Builders and VAT

jamietuk

Hi everyone, hope someone may be able to help with a query...

I have a builder who says they are not VAT registered, he is carrying out some refurbishment work in a property, which includes plumbing, insulation etc. I have been transferring funds to his account for the materials, which he has gone and bought as the job has progressed.
He is now saying I need to pay him an additional 20% on top of the cost of those materials for tax purposes?

Does this make sense or is he trying to get more money out of me?

the_lunatic_is_in_my_head

Assuming you are acting as a private individual (not a landlord for example) then all prices provided should include VAT, that said if he has quoted you net for materials he will have paid VAT on them.

Getting the job completed to a good standard is probably the best aim rather than causing problems now.

If you still have a final payment to make after the job is done pay the 20% now and maybe ask for invoices for the materials before the final payment.

As an aside I know the builders invoices are nothing to do with the customer but if the builder could quote his job correctly this situation wouldn't arise to begin with.

phill99

Not all builders are VAT registered. If he has a turnover of below £85k per annum, he wont have to register for VAT.


There maybe 2 scenarios here.
1) He has under priced the job and is looking to get more money out of you
2) Your job has actually pushed him over the £85k VAT registration threshold and therefore he has to charge you the 20% VAT. However, if this is the case, the VAT should only be on the labour element as he has already charged you a full (vat included)price on the materials.

ian103

if i understand your post - the builder is not vat registered so will not add vat to the labour element, however he has to pay VAT to his supplier on the materials he uses and therefore you are liable for the VAT on those materials.


if the builder was vat registered he would use the nett material costs, add the labour costs and then add VAT to that total - this would then be dealt with on his VAT return (a balance up of VAT paid and charged)

theonlywayisup

ian103 wrote: »

if i understand your post - the builder is not vat registered so will not add vat to the labour element, however he has to pay VAT to his supplier on the materials he uses and therefore you are liable for the VAT on those materials.

If the builder isn't VAT registered then he cannot charge or pass on VAT regardless.

If the builder buys X item he cannot charge VAT when he sells the item, he also cannot tell the (his) customer that they are liable for the VAT.

nickcc

If the builder isn't Vat registered then he will pay vat on all materials and will pass this cost on to you. The contract should have pointed this out when you signed it. I used a non vat registered builder but agreed I would handle the purchase of all materials, this worked out badly as the builder under quoted for the materials compared to more reputable builders leaving me paying even more for the job than other builders who included the cost of materials had quoted.