VAT Charged by Caterers

EJHome

Help please. We've employed a Caterer for our wedding and there food is good but their admin/ quoting process has been awful. Leading me to question everything. 
They are hiring glassware and equipment from another company and I've seen the quote for this which includes VAT. 
Can our caterer also charge us VAT to the price of this quote as they seem to be? 
Feels like we're paying VAT twice. 

the_lunatic_is_in_my_head

If they was paying £12 for the glassware and supplied it to you for £12 they would claim the £2 VAT back on the purchase and then charge it to you again meaning all is even. 

However if they decided to mark up the price (which they could do if they wished unless they previously agreed a certain price or to supply at cost) then the invoice to you would be higher obviously.

I’m assuming the wedding is in the future OP?

What was agreed about the glassware and more noticeable the price? 

sheramber

If the caterers are VAT registered they can recalim the VAT they paid out but they must charge you VAT on the whole purchase.

If they are not VAT registered they cannot reclaim the VAT charged to them so it will be part of the cost to you.

tightauldgit

EJHome said:

Help please. We've employed a Caterer for our wedding and there food is good but their admin/ quoting process has been awful. Leading me to question everything. 
They are hiring glassware and equipment from another company and I've seen the quote for this which includes VAT. 
Can our caterer also charge us VAT to the price of this quote as they seem to be? 
Feels like we're paying VAT twice. 

Csn you be a bit clearer on what you mean?

Are you saying that the caterer is taking the ex VAT price (say £100) claiming they paid the inc VAT price (£120) and then chargin you VAT on top of that (so you pay £144)?

If so, no they shouldn't be doing that. 

theonlywayisup

tightauldgit said:

EJHome said:

Help please. We've employed a Caterer for our wedding and there food is good but their admin/ quoting process has been awful. Leading me to question everything. 
They are hiring glassware and equipment from another company and I've seen the quote for this which includes VAT. 
Can our caterer also charge us VAT to the price of this quote as they seem to be? 
Feels like we're paying VAT twice. 

Csn you be a bit clearer on what you mean?

Are you saying that the caterer is taking the ex VAT price (say £100) claiming they paid the inc VAT price (£120) and then chargin you VAT on top of that (so you pay £144)?

If so, no they shouldn't be doing that. 

We don't know if the caterer is VAT registered or not.  We also don't know what price was agreed between the OP and caterer.  

It is usual practice for the supply chain to become more expensive as it goes up the chain.  This is irrespective of VAT being paid or not.  The OP is (as far as we know) not in a position to be reclaiming the VAT.  

In simple terms -
A VAT registered business will
buy the widget for £100 plus VAT (£120).
sell the widget to a customer for £150 incl VAT.  
His VAT return will include the £20 he is reclaiming from the purchase and the £25 from the sale.  He pays £5 to HMRC.


A non VAT registered business will
buy the same widget for £120.  
sell the widget to a customer for £150.  There is no VAT charged on this sale as he is not registered for VAT.  

user1977

As above impossible to answer without knowing what the OP's contract says - if it was actually agreed they were just going to be passing on such things at cost price then no, I don't think that implies they can add VAT onto the gross price.

DullGreyGuy

tightauldgit said:
Are you saying that the caterer is taking the ex VAT price (say £100) claiming they paid the inc VAT price (£120) and then chargin you VAT on top of that (so you pay £144)?

If so, no they shouldn't be doing that. 

When you buy something from M&S for £120 inc VAT do you think M&S only paid £100 net for the item?

In most cases you will have no idea how much a company has paid their supplier but needless to say there is normally a markup and then VAT on top. 

It totally comes down to the OP's contract... were they supplying things at cost, fixed markup or some other basis? It takes time and effort to hire something from another company and even more time if things get lost/broken and so to pass on at cost alone really would mean they are making a loss on that part of the service. A markup, say 20%, would be more normal which would mean £120 gross becomes £100 net becomes £120 inc markup net and £144 gross inc markup

born_again

EJHome said:

Help please. We've employed a Caterer for our wedding and there food is good but their admin/ quoting process has been awful. Leading me to question everything. 
They are hiring glassware and equipment from another company and I've seen the quote for this which includes VAT. 
Can our caterer also charge us VAT to the price of this quote as they seem to be? 
Feels like we're paying VAT twice. 

OP contract is with Caterer. Where caterer get the needed items from & if they are subject to VAT is not the OP issue, in fact caterer could simply state X & not include that glasses come from Y & the cost.
All OP have to do is pay the bill as presented.

tightauldgit

theonlywayisup said:

tightauldgit said:

EJHome said:

Help please. We've employed a Caterer for our wedding and there food is good but their admin/ quoting process has been awful. Leading me to question everything. 
They are hiring glassware and equipment from another company and I've seen the quote for this which includes VAT. 
Can our caterer also charge us VAT to the price of this quote as they seem to be? 
Feels like we're paying VAT twice. 

Csn you be a bit clearer on what you mean?

Are you saying that the caterer is taking the ex VAT price (say £100) claiming they paid the inc VAT price (£120) and then chargin you VAT on top of that (so you pay £144)?

If so, no they shouldn't be doing that. 

We don't know if the caterer is VAT registered or not.  We also don't know what price was agreed between the OP and caterer.  

It is usual practice for the supply chain to become more expensive as it goes up the chain.  This is irrespective of VAT being paid or not.  The OP is (as far as we know) not in a position to be reclaiming the VAT.  

In simple terms -
A VAT registered business will
buy the widget for £100 plus VAT (£120).
sell the widget to a customer for £150 incl VAT.  
His VAT return will include the £20 he is reclaiming from the purchase and the £25 from the sale.  He pays £5 to HMRC.


A non VAT registered business will
buy the same widget for £120.  
sell the widget to a customer for £150.  There is no VAT charged on this sale as he is not registered for VAT.  

If the caterer is VAT registered or not makes no difference to my point as they shouldn't be double counting the VAT either way. 

The OP indicated that the caterer is adding VAT onto the bill so presumably they are registered. And if so you don't charge VAT on top of VAT. 

Which is why I asked for clarification 

tightauldgit

DullGreyGuy said:

tightauldgit said:
Are you saying that the caterer is taking the ex VAT price (say £100) claiming they paid the inc VAT price (£120) and then chargin you VAT on top of that (so you pay £144)?

If so, no they shouldn't be doing that. 

When you buy something from M&S for £120 inc VAT do you think M&S only paid £100 net for the item?

In most cases you will have no idea how much a company has paid their supplier but needless to say there is normally a markup and then VAT on top. 

It totally comes down to the OP's contract... were they supplying things at cost, fixed markup or some other basis? It takes time and effort to hire something from another company and even more time if things get lost/broken and so to pass on at cost alone really would mean they are making a loss on that part of the service. A markup, say 20%, would be more normal which would mean £120 gross becomes £100 net becomes £120 inc markup net and £144 gross inc markup

Yes indeed but the OP didn't ask about a markup. They asked specifically about VAT being charged on top of VAT. 

Which IF that is happening isn't correct. 

Which again is why I asked the OP to clarify exactly what they meant. 

sheramber

if the OP gave us the quote figures for the glasses company and the caterers it could be clarified but since they have not reappeared to do so we are working in the dark.