Cash settlement and VAT

amh1958

Helo I need some advice. Nearly 2 years ago I contacted my insurance company about a small extention( that had toilet in) that was falling away from the house. There were issues with a neighbours tree which had to be removed, it now has, The insurance appointed another company to work out what had to be done and complete work.

As I have cancer and heart condition the local authority wanted to refurb the extention as wet room. This would cut off entrance to garden and I have 3 dogs. We are awaiting amount local authority will give us to do work ourselves.

Anyway going back to insurance the building company they have said they will give us £5000 ex vat approx £4000 then our excess is £1000 so we will get £3000. Surely if we are not having work done by building company and getting settlement we should not have to pay any VAT and should get £4000 from Insurance company. Any advise please?

ruthie77

I suspect that they will be offering you a net of VAT settlement and on production of a final VAT invoice they will reimburse/pay the VAT amount. You should check with them first as it sounds as though they are making an offer before you've even provided them with an estimate, this could mean that anything over and above the £4000 will be your responsibility.

alistair.long

Hi, in theory your suppose to pay the £1000 excess first then the work is suppose to be done.

I would get a few estimates of people who would actually do the work, then forward the estimates to the insurance so at least you get the correct figure for work, then get £1000 taken off for the excess.

amh1958

Sorry Havent been well so didnt see the replies sent. We are not allowed to get other estimates and Crawfords is a part of L&G. Have spoke to VAT office and told them I was disabled and zero rated VAT they said THat I should not be deducted the vat. When I spoke to L&G they are still adament that they will deduct the VAT and then when the work is done if I send proof that VAT paid they will reimburse me. The thing is I am zer rated and will not be liable to VAT are they just going to hold on to it whatever I say.

mikey72

If you look at it from the other side.

If the work costs £4000 , then vat on top of that means I would pay the £5000. So that's what the insurer pays out.
If you are zero vat registered, then you would pay only the £4000. So again the insurer should pay out that amount.
So it does seem correct.

Quentin

If you don't pay VAT, then they won't reimburse you for it!