charging vat twice or?

Radsteral

right, the email i sent to hmr that stated ''we ll reply within 15 days'' came back pretty quick actually
seem i am not doing anything wrong with the way i charge vat, and yes, for accounting purposes i have to seperate , whats materials, whats, vat and whats labour costs..so all right
thank you for your replies , now i have to coppy paste a link of this forum to her and a copy of hmrc email and wait for my vat money

DCodd

Just to reiterate with regards to Materials on CIS invoices.

HMRC tell contractors the following:

Making deductions


To make a deduction from a subcontractor's payment, start with the total - gross - amount of the subcontractor's invoice and then take away:

• any VAT they've charged
• the amount of any Construction Industry Training Board (CITB) levy they've paid

Then take away the amount the subcontractor actually paid for each of the following (including VAT if they're not VAT registered):

• materials
• consumable stores
• fuel used - except for travelling
• plant hire
• manufacturing or prefabricating materials

Finally, apply either the standard or the higher rate percentage to the amount that's left to work out how much to deduct.

http://www.hmrc.gov.uk/cis/contractors/advice-pay.htm

Premier_2

Mistral001 wrote: »

The customer is correct. ...

Only on the basis the customer is always right ... even in cases like this when the customer is entirely wrong

The OP should be charging VAT on the total value of the supply. i.e. materials & labour

The OP should be reclaiming VAT (assuming it was applied) on the materials purchased as input tax, but if the OP is selling the materials at £1000, then VAT must be added to that sale value.
What price the OP buys at is irrelevant; VAT is charged on the sale value.
So whether the OP is making 100% mark up, charging at cost or even making a loss on the materials supplied, the VAT the OP charges to the customer is the same. i.e. 20% of the sale price to the end customer

(The input tax reclaimed by the OP will be the value of VAT paid by the OP in purchasing the materials initially. If the OP is charging materials at cost, then the VAT should be deducted from the ex-VAT cost of the materials before applying this to the clients bill. i.e. in this case, £1000 would be assumed to be the ex-VAT cost of the materials purchased. But the OP is free to charge materials at whatever price he likes ... and VAT is added to that price)

Radsteral

it seem Dcodd has sort of understood what i am talking;)
if i work for private clients i normally tell him 4000+vat and the breakdown i did, its not aimed at him-- it aimed at me and my accountant which asks for material costs to be seperate from labour costs .
being ci4 registred, if i worked for a company , on the labour costs i had to deduct 20%... so the bill would be 4000 +vat(20%) - 20% tax ,..

I thought we here were a united front;) sorry for causing such a stirr! one poster costumer i right - next one costumer is wrong

to calm down or, to add more to the fire i have coppy/paste the reply from hmrc , though i told the client, the quote accepted was for 4000 plus vat, if you find that i am ripping you off, here you got the hmrc number and ring them yourself . she s paid already

---

Dear Sir

Accounting and charging VAT

Thank you for your enquiry of 2 October 2011, regarding the above enquiry.

I think your customer may have mis under stood the way VAT s charged and accounted for, you as the supplier may make purchases in the course of your business and as such you would account for these purchases on your VAT return as expenses. In the course of your supply to your customers you would need to supply materials to enable you to do the job and as such you would need to recover the cost of the materials plus your labour from your customer and account on your VAT return for this as a supply/sale charging VAT on the whole supply and paying this to HMRC.

VAT is a sticking tax for private individuals and as such because they are not business they cannot reclaim the VAT charged as an expense unlike VAT registered businesses aslong as the items purchased are for the business.

If you have any further queries regarding this matter, please submit your enquiry via our website, ensuring that you quote the case reference number at the top of this reply. Enquiries can be submitted by following the appropriate links on the VAT 'Contact us' page at www.hmrc.gov.uk

Yours sincerely

DCodd

Radsteral, it is a complicated situation as we are unsure who is asking for the Materials breakdown.

If your client is asking and they are a private individual (i.e. not a company) then they have no need or right to know how much the materials actually cost you. As long as you charge the agreed £4k + VAT then you, your client and HMRC are getting what they are entitled to.

If your Client is a company then they are allowed to ask you how much you paid for the materials, not for VAT purposes but for CIS4 deduction purposes. You can still charge £4k + VAT as that is what your client agreed to, HMRC will still get the correct amount of money but for CIS purposes, if you paid £833.33 + VAT for the Materials then that is what you should show on the invoice. You then increase the Labour content to make it up to the total of £4k + VAT. You get a higher deduction (on £3166.67 of labour) but HMRC and your client get what they are entitled to.

If it is your accountant that is asking for the breakdown then she may be asking for the actual amount of materials purchased to be able to work out your profit/earnings for the year for Income Tax purposes. You should be able to provide this by giving her your receipts for your purchases. Your invoices should always reflect what you charged the Customer and not what your accountant wants to see.

In short, all the posts above are, in their own way correct. It is just that they are looking at the situation from a different point of view.

Radsteral

i get the payments paid direct to my business account 99 per cent of times... it saves me lots off hastle and when i do my vat return, even my wife can match the invoice number with the money amounts that have come to the account from different clients as the payments come with names or invoice number- this is my ''great'' idea of dealing with the unnexpected, like it did on my first vat return 2 years ago
printed my receipts and all i cound see was digits as almost all had paid by cheque;)... about 33 invoices then and 2 payments were never traced where they came in---i just slapped up one invoice on the name of george w bush, thinking if inland revenue asked for this i d tell them, that they still get the money..i just cant remember from who .

so, when i finish the job i make up the invoice which contains my vat, utr,bank details and reference for payment and further down the breakdown
seeing the breakdown she decided i was overcharging her, but as above i do this breakdown for my own purpose not for her.
it never hapened before , this is the 800th invoice i issue

Mistral001

Radsteral wrote: »

so, when i finish the job i make up the invoice which contains my vat, utr,bank details and reference for payment and further down the breakdown
seeing the breakdown she decided i was overcharging her, but as above i do this breakdown for my own purpose not for her.
it never hapened before , this is the 800th invoice i issue

I see now. I assumed that you were showing her the actual suppliers invoices for materials which would have had VAT added.

Radsteral

yeah.. if i was that organised, i would have been an accountant!
my wife checks my van every day for paperwork as i return home..the only thing that she says, cant be on my van is germs! she says , they wouldnt survive on that dirty van