Car crash fence damage, VAT on top of VAT?

TooManyPoints

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

Yes, but not from the owners of the fence.

The fence-owners are not providing anything to do with the repair - neither materials nor labour. They have added no value to the goods and services provided. All they are doing is passing on an invoice from the repairers to the person who caused the damage. If the driver settled the repairer's invoice directly there would be no question of VAT being claimed by the fence owners. 

There was a case a while back where a garage (A) which did not undertake MoT tests for its customers relied on an MoT approved garage (B) to do that if a customer wanted an MoT along with other work. Garage B invoiced garage A for the tests (which are exempt from VAT) and garage A simply charged its customers the total of that invoice, with no VAT added.

The VATman argued that garage A should charge VAT on the amounts it billed its customers for the MoT tests carried out by garage B as it was part of the service that garage A was providing. The case went to court and the judge found against the VATman saying that the services provided by Garage B are beneficial to the customer only, not to garage A and that garage A has no interest in the transaction on which charging VAT would be appropriate.  

So it is with this. The fence owners have no interest in the transaction between the repairers and the OP which would allow them to charge VAT. They have simply got somebody else to mend their fence and are passing on the bill.

Leaving aside why insurers are not involved in this or where "mum" fits into the scheme of things, the simplest way for the OP to deal with this is to settle the invoice directly with the repairers. If the fence owners have already paid it they can claim it back - including the VAT.

Aretnap

sheslookinhot said:

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.

So long as the cost of the repairs is "reasonable" it can be claimed from the at fault party. There is no obligation to get three quotes and choose the cheapest - that's based on outdated law to the extent that it was ever true. 

Ultimately though whether the garage are trying it in isn't really the issue. The OP's family member either comes to an agreement with the fence owner that both are happy with, or passes the matter over to his insurers to deal with. If he is keen not to pass it over to his insurers (I presume he isn't, or he'd have done it already) that doesn't leave him in a strong position - if they insist then he either pays what they're asking for, or his insurers get involved.

sheslookinhot

Mildly_Miffed said:

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?

You’ve no way of knowing how the OP will react to insurance quotes in the future. 

You provide good advice to people at times, but I suggest that you don’t question people’s morals.

Hoenir

Possibly they might regard the "additional 20%" VAT ( that charged on the subcontrct work) to cover their own time internally. This itself will be liable to VAT. 

TooManyPoints

"Possibly they might regard the "additional 20%" VAT ( that charged on the subcontrct work) to cover their own time internally. This itself will be liable to VAT."

But it's not subcontract work. Presumably the fence owner (a motor dealer) is not in the business of repairing fences so he is letting a contract (to repair the fence) not sub-contracting part of his own business out. It was a crucial finding in the garage case I mentioned that garage A did not provide MoT tests. So the service which garage B provided for garage A's customers was not one garage A could provide. 

But that aside, if the fence owner wants to charge for his own time dealing with the matter, he must invoice it separately so that it can be checked that it is reasonable. VAT may be appropriate on that charge only. 

  

.  

bex88

400ixl said:

Only if their policy was in the thousands already would it possibly worth it. For most people they would not get bills over the next few years that are that level even if they didn't have a protected no claims.

If it were a young driveron the policy, maybe.

Yes correct, they are a not long passed young driver.

One way to fix this is to tell the company that she can't pay an invoice she doesn't have and ask them to produce the invoice she is being asked to pay. Tell them she needs it for her insurers. The process of the company having to produce an invoice with their own company VAT details should hopefully make them realise they're being silly.

I think its probably a mistake rather than the company actually trying to fiddle things.

Could also ask to speak to the manager/whoever is their financial controller.

I think you may be on to something there - I have read your response to his mum and she came back a little later saying that yes, perhaps the lady she spoke to on the phone may have verbally got it wrong, as after re-reading the email she was sent seems to imply they owe what is on the original repair invoice. Fingers crossed it was just a mistake then. Another email sent asking for payment details etc... so we'll see.  But thank you!

LightFlare

The incident-accident will most likely still need reporting to the insurance company.

Get the documents out and read VERY carefully what it says about declaring incidents and accidents

DullGreyGuy

LightFlare said:

The incident-accident will most likely still need reporting to the insurance company.

Get the documents out and read VERY carefully what it says about declaring incidents and accidents

There is no "likely" about it... it will need to be declared. The only question will be if it has to be reported as soon as is practicably possible or if you can hold off until renewal, almost certainly its the former as the insurer wants to be on the front foot if the third party decides to approach them to make a direct claim

Mildly_Miffed

It may be that the driver is informing their insurer on a "no claim, just information" basis, which will then be declared annually for as long as necessary - five years.

If their excess is above the cost of the damage, then there may be a very small financial benefit to doing that.

But...

Ditzy_Mitzy

Forgetting the accident, as it's only tangentially relevant to the OP's question, the straightforward answer is that there does appear to be a double-VAT charge in the offing.  

The garage, as a VAT-registered firm, are able to reclaim any VAT paid to VAT-registered external parties who supply VAT-able goods/services.  Reclaims are made either because the goods/services are bought for the benefit of the firm or because VAT will be charged on a downstream transaction (i.e. a shopkeeper buying VAT-able goods wholesale and selling them retail inc. VAT).  In the second example, VAT is paid by the end purchaser, the consumer, and the shop benefits by being able to offer the goods for sale net initial VAT; this offers an advantage when it comes to pricing as the retailer can eliminate the VAT payment to the wholesaler from the margin.  

What seems to be happening here, however, is that the garage are not doing what they should.  They appear (I intuit) to have paid the fencer's invoice, which included VAT, and have then invoiced the OP's brother for reimbursement - the downstream transaction.  The garage will be in a position to reclaim the VAT on the initial transaction so should, all things being equal, knock the fencer's VAT portion off when they invoice the brother net (actual charge pre-garage's own VAT) and then apply their own VAT to that amount.  That way, the fencer, the garage and the Revenue all receive what they should and the brother doesn't pay over the odds.

I don't believe, however, that there is any mechanism available to the consumer - the brother - to compel the garage to do the above.  Instead, they appear to have paid the initial invoice and fencer's VAT, and have then treated the gross payment to the fencer as the net on the downstream invoice to the brother.  VAT has been added by the garage, as per, meaning the brother ends up paying the Revenue too much - the transaction value has been inflated - and the garage get to pocket the initial VAT payment when they reclaim it.  

Advice?  None really, sorry, other than questioning the matter with the garage to see if this is a clerical error rather than gamesmanship.