Roofer Invoice Charging VAT but No VAT Number

Risteard

MapleTrees said:

Section62 said:

The question is whether him not informing you that he had become VAT registered and would have to add VAT to the invoice is a misleading omission for the purposes of the legislation.  As I indicated above, I don't think this is a clear cut 'yes'. It will depend on the timing, and exactly who said what when.

What he should have done was to tell you about it before starting work, which would have allowed you to compare his new price with the other quotes you had - but he was also under no obligation to go ahead with the work at the original price if you refused to pay the VAT.

The VAT liability came about because the trader's circumstances changed, just as the VAT liability would change if the government increased (or decreased) the VAT rate between quotation and invoicing.

It is an unfortunate situation, which the trader has agreed to resolve to your satisfaction.  But I can understand why they are less than happy at being accused of doing something illegal.

I'm struggling to see how the situation is not clear-cut. I have set out the communication trail. The trader quoted several weeks ago and we accepted the quote which was expressly ex VAT. After invoicing us post-work I queried the higher price. He said that he had to register for VAT last month, hence the new figure. The VAT situation won't have just crept up on him. He will have known that he was approaching the VAT threshold. I believe he had plenty of time to let us know about the change. We would then have had the option to agree the new quote or look elsewhere.

There is no possibility I would have expected him to warn us about his new circumstances and then expect he still proceeds with the work ex-VAT. That has never been a suggestion.

It seems straightforward - my understanding is that the customer must be aware of the VAT burden up front (it was made clear to us there was none) and that VAT must be set out on the quote which was agreed. You can’t retrospectively add VAT to the invoice - that would require a new quote showing the new VAT. I don't think there is any ambiguity there.

I raised this with him politely and he said that he 'had to' add the VAT to all the old quotes. I see nothing wrong in pointing out an improper course of action and I did let him off the hook by suggesting he may have been mis-advised. I feel it was valid to point out the legislation given his reply.

Yes, the situation has been rectified (I believe he is obliged to) and I have thanked him. I feel it would have been better if he had acknowledged it rather than suggesting I was unreasonable in querying his actions (as in his statement that everybody else was fine with it). 

It wasn't ex VAT. There was no VAT. A quote ex VAT is where there is still VAT, but this isn't the quoted figure, e.g. with wholesalers.

outtatune

'Dear Mr Scaffolder. You quoted me £x and that is what I will pay you, not £1.2x. Your VAT status is of no concern to me. Yours sincerely, me.

the_lunatic_is_in_my_head

Section62 said:

MapleTrees said:

Section62 said:

MapleTrees said:

Should I even respond to this?  Or I could politely point out the rules - in case he genuinely doesn't know that it's illegal to invoice for VAT without raising a new quote first for the client to agree?

I have my doubts it is "illegal" to do what the trader has done.  The relevant legislation is designed to deal with traders who deliberately set out to con customers.  It doesn't make any provision for situations where there is a change of circumstances, for example becoming VAT registered.

The trader has done wrong in not communicating to you that he would now have to add VAT to the previously quoted price, but has corrected that by (apparently) taking the loss himself.

The legislation states that a trader is not acting within the law if they add VAT to an invoice when it was not set out on the quotation. So surely it is illegal, as I read that. 

To be clear - there is no prospect I would shop the trader!

A change of circumstances is surely immaterial - there was ample opportunity to communicate that before the work commenced but the trader chose not to.

You say that he is bearing the loss himself, as if I'm unreasonably imposing that on him. In fact he attempted to pass on his new liability to me in a way which removed my right to refuse. He has only corrected that because I have pointed it out to him - again, not unreasonably. 

I've run a small business and if I issued a quote, did the work, and then sent an invoice for substantially more because my suppliers had raised their prices in the interim (which they often did) I think my customers would have thrown the book at me. With an 'estimate' it would have been easier to deal with.

Which legislation states the BiB?

The Consumer Protection from Unfair Trading Regulations 2008 you've quoted to the trader doesn't state anything like that.

The legal opinion linked to earlier in the thread suggests not including VAT in a quote but subsequently adding it could be a misleading omission (Regulation 6) but whether it is or isn't depends on interpretation of the facts of the case.

At the time the trader produced the quote he wasn't VAT registered, so not only did he not need to include VAT, it would have been unlawful for him to have done so.  He couldn't be prosecuted for a misleading omission for not including VAT in the quote.

The question is whether him not informing you that he had become VAT registered and would have to add VAT to the invoice is a misleading omission for the purposes of the legislation.  As I indicated above, I don't think this is a clear cut 'yes'. It will depend on the timing, and exactly who said what when.

The trader hasn't "removed [your] right to refuse".  You refused, he agreed to amend the invoice.  What he did in terms of adding VAT to the invoice is entirely in accordance with his legal obligation to do so.  What he should have done was to tell you about it before starting work, which would have allowed you to compare his new price with the other quotes you had - but he was also under no obligation to go ahead with the work at the original price if you refused to pay the VAT.

This isn't the same as you increasing your prices because your suppliers were charging more.  VAT is a tax which you - as the end customer - are obliged to pay.  The VAT liability came about because the trader's circumstances changed, just as the VAT liability would change if the government increased (or decreased) the VAT rate between quotation and invoicing.

It is an unfortunate situation, which the trader has agreed to resolve to your satisfaction.  But I can understand why they are less than happy at being accused of doing something illegal.

For all contract types the trader is to provide the consumer

the total price of the [F2goods, services or digital content] inclusive of taxes, or where the nature of the [F2goods, services or digital content] is such that the price cannot reasonably be calculated in advance, the manner in which the price is to be calculated;

without this the consumer is not bound by the contract. 

The issue is that any trader should register for VAT when they expect to cross the threshold in the next 30 days, one could suggest the trader has had an influx of work over the last 3 months that wasn't expected but it seems unlikely. 

A contract may have clauses that permit alterations but they need to not fall foul of the CRA list of terms that may be unfair, notably:

A term which has the object or effect of enabling the trader to alter the terms of the contract unilaterally without a valid reason which is specified in the contract.

On which we can only look to guidance and that from CMA states:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/450440/Unfair_Terms_Main_Guidance.pdf

If a term could be used to force the consumer to accept unanticipated costs

or penalties, new requirements, or reduced benefits, it is likely to be

considered unfair whether or not it is meant to be used in that way. A

variation clause can upset the legal balance of the contract, even though it

was intended solely to facilitate minor adjustments or corrections, if its

wording means it could be used to impose more substantial changes.

5.21 on page 100 if anyone wished to read more. 

Separately, a breach of the CPRs do not require intent, they are instead measured against the requirements of professional diligence, one may put forward an argument that the trader's lack of awareness of their obligations of when to register for VAT may contravene that but ultimately it's extremely unlikely for a small trader to be prosecuted over something like this. There is however right of redress for the consumer which I assume would be decided on the balance of probability in small claims.

Ultimately the trader shouldn't be asking for more money if a contract was formed, their VAT registration is going to cost them 16.6% off the gross as a "loss" for the quotes without the VAT added and such is the cost of doing business. If the trader has had an that unexpected influx of sales then his business is booming and the short term loss will be more than made up by their future successful business endeavours. Basically you can't win every time when running a business but if you win overall that's a good result.  

Whether the scaffolder had an obligation to fulfil the contract at the agreed price would depend upon whether a contract was formed, had it been formed it's unlikely a court would demand specific performance (and neither would that help the OP) but OP may have had a claim for damages for any additional mitigated costs of sourcing the service from an alternative trader. 

Hopefully the guy will put the scaffolding up, take the original amount in payment and everything will be hunky dory.