VAT on builders quotes

TrixA

prowla said:

macman said:

Their VAT no. should be shown on the letterhead. Unless of course they're doing one job a year at £80k and so under the VAT threshold...

That!

Also, what is their insurance cover like?

They haven't said anything about insurance cover, is that normally something that would be included at the initial quote stage? If so what question should I be asking them? I had assumed we'd probably need to take out renovations insurance ourselves.

plumb1_2

TrixA said:

I can't imagine they're under the VAT threshold, so the question is simply whether they've included VAT and haven't made that clear, or whether they've assumed we know there will be an additional VAT charge to pay. Obviously we need to ask them but I just can't understand why they'd be coy about it. It may be the case that they can't legally charge more than was quoted but obviously we'd prefer to avoid a legal dispute.

The quote came electronically and there is no letterhead as such, just a company logo.

Just reply to their email asking them, then you will have it in writing either way. Simples

grumbler

TrixA said:

... I just can't understand why they'd be coy about it.

Are Tesco coy about VAT? IMO, it's a norm not to confuse a private customer with absolutely irrelevant VAT.

The problem is that many cowboys try to pull a fast one by deliberately quoting private customers without VAT, especially if it's just a conversation, and then trying to make extra 20% by adding VAT at the very end.

TrixA

Ok, so I asked the builder and his response was that he's not currently registered for VAT, but is in the process of becoming registered at the moment. It turns out that he and his associate had previously been working for another local company, and have recently created their own company, hence they have only just reached the VAT registration threshold.

I am still a bit confused though, does this mean that we should add 20% to the price he has quoted us?

Doozergirl

TrixA said:

Ok, so I asked the builder and his response was that he's not currently registered for VAT, but is in the process of becoming registered at the moment. It turns out that he and his associate had previously been working for another local company, and have recently created their own company, hence they have only just reached the VAT registration threshold.

I am still a bit confused though, does this mean that we should add 20% to the price he has quoted us?

In a word, yes.   

Most of us only do this once and it confused me when we first went VAT registered, but they should be making an allowance for VAT until such time that they get their VAT number and can invoice with it.  It doesn't take long to register so unless you're starting tomorrow, they should be registered by the time you get your first invoice.  

Things like their public liability and (hopefully) contract works insurances are important here because they are new.  Are they doing things correctly is the question.  Working for someone else is totally different to going it alone as a main contractor, as several of our subbies have discovered.    Being a good general builder does not necessarily a good business, people and project manager make.  They are different skills.  

Have you checked references properly?  ie.  Who was actually managing the jobs for previous clients?  

grumbler

Doozergirl said:

TrixA said:

Ok, so I asked the builder and his response was that he's not currently registered for VAT, but is in the process of becoming registered at the moment. It turns out that he and his associate had previously been working for another local company, and have recently created their own company, hence they have only just reached the VAT registration threshold.

I am still a bit confused though, does this mean that we should add 20% to the price he has quoted us?

In a word, yes.  

I'd say, "In a word, no".

Why would I care about his VAT status, registration etc.? I asked for the price and was given the price. Everything else is his business, not mine.

If he doesn't want to give me a clear and unambiguous quote, I'd just say goodbye to him.

Doozergirl

grumbler said:

Doozergirl said:

TrixA said:

Ok, so I asked the builder and his response was that he's not currently registered for VAT, but is in the process of becoming registered at the moment. It turns out that he and his associate had previously been working for another local company, and have recently created their own company, hence they have only just reached the VAT registration threshold.

I am still a bit confused though, does this mean that we should add 20% to the price he has quoted us?

In a word, yes.  

I'd say, "In a word, no".

Why would I care about his VAT status, registration etc.? I asked for the price and was given the price. Everything else is his business, not mine.

If he doesn't want to give me a clear and unambiguous quote, I'd just say goodbye to him.

Say goodbye if you like, but does the OP
need to account for VAT with this person if they want a finished project with them?  Yes.  

It is a showing of incompetence though, I would certainly go that far.  There's no room for ambiguity when it comes to VAT. Had they genuinely considered their own VAT registration status before the OP raised it? 

Also who wants to be the first customer of someone who has potentially never fully managed an £80-96k job before??  I know someone has to be, but I'd be asking questions there. 

TrixA

Incompetence as in, he should have alerted us to the fact that VAT would be payable as part of the quote?

I am finding it all rather frustrating, as the need to find an extra 20% will likely make the project unaffordable for us.

grumbler

Doozergirl said:

grumbler said:

Doozergirl said:

TrixA said:

Ok, so I asked the builder and his response was that he's not currently registered for VAT, but is in the process of becoming registered at the moment. It turns out that he and his associate had previously been working for another local company, and have recently created their own company, hence they have only just reached the VAT registration threshold.

I am still a bit confused though, does this mean that we should add 20% to the price he has quoted us?

In a word, yes.  

I'd say, "In a word, no".

Why would I care about his VAT status, registration etc.? I asked for the price and was given the price. Everything else is his business, not mine.

If he doesn't want to give me a clear and unambiguous quote, I'd just say goodbye to him.

Say goodbye if you like, but does the OP
need to account for VAT with this person if they want a finished project with them? 

It's the person who has to account for VAT, not the OP.

Risteard

Doozergirl said:

TrixA said:

Ok, so I asked the builder and his response was that he's not currently registered for VAT, but is in the process of becoming registered at the moment. It turns out that he and his associate had previously been working for another local company, and have recently created their own company, hence they have only just reached the VAT registration threshold.

I am still a bit confused though, does this mean that we should add 20% to the price he has quoted us?

In a word, yes.   

Most of us only do this once and it confused me when we first went VAT registered, but they should be making an allowance for VAT until such time that they get their VAT number and can invoice with it.  It doesn't take long to register so unless you're starting tomorrow, they should be registered by the time you get your first invoice.  

Things like their public liability and (hopefully) contract works insurances are important here because they are new.  Are they doing things correctly is the question.  Working for someone else is totally different to going it alone as a main contractor, as several of our subbies have discovered.    Being a good general builder does not necessarily a good business, people and project manager make.  They are different skills.  

Have you checked references properly?  ie.  Who was actually managing the jobs for previous clients?  

The official position of HMRC is that they should allow the extra 20% in their quote to allow for the VAT once they become registered. They cannot detail this as VAT on the quote because they are not currently VAT registered. So it should not affect the price that the customer is to pay. So I would suggest that you are incorrect on this.