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    Does VAT apply to labour costs?
    • #1
    • 18th Apr 05, 4:18 PM
    Does VAT apply to labour costs? 18th Apr 05 at 4:18 PM
    My son's friend started a small business 2 years ago and has since taken on 2 staff. He has been paying his taxes etc and watching his turnover for the inevitable arrival of VAT payments becoming due. He thought the liability was on his costs for materials etc. but someone has told him that his labour charges are included in the VAT liability. If that is correct he could be in big trouble as he was going to register for VAT soon but if he should have included labour he is way past the time he should have registered. I have tried to find out but can't make any sense of the information I've found as nobody seems to mention labour charges anywhere.
    Any advice or hints on where to tell him to look would be useful as he wants to find out his liability and try to sort out a solution before going to the VAT people and maybe getting a massive fine which would put his business at risk.
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