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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4208
Experience:  FCCA FCMA CGMA ACIS
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I have a question about VAT on some building work. Our

Resolved Question:

I have a question about VAT on some building work. Our freeholder is organising the building work to our roof and has sent an estimate that lists the contractor's tender, their VAT, the surveyor's fee, his VAT and the freeholder's fee. I'm assuming the freeholder is VAT registered, in which case am I wrong in thinking that the contractors should not be charging VAT (we pay him, he pays them)?
We will be paying almost 25k in VAT that someone is going to reclaim and put in their pockets - is that just the way it is? We indirectly purchase materials and someone else can reclaim the VAT? Can I reduce this cost somehow?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

Customer: replied 1 year ago.
I have attached a document. Is there anything else you need to know?
Expert:  bigduckontax replied 1 year ago.

It is the principle of VAT that the end user pays the tax. Your freeholder does not appear to be registered for VAT and is merely passing on the bills raised by a third parties. In that case you are liable. Were the freeholder registered for VAT then he would bill you with the net costs (ie excluding VAT) and then add VAT at 20%. This he would account for to HMRC as an output and deduct the VAT suffered as an input.

The supplies being made to you are standard rated, ie at 20%, see VAT Notice 708.

I am so sorry to have to rain on your parade. I would advise you, however, to check with the freeholder as to whether they are VAT registered. If they are then their whole bill is incorrect and should be adjusted.

I do hope that you have found my reply of some assistance.

bigduckontax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thank you, ***** ***** prepared for a response like this!
Expert:  bigduckontax replied 1 year ago.

I am so sorry to have had to rain on your parade.

Thank you for your support.