What happens if a supplier doesn't charge you VAT and should have

[LSB]

I have a 'supplier' who has bought a machine and done some work, he says that I don't have to pay VAT as it's a new build.

 

But, just for arguments sake, what happens if he is wrong.

 

Slightly more info he is crushing concrete on site for our hardcore.

 

I know we wouldn't have to pay for hardcore if we bought in, but what about in this scenario.

 

He bought his own crusher and did all the work.

[joe90]

If he bought a machine what are you paying for.? If it’s his machine that’s up to him. If your not paying VAT then you will not be reclaiming it 🤷‍♂️

Edited October 2, 2023 by joe90

[nod]

Plus 1 with above 

 

If a supplier or contractor does charge vat when he should of He’s liable 

I did exactly that on some newbuild apartments and ended having to pay the vat out of my own pocket 7k

[LSB]

thanks, it's just that I'm not sure that crushing concrete is VAT free even though we will use most of it, just not all, what's left will go on the driveway

 

[saveasteading]

If he is vat registered then he has to charge vat, but at the appropriate rate between zero and 20%.

 

I'm not sure I understand the problem. 

[dpmiller]

12 hours ago, nod said:

If a supplier or contractor does charge vat when he should of He’s liable 

 

If blokey is looking a bit of back-pocket money then the risk is his, not yours.

[LSB]

He is VAT registered, but is a one-man band with a huge home build machine that he just takes from site to site and crushes concrete, I don't think paperwork is his forte in life.

 

He's pretty rough and a very typical 'old Suffolk boy', but he's been really good at what he's doing and even went and found HID for me yesterday when I had a problem when I was on my dog walk, HID didn't have his phone so I rang this guy who went and told him to ring me 🙂

 

I would happily recommend his work and I'm happy not to be charged VAT as long as any risk is with him.

 

My issue, is:

If I buy in hardcore I don't pay VAT, no problem.

This guy is crushing our own old concrete floors to provide us with hardcore.

 

So, are we buying a service, which is not VAT exempt, or are we buying hardcore.

 

[MR10]

Or you're just paying for labour with materials supplied by you.

[Dreadnaught]

My guess is that…

 

You should pay VAT on the hardcore that you buy but only if you're buying from a VAT-registered entity. You would then claim it back at the end of the build if you qualify for the "DIY Housebuilders’ scheme".

 

The crusher man is correct in charge you 0% VAT on his services (including his machine, which he operates) as that counts as site labour.

 

… only a guess.

[Temp]

On 02/10/2023 at 15:45, LSB said:

I have a 'supplier' who has bought a machine and done some work, he says that I don't have to pay VAT as it's a new build

 

How is that different to a painter using his own brushes? An electrician using his own wire cutters. Ground worker and his own digger?

[andyscotland]

On 03/10/2023 at 09:44, LSB said:

I'm happy not to be charged VAT as long as any risk is with him.

 

First off the broad principle that would apply to all situations like this.

 

The key question to be clear on (and ideally document) is have you agreed a total price, or a price + VAT (which he may happen to be charging at 0% at the moment).

 

If you have a quote/contract/verbal agreement on an "ex VAT" price then just because he invoices an amount now he could theoretically come back at a later date with e.g. a VAT-only invoice. It's no different to any other situation where a supplier might accidentally invoice for less than agreed and still be entitled to come back and ask for the balance when they discover the mistake. There are some exceptions and caveats and time periods vary by UK country but loosely speaking suppliers have several years in which they could still successfully pursue an underpayment / billing mistake.

 

On the other hand if you've agreed a total price then any missing VAT would be down to him. Same as e.g. if you buy Jaffa cakes in the shop and pay the amount they asked at the time, they can't later chase you up for the extra if they realise they should have charged them at 20%.

 

On 03/10/2023 at 09:44, LSB said:

 

My issue, is:

If I buy in hardcore I don't pay VAT, no problem.

This guy is crushing our own old concrete floors to provide us with hardcore.

 

So, are we buying a service, which is not VAT exempt, or are we buying hardcore.

 

 

In this specific case though I think you're fine.

 

All labour on new builds is zero rated, except for a few very specific services (architect / structural engineer etc) that are standard rated. This is for both labour-only and supply-and-fit.

 

Equipment hire is 20% rated, but he's not hiring you the crusher. He is bringing the crusher as part of his supply of labour & services. This is the same as the common case of a groundwork company coming with a digger to dig foundation trenches - they are bringing their own plant and providing essentially a labour-only service, which would be zero rated.