VAT Charged by Caterers

theonlywayisup

tightauldgit said:

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 

They aren't 'double counting' the VAT.  I was explaining how the VAT works as it seems to have completely side stepped some people.

The caterer will be charging whatever they have agreed/want to charge PLUS VAT.   

Lets put it a simple way.  

The caterer has been charged £100 plus VAT.  He then sells that to the OP for £120 plus VAT.  It is a coincidence that the gross purchase price is the same as the net sale price. There is only one part of VAT on that sale, the £24 the seller has charged. 

user1977

theonlywayisup said:

tightauldgit said:

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 

They aren't 'double counting' the VAT.  I was explaining how the VAT works as it seems to have completely side stepped some people.

The caterer will be charging whatever they have agreed/want to charge PLUS VAT.   

Lets put it a simple way.  

The caterer has been charged £100 plus VAT.  He then sells that to the OP for £120 plus VAT.  It is a coincidence that the gross purchase price is the same as the net sale price. There is only one part of VAT on that sale, the £24 the seller has charged. 

Yes, that's fine if the OP has agreed to pay the caterer's price of £120 plus VAT and the cost to the caterer is completely irrelevant - but I'm assuming from the question (and the fact the OP has even seen the supplier's invoice) that they're expecting these items to be provided at cost price, not with any markup.

But I guess we'll never know unless the OP logs in again...

tightauldgit

theonlywayisup said:

tightauldgit said:

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 

They aren't 'double counting' the VAT.  I was explaining how the VAT works as it seems to have completely side stepped some people.

The caterer will be charging whatever they have agreed/want to charge PLUS VAT.   

Lets put it a simple way.  

The caterer has been charged £100 plus VAT.  He then sells that to the OP for £120 plus VAT.  It is a coincidence that the gross purchase price is the same as the net sale price. There is only one part of VAT on that sale, the £24 the seller has charged. 

I agree that could well be the case, however that's not the information the OP provided to us so I don't see how you came to that conclusion. Unless the OP comes back to clarify then we don't know. 

EJHome

Hi All, I think this is far more complicated than I first realised. 
I'll try and provide some figures for clarity. Firstly I would assume they are Vat registered, as they are a large company and definitely intending to charge us Vat. 

Our Quote looks like follows.
TOTAL COSTS: Item Cost Food £ 2,761.00
Hire & Equipment £ 1,250.00
 Staff £ 1,925.00
Rubbish Removal £ 175.00
 Damage deposit £ 60.00
Street Food £ 250.00
TOTAL £ 6,421.00
VAT £ 1,284.20
TOTAL INC VAT £ 7,705.20

The Hire & Equipment line £1250 is a cost being paid direct to another company for glassware, crockery ect. I have seen this itemised quote which includes VAT in the £1250 figure. Our Caterer have clearly included this whole figure in their total and then added 20% vat. We are effectively paying vat on this line item twice is that correct? 

This might look like penny pinching but the whole thing is so expensive any saving helps. 

tightauldgit

EJHome said:

Hi All, I think this is far more complicated than I first realised. 
I'll try and provide some figures for clarity. Firstly I would assume they are Vat registered, as they are a large company and definitely intending to charge us Vat. 

Our Quote looks like follows.
TOTAL COSTS: Item Cost Food £ 2,761.00
Hire & Equipment £ 1,250.00
 Staff £ 1,925.00
Rubbish Removal £ 175.00
 Damage deposit £ 60.00
Street Food £ 250.00
TOTAL £ 6,421.00
VAT £ 1,284.20
TOTAL INC VAT £ 7,705.20

The Hire & Equipment line £1250 is a cost being paid direct to another company for glassware, crockery ect. I have seen this itemised quote which includes VAT in the £1250 figure. Our Caterer have clearly included this whole figure in their total and then added 20% vat. We are effectively paying vat on this line item twice is that correct? 

This might look like penny pinching but the whole thing is so expensive any saving helps. 

As others have said it really depends what you agreed with your caterer - if you agreed the costs would be passed on to you without any markup then it's not right but on the other hand the caterer can charge what they want if that's what you agreed to pay. 

You have nothing to lose by contacting the caterer and asking politely if that's an error on their part or how they've arrived at the pricing. 

DullGreyGuy

EJHome said:

Hi All, I think this is far more complicated than I first realised. 
I'll try and provide some figures for clarity. Firstly I would assume they are Vat registered, as they are a large company and definitely intending to charge us Vat. 

Our Quote looks like follows.
TOTAL COSTS: Item Cost Food £ 2,761.00
Hire & Equipment £ 1,250.00
 Staff £ 1,925.00
Rubbish Removal £ 175.00
 Damage deposit £ 60.00
Street Food £ 250.00
TOTAL £ 6,421.00
VAT £ 1,284.20
TOTAL INC VAT £ 7,705.20

The Hire & Equipment line £1250 is a cost being paid direct to another company for glassware, crockery ect. I have seen this itemised quote which includes VAT in the £1250 figure. Our Caterer have clearly included this whole figure in their total and then added 20% vat. We are effectively paying vat on this line item twice is that correct? 

This might look like penny pinching but the whole thing is so expensive any saving helps. 

No, they are adding a 20% markup to represent the time/effort of arranging the hire, dealing with any damages/losses etc etc

If you sell at cost you quickly go out of business. 

Altior

Have a read of this, OP.

https://www.gov.uk/guidance/vat-costs-or-disbursements-passed-to-customers

EJHome

Altior said:

Have a read of this, OP.

From this looks like it should be treated as a disbursement. Think I'll ask the company. 

user1977

EJHome said:

Altior said:

Have a read of this, OP.

From this looks like it should be treated as a disbursement.

So you hadn't agreed anything in particular about whether they would be charging you at cost or not?

DullGreyGuy

EJHome said:

Altior said:

Have a read of this, OP.

From this looks like it should be treated as a disbursement. Think I'll ask the company. 

Disbursements are a very specific thing hence the list of conditions that must be met and are only really common when dealing with solicitors etc.

For example the 3rd bullet... had you paid your company but they had failed to pay the equipment hire company would you have expected to be liable to pay them directly?  If not, its not a disbursement and they are simply subcontracting

There is nothing in your bill about them arranging the hire too whereas a solicitor will charge ATE Insurance as a disbursement but add on 30 minutes of effort for having arranged it/dealt with it.