VAT on site preparation

[Plumbersmateuk]

1 minute ago, AliMcLeod said:

 

The starting point for your negotiation could be that he'll have been making a "profit" using the flat rate scheme.

 

So, if his hourly rate is (for example) £100 ex-vat, he'd (in a standard VAT-rated engagement) be charging £120 to customers, then paying £13.20 (assuming 11% - you'd need to check) to the VAT man, meaning a net hourly rate of £106.80.

 

If you get him to zero-rate his invoice at £112.36, he'll owe the taxman £12.36 and get his net £100 per hour. He may well see that as a £6.80 discount on his hourly rate, however.

Yep that is virtually what I have put in an email to him so will keep fingers crossed.

 

[Thedreamer]

If your supplier is registered under the VAT flat rate scheme, then the following should happen:

 

• If the supply provided, qualifies as being zero rated as site preparation costs, then they should issue an invoice to you which shows VAT charged at 0%.

 

• The supplier's own VAT records will be based upon what ever the flat rate % is for their industry. My understanding is the flat rate % is based on a composite of standard, reduced or zero rated supplies averaged within a particular industry, unless they are operating as a limited cost business in which it's case it always 16.5%.

 

 

[Plumbersmateuk]

8 hours ago, Thedreamer said:

If your supplier is registered under the VAT flat rate scheme, then the following should happen:

 

• If the supply provided, qualifies as being zero rated as site preparation costs, then they should issue an invoice to you which shows VAT charged at 0%.

 

• The supplier's own VAT records will be based upon what ever the flat rate % is for their industry. My understanding is the flat rate % is based on a composite of standard, reduced or zero rated supplies averaged within a particular industry, unless they are operating as a limited cost business in which it's case it always 16.5%.

 

 

Yep that's as I read it but I have to get him to agree to do it at zero, which I don't think is going to happen.

[Temp]

11 hours ago, Thedreamer said:

If your supplier is registered under the VAT flat rate scheme, then the following should happen:

 

• If the supply provided, qualifies as being zero rated as site preparation costs, then they should issue an invoice to you which shows VAT charged at 0%.

 

• The supplier's own VAT records will be based upon what ever the flat rate % is for their industry. My understanding is the flat rate % is based on a composite of standard, reduced or zero rated supplies averaged within a particular industry, unless they are operating as a limited cost business in which it's case it always 16.5%.

 

 

 

That's correct but it means anyone on the flat rate scheme is out of pocket if they take on zero rated jobs. Earlier I posted a comment I found on an accountancy site that suggested companies that regularly do zero rated work should avoid the flat rate scheme for that reason.