Builder has become VAT registered near end of the build

curvie8

The invoices were in the builders name, we paid him the money and yes the 30k quote was all inclusive.

stator

If he's asking you to pay an extra £6000 then he clearly doesn't understand how VAT works.


Pay what you owe £1k and tell him to do one.

G_M

Is the job complete?
To your satisfaction, with no snagging list?

If not, you should not be paying anything more yet. What did the original contract say about payment schedule? The final £1000 is when you are 100% happy with the job.

When you are completely satisfied, you pay what is outstanding based on the original quote/contract. By the sound of it, that's £1000.

That is what he quoted. He made no mention of VAT being included or excluded, so the presumption at law is that that is the final figure owed.

If he wants to take matters further, either compromise and offer VAT at 20% on the final £1000 (ie from the point in time when you were informed of VAT), or simply refuse. If he wants to sue, let him take his chances in court.........

curvie8

There are a few finishing touches left before we pay the final 1000. We are fine with paying VaT on the final 1000 but not on what we have already paid.

Newuser1987

Maybe your builder just doesn't understand VAT properly but tell them to google 'VAT Date of Supply'. If the £29k has already been invoiced and the work associated to that amount has already been completed, before their date of registration, then they are not required to issue a VAT invoice for that amount.

I imagine the £1k may require VAT to be added but again that might not even be the case depending on the date of supply.
This is my understanding of VAT. I know there are some slight differences for construction but believe the principals are the same.

supa34

Vat is applicable after he has registered and only on the amount left to pay. So you only need to pay vat on the 1k.

GDB2222

If the builder delayed registering too long, he may be liable for VAT on work already done. But, he’s being a bit optimistic (or desperate!) hoping that he can pass that on to his customers.

Mistral001

Get an accountant on to this one. This builder might have got himself in a pickle by thinking that he knows how VAT works when he does not. He might have erroneously claimed back from HMRC the VAT on the materials and now thinks if he charges VAT everything will be OK. In that situation, builders will be stubborn as they do not want to have to hand back the VAT they have already claimed back. So you need to have professional backing as they probably will not give in without a fight.

missile

I would pay only what was originally agreed AFTER all snagging has been completed.

Doozergirl

Mistral001 wrote: »

Get an accountant on to this one. This builder might have got himself in a pickle by thinking that he knows how VAT works when he does not. He might have erroneously claimed back from HMRC the VAT on the materials and now thinks if he charges VAT everything will be OK. In that situation, builders will be stubborn as they do not want to have to hand back the VAT they have already claimed back. So you need to have professional backing as they probably will not give in without a fight.

It's the builder that needs an accountant, not the client!