Car crash fence damage, VAT on top of VAT?

bex88

Hi all, hoping someone in the know may be able to advise.

One of my family members recently crashed his car into the metal security fencing of a company's property. The company has sent him (well, sent to mum) an invoice for the cost repairs, which have been carried out. 

On the invoice, it shows the cost +VAT added for the repair, totalling £1776, however the company has spoke to mum and said to note that VAT will be charged on top of the repair cost... Is this allowed? As that means the company is actually then surely getting more than the total cost of repair.

Hope that makes sense,

Thank you

Car_54

The company doesn't "get" VAT, the Treasury does.

MikeJXE

The insurance company should nave been handling this from the start of the accident 

Mildly_Miffed

The repair bill will almost certainly include both a VAT exclusive and a VAT inclusive figure. VAT is payable on the exclusive figure, taking it to the inclusive.

So...
£1,776 + VAT = £2,131 inc VAT
- or -
£1,776 inc VAT = £1,480 + VAT

As he's not VAT registered, if he was paying it himself, he would have to pay the VAT inclusive price - but obviously he only needs to pass the invoice to his insurer, and move on with life.

Unless, of course, he's planning on fraud by not claiming, paying himself, and pretending this never happened when he gets insurance quotes in the future? Very daft idea indeed, which will very likely come back to bite him HARD.

Also, not exactly the moral highground to complain about the company whose property he damaged having to charge VAT on the cost, while simultaneously defrauding insurers.

MeteredOut

So the company whose fence was crashed into has a repair bill that is  £1480+VAT (£1776).

And they sent the mum an invoice for £1776 + VAT (which would be £2131)?

That cannot be correct. Has she explicitly been told that, or does the invoice just say something along the lines of VAT will be added at applicable rate?

Notwithstanding whether this is/should be going via the insurers, I can't see how the company can apply VAT to the repair cost. The mum/insured person is not purchasing a service from the company.

bex88

MeteredOut said:

So the company whose fence was crashed into has a repair bill that is  £1480+VAT (£1776).

And they sent the mum an invoice for £1776 + VAT (which would be £2131)?

That cannot be correct. Has she explicitly been told that, or does the invoice just say something along the lines of VAT will be added at applicable rate?

Notwithstanding whether this is/should be going via the insurers, I can't see how the company can apply VAT to the repair cost. The mum/insured person is not purchasing a service from the company.

Yes this is exactly right and what I (and his mum) was wondering. Yes she has spoke to a lady from the company today and she said that there will be VAT added on top of that repair bill invoice.

Mildly_Miffed

MeteredOut said:

The mum/insured person is not purchasing a service from the company.

Yes, they are. They're purchasing a repair to the fence they damaged.

sheslookinhot

Mildly_Miffed said:

The repair bill will almost certainly include both a VAT exclusive and a VAT inclusive figure. VAT is payable on the exclusive figure, taking it to the inclusive.

So...
£1,776 + VAT = £2,131 inc VAT
- or -
£1,776 inc VAT = £1,480 + VAT

As he's not VAT registered, if he was paying it himself, he would have to pay the VAT inclusive price - but obviously he only needs to pass the invoice to his insurer, and move on with life.

Unless, of course, he's planning on fraud by not claiming, paying himself, and pretending this never happened when he gets insurance quotes in the future? Very daft idea indeed, which will very likely come back to bite him HARD.

Also, not exactly the moral highground to complain about the company whose property he damaged having to charge VAT on the cost, while simultaneously defrauding insurers.

In what way are insurers being “defrauded” ?

sheslookinhot

Tell your mum, to send the invoice back. She has no obligations in this matter.    Ask the company to see the 3 quotations they got before commencing the work. If they can’t, leave them to it.

Mildly_Miffed

sheslookinhot said:

Mildly_Miffed said:

Unless, of course, he's planning on fraud by not claiming, paying himself, and pretending this never happened when he gets insurance quotes in the future? Very daft idea indeed, which will very likely come back to bite him HARD.

Also, not exactly the moral highground to complain about the company whose property he damaged having to charge VAT on the cost, while simultaneously defrauding insurers.

In what way are insurers being “defrauded” ?

By a policyholder lying about their driving history in order to get a lower price than would be the case if truthful answers were given?

LightFlare

MikeJXE said:

The insurance company should nave been handling this from the start of the accident 

This -- it will have to be declared anyway (depending on the exact wording of the question asked and the current contract)

Failure to disclose could result in cancellation of insurance which could make £2k seems like not a lot