Issue with Vat added at the end of a job

Hermione_Granger

stragglebod wrote: »

Any price indication for a consumer must include VAT.

http://www.legislation.gov.uk/uksi/2008/1277/regulation/6/made

Unless the following applies:

(4) Where a commercial practice is an invitation to purchase, the following information will be material if not already apparent from the context in addition to any other information which is material information under paragraph (3)—

(i)the price, including any taxes;

I'm of the opinion that the words "ex-VAT" used in the context of a quote indicate that VAT is not included in that quote but will be payable (and from reading the other replies, a few other posters share this opinion).

https://www.ldoceonline.com/dictionary/ex-vat

ex ˈVAT adjective
in Britain, used with a price to show that it does not include vat

stragglebod

So where was the price including taxes readily apparent? It is not the consumer's job to work out what the tax will be.

Hermione_Granger

stragglebod wrote: »

So where was the price including taxes readily apparent? It is not the consumer's job to work out what the tax will be.

You missed out three important words:
"readily apparent from the context" and when something states "ex VAT" in the context of a quote, it means that VAT is not included in the figure quoted.

stripeyfox

stragglebod wrote: »

So where was the price including taxes readily apparent? It is not the consumer's job to work out what the tax will be.

Every time I've been quoted for building work the quote said the value, let's say £1000 + VAT , or £ 1000 excl VAT. This is obvious that I need to add VAT to the quote. I assume it is the builders way of saying "here's my price, you'll need to add VAT on of course". It's not difficult to calculate the VAT. Everyone knows the VAT rate, or if they don't, I'm sure they can easily find out.

I recently got a quote for a bathroom refurb and the quote said £ 3800.00. It didn't mention VAT either way on the quote so I asked the tradesman and he confirmed no VAT to be added as he isn't VAT registered.

Pretty straightforward really. If in doubt, ask at time of quotation

unholyangel

Exc VAT to me means vat is chargeable and would therefore be added on because if they're not VAT registered then they can't charge VAT therefore it cannot be excluded.

However, thats neither here nor there given the Consumer Contracts (Information, Cancellation & Additional Charges) Regulations 2013.

Because those regulations state that the trader needs to provide the consumer certain information before the consumer is bound by the contract (whether on-premises, off-premises or distance contract). Part of that information is:

(f)the total price of the goods or services inclusive of taxes, or where the nature of the goods or services is such that the price cannot reasonably be calculated in advance, the manner in which the price is to be calculated

So if they cannot (and notice its only where it cannot be calculated in advance, not just because they couldn't be bothered) tell you it will cost £5000 (including VAT - as example only) then they should tell you £x materials + £x per hour labour + VAT @ 20%.

DoaM is correct that they need to tell you the rate VAT is charged at - but that would be if they couldn't calculate the price in advance. Which doesn't seem to be the case here so they needed to have given an inclusive price.


Whats more, the regulations also state:

Any information that the trader gives the consumer as required by this regulation is to be treated as included as a term of the contract.

A change to any of that information, made before entering into the contract or later, is not effective unless expressly agreed between the consumer and the trader.

Jumblebumble

IndigoPie wrote: »

Thanks for the replies all. I will pay the VAT.

From the replies, I think partly the fault lies with me for making assumptions and not challenging the initial deposit invoice - As no VAT was charged and no VAT number presented on that invoice, I think it's fair to say that I assumed they were not VAT registered. ( they are after all a new company ) - So, therefore, didn't expect it in the final invoice.

However, I do think the company should have charged VAT on their deposit or at least placed a VAT number on it, which would have helped. ( I assumed it is a legal requirement to do this? ).

Anyway, it's not a big issue, as I mentioned the work they've done is great and I would certainly use them again - just good to get some additional thoughts on the matter. Many thanks!

It is really commendable that you are doing the right thing by paying and not screwing a business over

I do not see that if a business puts EX VAT there can be any other interpretation of their intentions

The business might have broken the consumer laws but I struggle to see that this means that you do not need to pay just that Trading Standards might be displeased.
I may be totally wrong as to what a Small Claims Court might rule

MobileSaver

stripeyfox wrote: »

£ 1000 excl VAT. This is obvious that I need to add VAT to the quote. ... It's not difficult to calculate the VAT. Everyone knows the VAT rate,

There is a specific reason why most quotes only say "ex VAT" without doing the calculation for you and that is that the business cannot be 100% certain that the VAT rate will still be 20% or whatever when the work is done or the VAT invoice raised.

IndigoPie wrote: »

So assumed the trades company was not VAT registered.

As many others have said the OP made a completely erroneous assumption; the very fact the quote stated "ex VAT" meant that VAT would be added to the final bill whereas any business not VAT-registered would either not mention VAT or state "No VAT."

JCS1

stripeyfox wrote: »

The time to check this is of course at the time the quote was issued. The fact that it stated "Excl VAT" would be a very large indicator that VAT will be added.

EDIT: I think the VAT on deposit thing is a red herring in any case. It's just a down payment and the trader probably only does the VAT return on the full final invoice

Deposits are subject to VAT though, sounds like they aren't quite up to speed on VAT.

longforgotten

There are three vat rates...20% , 5% and 0%. So 'excl vat' could mean many things and it would have been best for the customer to ask how much the VAT would be.


Each of these rates can apply to building work.


The business can only state 'excl vat' on a quote if it is actually VAT registered.


In this case the part payment seems to be towards a standard rated supply ( 20%) then the business should have raised an invoice showing vat at 20%. I would agree that the tax point is when the money is handed over to the VAT registered business and it's when HMRC would want the vat.

JCS1

longforgotten wrote: »

There are three vat rates...20% , 5% and 0%. So 'excl vat' could mean many things and it would have been best for the customer to ask how much the VAT would be.


Each of these rates can apply to building work.


The business can only state 'excl vat' on a quote if it is actually VAT registered.


In this case the part payment seems to be towards a standard rated supply ( 20%) then the business should have raised an invoice showing vat at 20%. I would agree that the tax point is when the money is handed over to the VAT registered business and it's when HMRC would want the vat.

The tax point is the earlier of an invoice date or when a payment is received.