VAT on Labour?

[Darklymoon]

Hi!

Not sure if this is the right place to go to ask but I thought id give it a go.
Does anyone know if labour is taxable?
I know when you get an invoice parts have to have VAT added, but do they charge VAT on labour too?

Cheers!

[Pagan98]

VAT can be chargeable on most goods and services, including the labour element.

The standard rate is 17.5%, domestic electricity and gas is charged at 5% and some items are nil-rated such as children's clothes, food (but not dining out) and rail tickets.

Traders/companies with turnover of less than 60k (IIRC) are not required to register with the Revenue and charge VAT, although they can voluntarily register.

[Darklymoon]

Hi,
So what does that last bit mean?
Basically, my mum has just had her roof re-done, and the builder has given her an invoice with VAT on the total amount.
Is that what they're supposed to do?

[Mum_of_3]

If the builder is VAT registered then yes they have to add VAT to both labour & materials/parts.
My partner is a builder & roofer and is not VAT registered as his turnover (the amount he bills) each year is below the legal requirement for VAT registration.

Therefore if you ask a non-VAT registered roofer like my partner to do it tey will charge you just labour & materials and no VAT.

I hope this helps!

M_o_3

[Darklymoon]

So if he's not VAT registered and he's charged for it, can she argue to have it taken off?
Is there any way of checking if he's VAT registered?

[Bean Counter]

Originally Posted by Darklymoon

So if he's not VAT registered and he's charged for it, can she argue to have it taken off?
Is there any way of checking if he's VAT registered?

No way should he charge VAT if not registered; HMRC take a dim view of this.

If he has invoiced with VAT on it, the law requires that his VAT number is included on the invoice. I dare say you could call HMRC and double check if you had doubts that he is registered.

[JasonLVC]

OP - it comes down to what price was quoted by the builder and on what terms.

If he said "I'll do the job for £1,000" then that is what the customer should pay as the quote will be deemed VAT inclusive for non-VAT registered persons and if the builder has been ambiguous then that'll be his problem.

If he said "I'll do the job for £1,000+VAT" then I'd expect the invoice to have a VAT number (looks like this 111-2342-564) as well as a date, description of works and the VAT shown as a seperate amount :-

Works done £500

Labour £500

Plus VAT (on all of the above) £117.50

Total £1,1175.00

So depends on the quote really. Inclusive of VAT (that is VAT is included in the quoted price) or exclusive of VAT (VAT is not included in price and is to be added on). Some builders have a habit of quoting exclusive of VAT even though they know full well that the customer cannot reclaim the VAT back - I suppose they do it to show you the cost of the work and the cost of the tax in the same way airlines show you the cost of the ticket and then the cost of the taxes they have to impose on you - but in reality - it's all part of the price and should be more transparent at the quote stage.

HMRC can be contacted on their national helpline which is 0845 010 9000

[yellowcyclist]

VAT number (looks like this 111-2342-564)

Small point - VAT registration numbers are actually one digit less: 111 2222 34 .

There's also the scenario that a builder not registered for VAT must not charge VAT on his labour, but may show on his invoice that the materials he bought were charged with VAT by the builder's merchant.

[mustafa say ving]

Worth remembering too , there are different VAT rates , depending on the type of building.

Barn conversion are reduced VAT.

Listed properties 0 VAT.


For the Builder to act in compliance with this you would need to provide him with a Local Area( county council ) approval notice ( ie an approval of the works or Notification of Grant of Listed Building Consent).

I'd definately ask for his VAT reg no and check that with the HMRC.As bean said, his VAT no. should be quoted on his invoice. If he's not VAT reg. you should point blank refuse to pay VAT on labour & report him to HMRC.

I'd also ask for a detailed breakdown of works. As yellow says, his invoice may show VAT on materials.