VAT charged by VAT-registered company but payment had to be made to a non-VAT registered person

Brunnhilde

The company charged me for the units, but VAT on both the units and fitting. I was told to pay the fitter (who is not VAT registered) for his work excluding the VAT which the company had charged me. The fitter did not invoice me.

TheGreenFrog

There are some responses to the same question you posed on 

https://forums.moneysavingexpert.com/discussion/6529517/building-work-vat-on-quote-but-subbed-out-to-non-vat-registered-business

You need to insist that the supplier gives you a proper VAT invoice before you pay them.  If they are properly subcontracting to a non-VAT registered business then, because they are responsible to you for the work of the subcontractor, they will incorporate the subcontractor's charges into their invoice to you and charge VAT on the whole lot.  That is the way it works.  It is however suspect that they ask you to pay the subcontractor direct - so make sure that the subcontractor's labour is included in the supplier's VAT invoice, that VAT is charged on the whole amount, and that you receive a credit to the final total reflecting the payment you made.  So for example (where £4,000 is the amount you paid to the fitter):  

Supply and fit of kitchen:  £7,000
VAT:                                   £1,400

Total:                                £8,400

LESS amount paid:          £4,000

Balance outstanding:       £4,400

Grumpy_chap

rob7475 said:

I'd drop into conversation how you work for HMRC and you'll need a VAT receipt / invoice before you can pay it.

Frankly, the tradesperson will know straight off that is an untruth.
VAT invoices are only required when a VAT-registered business is selling to a VAT-registered business.

MysteryMe

It is not an untruth. Leaving aside businesses using one of the margin schemes (mainly second hand cars)   It is a requirement to issue a VAT invoice to another VAT registered business however if one is requested by a customer who is not VAT registered, a VAT invoice must also be issued. Depending on the amount it can be a simplified version.  The only difference to when I used to be a VAT inspector is the amount, it was £50 in my day and now it's £250
 

DullGreyGuy

You contract me to do a job and I quote it as £30,000 + VAT so £36,000

I decide to subcontract a big chunk of it out as labour only and so the sub invoices me for £20k or £20k+VAT it makes no difference as if its the later I just offset the £4k VAT I've paid against the £6k VAT you've paid me so its just a temporary cashflow consideration. 

There would be a difference were it to be a labour and materials deal because the non-VAT registered would be invoicing me including the VAT they'd paid but then in that scenario I would have them as labour only other than sundries as not to trap that VAT.

The OP's situation is messy because it's unclear on the contractual relationships, they've been paying the sub not the contractor and the sub not the contractor produced an invoice. 

Section62

See also...

https://forums.moneysavingexpert.com/discussion/comment/81359455

Brunnhilde

Thank you so much. Looks as though they were right to charge me the VAT for the fitting even though he is not registered for VAT then. I will file my papers now!

System

This discussion was created from comments split from: Building work VAT on quote but subbed out to non-VAT registered business.