 

 

Assuming your supplier is the importer and is VAT registered then they can opt to use postponed VAT accounting for the import VAT.

 

With this:

* They provide evidence of their VAT registration to allow the goods to come in without paying any import VAT at that point.

* On their next VAT return they declare the import VAT and simultaneously reclaim it as input tax. So they never actually pay anything out.

* They would normally then charge you VAT when they sell you the windows, but in this case as a new build supply and fit they can zero-rate that.

 

So in theory assuming your fitter is technically speaking buying the windows and reselling them to you and is VAT registered then no VAT should need to change hands from anyone although I think there may well still be import duty.

 

However if your fitter is not VAT registered or is acting as your agent (and you are paying the window supplier direct) then there will be UK VAT to pay before the goods can clear customs. Which presumably you would eventually be able to reclaim from the self-build scheme like any other goods-only purchase.

 

 

 

 

[KTB]

This is now heading South at an alarming rate - He says he's spoken to HMRC, who are insisting that we pay the VAT, then try to reclaim it. We are refusing, based on our and everyone above's understanding of the process and the zero chance of ever claiming it back once HMRC have it.

 

He's also asked for the rest of the balance for the entire job to be paid today, a week before shipping! He hasn't even sent us a final invoice yet. The whole thing stinks and is stinking more by the hour.

[Temp]

The answer he got from hmrc depends on what information he gave them. If he missed some detail then he will get the wrong answer. I suggest you ask in writing on the HMRC VAT help forum.

 

Make sure you tell them you are a self builder employing someone on a supply and fit basis and that the supplier is doing the importing. 

 

I agree with others. He should pay the VAT and reclaim it by deducting it when he makes his VAT return. He must zero rate the windows and installation to you because you cannot reclaim VAT paid in error.

 

The only exception would be if you ordered the windows yourself from Poland with the "help" of the installer. Perhaps not consciously - check the small print in the contract. Is it all with supplier/installer or do you have a contract with the Polish manufacturer?

 

 

[Temp]

Make sure at least £100 is paid by credit card. 

[Temp]

https://community.hmrc.gov.uk/customerforums/vat

 

 

 

[KTB]

31 minutes ago, Temp said:

The only exception would be if you ordered the windows yourself from Poland with the "help" of the installer. Perhaps not consciously - check the small print in the contract. Is it all with supplier/installer or do you have a contract with the Polish manufacturer?

 

 

The contract is with the UK registered company only. We are digging our heels in and refusing to pay the UK VAT.

[Temp]

You might consider offering the UK company a "certificate". Theses are essentially a letter from you to the company certifying that their supply and fit is for a new dwelling that qualifies for zero rating. It should state that and give all your contact details, the site address and the planning reference number. 

 

Officially HMRC doesn't need a certificate (unless it's a charity building ?) but they can sometimes smooth problems like this.

 

These certificates are mentioned in VAT708 and there is/was a template certificate as well but it needs a lot of editing. Several people on here have produced one.

 

 

[Temp]

Tip for others If you are ever given a quote "Inc Vat" or "plus VAT" always request a new quote that reflects the zero rated status before accepting it. It's always easier to get this done before you've accepted it. 

[Bozza]

Feel sorry for you @KTB.  But you are getting 100% confirmation from lots of us that your knowledge is accurate re VAT rules.

 

Sounds like your installer might have a cash flow issue.  
 

I’m sure we’ve all encountered contractors who are unfamiliar with self build VAT rules but surprised at a window fitter , unless he’s a small business r never installed in self builds.

[andyscotland]

2 hours ago, KTB said:

The contract is with the UK registered company only. We are digging our heels in and refusing to pay the UK VAT.

This is all quite concerning, although there is always still a chance there is some honest misunderstanding going on.

 

 

 

Brexit has opened up many cans of worms for small companies trading cross-border. That said, none of it is particularly new now and most firms have figured the basics out. Is this your fitter's first time working with the Polish supplier?

 

In my experience tho, sudden requests for extra funds / bringing forward expected payments are more usually to do with cashflow issues than any external pressure... As @Temp said, if you haven't paid any of the bill by credit card then I would start thinking about how to protect your position just in case, and insist on paying some by card if you do agree to pay anything further.

 

It's actually more surprising for this to arise for an import because as above, so long as they do the paperwork right, they do not have to ever actually pay any VAT on the supply. They just put the number in one box of the VAT return, and the same amount in another box, and it ends up at zero. So the cashflow challenge that would normally arise on a self-build (pay supplier 20%, bill customer 0%, be out of pocket until the next VAT return) does not exist.

 

Unless I suppose something has gone wrong with your supplier's VAT registration and HMRC have refused to allow them to use the postponed accounting method, but I'm not sure they have the power to do that. I just double checked the guidance again at https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return and it would seem literally all you have to do is be a VAT registered business importing for business purposes, and then on the import declaration tick a box to say so and provide your VAT registration number.

[Roger440]

3 hours ago, KTB said:

The contract is with the UK registered company only. We are digging our heels in and refusing to pay the UK VAT.

 

Are they actually registered for VAT though.

 

If they are, they wont even need to pay VAT themselves at point of entry as it always used to be. You just add it to your VAT return at the end of the quarter.

 

To me, this sounds like they are NOT VAT registered. Or they are clueless. Or on the make.

 

As above, is the UK vat, or Polish VAT they want you to pay?

[KTB]

8 minutes ago, Roger440 said:

 

As above, is the UK vat, or Polish VAT they want you to pay?

UK VAT - we've told them were not paying 

[KTB]

Invoice now reissued without VAT. A load of hassle for not very much.

 

He's trying to get 100% of the balance of the job tomorrow too, but we are paying half of what's left, 25% on arrival on site of kit and the balance when the job is completed to our satisfaction.

[Temp]

Jolly good. Do try and pay some of the first payment on a credit card if not already done.

[Temp]

From the HMRC forum..

 

https://community.hmrc.gov.uk/customerforums/vat/ebb59f20-6793-ed11-97b0-00155d9c7b3d

 

Quote

 

Background: "Supply and fit" services to a Self Builder constructing a new dwelling are normally zero rated. For example an electrician providing materials and labour must normally zero rate both to the Self Builder. The Electrician reclaims any VAT he paid on materials when he does his VAT return. If the Self Builder pays the Electrican VAT in error he cannot reclaim it from HMRC later. This is well established in VAT708 and VAT431NB.

 

Question: Does this also apply when the company providing the supply and fit services imports the materials ?

 

 

 

Quote

 

Posted about 4 hours ago by HMRC Admin 17 

 

Hi. If the company imports the materials then there would be an import VAT charge to the importer and the supplier should be able to recover this from HMRC in the normal way. When it comes to the supplier then charging on the cost of the materials and the labour the supplier should be then charging both supples on to the housebuilder at the Zero rate of VAT. Thank you.