Builder has become VAT registered near end of the build

curvie8

Basically our builder was not VAT registered when we agreed and signed the quote. We have paid for all the materials as he has been building and have paid 29000 so far. We had 1000 left to pay and he has now said he needs to be VAT registered backdated to the start of the build and has added an extra 6000 to the final invoice (20% of the whole final amount).
Every item we have paid for so far has been inclusive of VAT so how can we be charged VAT on the whole invoice amount when only 1000 is outstanding.
I am really confused and would really appreciate some advice please?

Pennywise

What did the quote say? Did it mention anything about VAT at all?

Sounds like builder has been caught out unexpectedly going over the registration threshold, but unless he included "plus VAT" or similar on his quote, it's his problem, not yours.

sooty&sweep

Hi
When you've paid for materials has he charged you the VAT on them ?

If he's becoming VAT registered will he be able to reclaim that VAT ?

Jen

Doozergirl

If you know you're about to go VAT registered, you're supposed to make the allowance for VAT on customer's invoices whilst going through the process and then issue the proper VAT invoice once registered.

Before becoming VAT registered, the builder was paying VAT to HMRC as a consumer, effectively. He can now reclaim the VAT on the materials and any VAT registered subcontractors paid out for on the jobs he was working on when he became VAT registered. Not that many subbies are.

There is effectively an element of VAT included in any non-VAT registered builder's invoice. That means that when you allow for it, it shouldn't be the full 20% that gets added onto everything including the gross amount of materials already paid for - he should be taking the materials and any VAT registered subby cost back to the net amount, then adding VAT on at 20%. It would add possibly 15% to the original cost, still.

VAT isn't the easiest to get your head around at the beginning.

Do check the VAT registration number he gives you belongs to him.

In the same position as a consumer, I'd pay the 20% on the remaining £1,000 and let him argue the toss with HMRC on the rest, presuming the job is finished. Whilst you don't want anyone losing money, he needed to be more organised at the beginning of this job, unless the project was obviously at the threshold.

What was the total of the project?

curvie8

Hi, no there is nothing about VAT on any of the invoices except the final one.

curvie8

What's this?

PENNYWISE
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What did the quote say? Did it mention anything about VAT at all?

Sounds like builder has been caught out unexpectedly going over the registration threshold, but unless he included "plus VAT" or similar on his quote, it's his problem, not yours.

The total value was 30000 and we have paid 29000 but now according to the invoice we now owe an extra 6000. VAT has not been mentioned in any previous invoices we have received.

Thanks

Doozergirl

Have you checked the VAT number given on the invoice here?
http://ec.europa.eu/taxation_customs/vies/

If he is registered, I would pay £1,200 and be done with it. He will be obliged to charge on any remaining amount if he is now registered.

Let it go legal, if necessary.

GDB2222

Doozergirl wrote: »

Have you checked the VAT number given on the invoice here?
http://ec.europa.eu/taxation_customs/vies/

If he is registered, I would pay £1,200 and be done with it. He will be obliged to charge on any remaining amount if he is now registered.

Let it go legal, if necessary.

The builder may have an obligation to account for VAT on that final £1000, but it’s not really the customer’s problem. Let alone backdating the VAT to the start of the job. That smacks of desperation.

However, if you fall out with the builder, getting someone else in to finish off the job could be difficult, and it is highly likely to cost much more than £1000.

Tucker

If you have settled the material bills directly as it sounds like you have i.e. Paid the builders merchants directly, you've already paid vat on all the materials.

At worse he could seek vat on the labour element only.

You would always have paid vat on the materials so that will be accounted for in the original quote.

How much of the 30k have you paid for materials?

curvie8

On the invoice it is not totally clear as to the exact labour charges. There is alot of 'supply and fit x and y'.

JimmyChanga

Was the 30k quote including materials? If so, did you pay the suppliers directly and were the invoices in your name?