Standard Simple Explanation of VAT rules

[Andrew]

I have an invoice from a company who have carried out some site clearance for us, which includes standard rated VAT. I have explained (and linked to notice 708) that this activity should be zero rated as it's closely related to the construction of the building and is not ruled out by paragraph 3.3.6, as planning permission is granted.

 

I've had a pleasant reply explaining to me that as they are VAT registered they have to charge VAT on everything and I may be able to claim it back directly from the 'government'. Obviously this incorrect but I'm struggling a little to strike the right tone in my reply.

 

I'm imagining I will need to send this email many time through the build, so I wondered if anyone had standard form of words they had used which had been effective in getting suppliers to zero rate their invoices? 

 

Thanks

[newhome]

Wait a few days, say you’ve contacted HMRC and use similar words to here 

 

https://forum.buildhub.org.uk/topic/6851-a-guide-to-the-vat-reclaim-process/?do=findComment&comment=115967

 

[Alex C]

Some contractors just refuse to believe the situation on zero rating whatever you do to try and convince them. I was very careful to check this in advance of having any work done and just didn't use the contractors who said they would refuse to zero rate. I had one landscaper quote for the patio and he even confirmed with his accountant father that he had to charge VAT. Most small companies will just be being advised by their book keeper who may well not know and not be interested in finding out the full situation. Good luck with getting another invoice issued. You may find that refusal to pay more than the non VAT amount does the trick.

[newhome]

8 minutes ago, Alex C said:

You may find that refusal to pay more than the non VAT amount does the trick.

 

Actually I did that with one supplier. Paid the ex VAT price with an explanation and I never heard from them again. 

[Andrew]

They've just got back in touch unprompted to say they are going to double check with their accountants, so fingers crossed it won't be a fight. 

 

44 minutes ago, Alex C said:

I was very careful to check this in advance of having any work done and just didn't use the contractors who said they would refuse to zero rate. 

 

I think this is probably the real answer here.

 

To be honest I took the risk as they could start immediately and were £5,500 less than the other quotes I'd had. If I had to pay the £500 VAT I'd still be a long way ahead of the other quotes. 

Edited March 25, 2019 by Andrew

[HerbJ]

2 hours ago, Alex C said:

Some contractors just refuse to believe the situation on zero rating whatever you do to try and convince them. I was very careful to check this in advance of having any work done and just didn't use the contractors who said they would refuse to zero rate.

 I also would recommend this course of action. It is the least line of resistance and stress. Also,    use the the" Certificate for zero rated VAT" when  dealing/communicating with contractors, ideally pre-contract.

 

I went into this in some detail with HMRC and several things were made very clear

1. HMRC will NEVER refund VAT incorrectly charged. It must be properly accounted for and refunded by the contractor. 
2. It is unlawful to charge VAT in contravention of the applicable Regulations.  
3. If a contractor unlawfully charges VAT and refuses to correct the invoice and refund the incorrectly charged VAT. then the final step available  would be to take the contractor to the small claims court and make a claim for the unlawfully charged VAT

[Temp]

You could reply saying that you understand they must charge VAT on everything but they must also charge it at the correct rate or they commit an offense. Not everything is standard (20%) rated. Some things are 5% and others such as work on a new dwelling must be charged at 0% (Note that 0% is not the same as VAT exempt).

Edited March 26, 2019 by Temp