VAT on VAT (on invoices)? Phenomenally tedious.

Background

As griped about elsewhere on here, I have an ongoing insurance claim situation.

I have an excess to pay. Fine.

The insurance company has also stated that my policy doesn’t fully cover replacement of matching undamaged items. I.e. kitchen worktop and tiles that have not been directly damaged but will have to be removed and replaced so that’s things match.

The agreement is that I pay 50% of these costs. Not ideal. But fine.

Situation

The discussed breakdown of my contribution was suggested via email as being:

Remove, dispose and replace wall tiles - 3m2 @ £22m2 as per choice.

Labour costs: £180.00
Material costs: £66.00
Total Tiling costs = £246.00+VAT

Remove, dispose and replace worktops - 2 lengths @ £89 per length as per choice.

Labour costs: £100.00
Material costs: £178.00
Total worktop costs: £278.00+VAT

Tile Costs £246.00
Worktop Costs £278.00
Sub-Total £524.00
VAT @ 20% £104.80
Total £628.80

And in the actual invoice, only the tiling and worktop subtotals are present. No mention of a split between materials supply and labour. Which feels like an attempt to bury the VAT on VAT thing

Query

Hang on. The actual B&Q shop shelf price of the tiles, inclusive of VAT, is £22. Similarly, £89 for the stated worktop price. Which means their breakdown is asking me to pay VAT on VAT, right?

And that wouldn’t usually be an issue. The contractor can apply whatever markup they like for supply of materials. They don’t have to tell me what deals they’re getting

But this feels different to a normal private works situation. It’s me contributing a portion to insurance replacement costs, not commissioning work outright. And I resent the thought of paying over the odds unnecessarily. Cos, as I understand it, the contractor won’t actually be paying VAT when they buy the materials (or, if they do, they can claim it back).

Actual Questions

Am I being asked to pay VAT on VAT?

If yes, should I be doing so?

:sleeping: :sleeping: :sleeping:

What’s all VAT about!?

5 Likes

i would do anything for love (but i won’t do VAT)

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Nice.

Hmmm.

Almost exceptional. Not sure the second half is needed.

Well what do think about VAT?
Now you know how I feel

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VAT calls for a Carlsberg

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rate drop!
oh! oh!
you got a 20pc rate, get your hands up
you got a 5pc rate, get your hands up
you got a 0pc rate, get your hands up

vatman scoop, hmrc
vatman scoop, hmrc

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Oh fuck, this is good

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The contractor may argue that they’re charging a markup on the price they pay for sourcing the materials?

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WZA, you know you better, watch out
Some contractors, some contractors are only about

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VAT’s an absolute fucking minefield. I know accountants who don’t really understand it. First rule i was taught though was you can’t pay VAT on something twice. Materials should be invoiced nett of VAT.

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Redeemed.

Very possibly not. The admin bullshit, general incompetence, and demands on my time connected to the claim is genuinely taking its toll. The comedy responses are some welcome light relief.

They may well argue that. But it can’t be right and proper that I’m paying a mark up (coincidentally identical to VAT) for them sourcing materials that they are obliged to source under cover of the insurance job anyway.

(What I haven’t mentioned is the fact that their survey measures are bullshit. But that’s a slightly separate issue that I was going to revisit in a shakedown after completion, but which will be slightly harder to do if they’ve omitted their workings from the invoice).

This, ultimately, is my feeling.

And I think they know that. And I think that’s why they’re only invoiced ‘supply and fit’ subtotals on the actual (legally binding, for their tax purposes) invoice, rather than put a materials and labour breakdown on it, like they have on the email (which wouidn’t be documented for tax purposes).

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You should only pay VAT on the service and not the materials. Unless they make their own materials or summat I DUNNO

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VAT don’t impress-ah meee much

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Yep, my instinctive position. Based on knowing fuck all.

On a serious note, just ask them if it concerns you. If the tiles are £22 inc VAT, ask why they’re charging you £22 + VAT.

A contractor would just pass any VAT on to the consumer, who is liable for the payment.

They could easily do some fudging if you think they were falsely reclaiming VAT, but not sure it’s your fight to fight.

Yeah, I’ll be asking the question. Wanna have as much hivemind on my side as possible when I do, though.

Understood. In a normal commissioning of a trades person, they could give any price for an invoiced ‘materials’ item, and bung VAT on top of that. Or, as they have done here, bury it in a ‘supply and fit’ item, and plonk VAT on that.

But this is a contribution to insurance claim costs, not a normal transaction. And it feels like there’s a sleight of hand cheeky mark up going on. E.g. I could go and buy the materials toward which I’m supposed to be contributing, and hand 'em over, and yes I’d have paid VAT to B&Q, but I wouldn’t be paying any VAT on top of that. So why should I be paying VAT when they buy the materials? ‘Because they’re going to the trouble of supplying the materials’ doesn’t feel like it covers it.

It’s not so much that I’m worried about what they’re getting up to accounting-wise, just the fact I think they’re potentially ripping me off.