Losing Out On Jobs Because Not VAT Registered.

[SimonG]

Priced up a barn conversion. Twenty four thousand pounds materials and Labour. Labour was just under seven thousand.

Now the customer apparently only has to pay 5% vat, and has come back this morning to say he is probably going to go with the other company as they are cat registered and it will be easier.

Anybody had the same thing? Anybody any creative ideas to overcome this?

 

[Harvest Fields]

Nope. I normally get the opposite.

 

[SimonG]

Nope. I normally get the opposite.

Normally the same, but apparently it's the only having to pay 5% vat and him claiming back the additional vat on materials.

 

[chris watkins]

Is it Grant funded Si ?

 

[chris watkins]

Maybe draw there attention to this from the VAT man
Energy-saving materials and heating equipment (VAT Notice 708/6)
From what I can see they can't claim back anything. If the other contractor is VAT then it would only be grant funded only or applies to limited areas like controls & renewables.

 

[SimonG]

No, not grant funded Chris. Something to do with it being derelict for a number of years.

 

[Scott_D]

They buy materials and no vat on labour?

 

[Ric2013]

I've had something similar. Customer was blind and new shower cubicle was classed as an adaptation, so he was exempt from having to pay VAT, but I wasn't going to charge VAT. All I could suggest was that he buy his own materials.

 

[SimonG]

This was what he sent me this morning.


I will let you know shortly, but with such a big part of the job being materials I may have to go with someone who is VAT registered. This will not only save me quite a bit now, but should make the eventual overall VAT refund more straightforward as everything will be at 5%.

 

[Harvest Fields]

This was what he sent me this morning.


I will let you know shortly, but with such a big part of the job being materials I may have to go with someone who is VAT registered. This will not only save me quite a bit now, but should make the eventual overall VAT refund more straightforward as everything will be at 5%.

I would leave him to it mate.

 

[ShaunCorbs]

Order the materials get him to pay for them if he’s ok with that

 

[Harvest Fields]

Order the materials get him to pay for them if he’s ok with that

I would rather do everything. But that is an option I suppose.

 

[SimonG]

Aye, just going to e-mail back and wish him good luck with his build.

 

[ShaunCorbs]

I would rather do everything. But that is an option I suppose.

But you are all your not doing is paying for them

 

[Harvest Fields]

But you are all your not doing is paying for them

Just how I am mate.

 

[SimonG]

Just phoned him and wished him a smooth project.

 

[Ric2013]

You know what? You can't win them all. Sometimes the right thing to do is let someone else have the contract.

 

[Best]

You can’t do all the good work offered to you.
Re the Vat, -
Not sure exactly, but there are some rules that the vat reduces and drops to 5% if a house has been derelict for over 10 years. Think it has to be a private home though, not for profit.
Another piece of info about vat is it can be fully claimed back on more than just new buildings. A ‘new dwelling’ also means a barn conversion, as never previously was a dwelling.

 

[kris]

Doesn't matter the percentage because as the vat is not his to claim back , the fact he's asking you if your vat registered sounds to me like he automatically thinks you or who ever gets the job will simply give him the vat back, that's a lot for a tradesman to loose out on. Or am I not understanding it lol

 

[Best]

Doesn't matter the percentage because as the vat is not his to claim back , the fact he's asking you if your vat registered sounds to me like he automatically thinks you or who ever gets the job will simply give him the vat back, that's a lot for a tradesman to loose out on. Or am I not understanding it lol

I assumed the customer just saw the benefit that a vat registered installer could claim it back, therefore the customer wouldn’t have to pay the extra for the vat in the first place and try to retrieve it later.

 

[Ric2013]

Agree. Whereas a non-VAT installer would be lumbered with paying 20% VAT on materials which would put them at a disadvantage against an installer that pays no VAT on materials and only has to charge the customer 5% in this case.

Unless the job price is 4 x the cost of materials, then the VAT reg'd business has the edge.

 

[firemant]

Doesn't matter the percentage because as the vat is not his to claim back , the fact he's asking you if your vat registered sounds to me like he automatically thinks you or who ever gets the job will simply give him the vat back, that's a lot for a tradesman to loose out on. Or am I not understanding it lol

You are misuderstanding. VAT is never the tradesmans.

Things may have changed, but I was under the impression that converting anything (completely non residential) to a dwelling was ZERO rated. It may be 5%, I may have misunderstood that bit myself.

However, any reduction of VAT is for the clients benefit. It used to be the case (when I had a shop) that new builds into which we installed products were zero (or exempt, cant recall which) rated. We paid VAT on our pruchases, claimed that back as normal, but obviously there was no VAT to pass on from that job.

Where we supplied only (Fires and Fireplaces), we would charge the VAT at normal rates, and the client would claim the VAT back (at the end of the build, I beleive)

 

[firemant]

A quick Google found this:
Claim VAT refunds if you build new houses on a DIY basis

It seems ALL the VAT is reclaimable, where does the 5% discussed here come from? 5% is the rate applied to certain energy controls, much of which was always a mystery to me, and even HMRC disagreed with CORGI when they offerred a VAT claim back for installers.

In fact, as I write, I am thinking maybe that iwhere Kris was coming from. CORGI used to (and maybe still do) had a program whereby you as an installer would use their system to claim 5% on boiler changes, in return for commission. The installer DID get the benefit of this, but only if they quoted a single figure. If you quoted "VAT included at 20%" or "£x Plus VAT", any reclaim would have to be refunded to the client. If you quoted "£***", then you could keep the reclaimed VAT.
But HMRC claimed CORGI were claiming for non qualifying products, and I agreed with them, so never got involved.

 

[Best]

Vat can vary depending on how long a period a house has been vacant that is being refurbished I believe

 

[firemant]

Vat can vary depending on how long a period a house has been vacant that is being refurbished I believe

The OP referred to a barn - which presumably has never been residential.
I do not believe any refurbishment projects of derelict homes EVER get VAT relief of any sort.
But I am always prepared to be corrected with actual evidence.

 

[Best]

The OP referred to a barn - which presumably has never been residential.
I do not believe any refurbishment projects of derelict homes EVER get VAT relief of any sort.
But I am always prepared to be corrected with actual evidence.

They do. Not sure of the details, but if a house has not been occupied for a certain number of years (I think 10 or more), then vat is reduced.

A barn or outbuilding, as you say, is not a dwelling and would be vat free to be converted into a dwelling

 

[SimonG]

Appreciate the comments, but the ship has sailed.

I still can't figure it out but won't lose sleep over it.

Cheers.