VAT reverse payments

[Evans Electric]

Anyone looked at the new VAT proposals for revere charges  for the construction industry ?   

I just looked through it and praised the day I became  " Not VAT registered "   

So the Developer becomes the "End user"    unless a purchaser steps in . 

The VAT payment chain will now go down instead of up.   Sorry  it flows up not down  or does it ? 

Developer still pays VAT to the Contractor.

The sub-contractor is not the  last recipient so no longer pays VAT to  HMRC  but still pays the contractor who does something else with it  unless    a buyer steps in and becomes the end user / recipient in which case  the buyer pays the piper  and the sub-contractor is totally confused and wishes he did something else for a living .  

I read through it & lost the will to live . 

Does anyone actually understand VAT   ?   Seems to me the only person to actually pay anything is the  non registered , end user ,  Mr. Joe Public 

 

[Sharpend]

Link?

 

[Evans Electric]

I don't know how to do a link  ,  I tried a screenshot but they  rarely work .      Does this work , should open in  MS Word  View attachment VAT Reverse Charges_ what you need to know - Professional Electrician.html

Its on an email from Professional Electrician    Newsletter . 

 

[Murdoch]

Does anyone actually understand VAT   ?   Seems to me the only person to actually pay anything is the  non registered , end user ,  Mr. Joe Public 

no!

And I'm not VAT reg so its something I don't need to worry about

And they wonder why cash is so prevalent!

 

[Evans Electric]

Well this must be bad as HMRC  are allowing  a 6 month run in for people to get the hang of it .   

I'd post it but it doesn't work  .

I Press CTRL + P  then save as a PDF     ...doesn't work . 

 

[Evans Electric]

 

[binky]

the idea is that VAT is only paid once, so passing VAT between contractors becomes obsolete as I understand the changes - it's a good thing! 

 

[Sharpend]

I thought Vat was only ever paid once, it was always just a paper trail in reality. 

?

 

[Sharpend]

Ok so having read the article I can see some major problems forthcoming, unless I’m missing something? 

So a developer wants to do a project, asks builder for a price of works, a quote is done and accepted, the builder starts work completes work then after final payment had been made by developer the builder goes oh hold on you need to cover this payment which is the vat balance? 

Developer says hold on John that’s not the figure you quoted for go take a walk, what now for builder? 

 

[Evans Electric]

I read through it & got lost TBH     Glad I de-registered .  

All I did before  was  , quarterly,   deduct  my outgoing VAT from my incoming VAT  & send the difference to HMRC  .

 

[binky]

currently I work out a bill including VAT and pass it on, then builder adds his margin + VAT, etc etc, so the end customer ends paying VAT on VAT. As I see it this should reduce the overall VAT bill for the customer, which should make building works nore affordable which will hopefully generate more wrok???  Now what to do with VAT on materials, I can't imagine the wholesalers playing pass the VAT, so I will still include materials VAT in any quote, but it should remove VAT on labour if I am understanding it correctly???

 

[Andy™]

so the end customer ends paying VAT on VAT.

no they are not. whatever you charge the builder in VAT is taken off, then the builder adds VAT

so if you charge £100 + VAT, you invoice £120. the builder then has an invoice for £100 + VAT. he claims back the £20. he then adds £20 & invoices the customer £120 + VAT (£144 total). customer has only paid £24 VAT, effectively the £20 you charged on your £100, and the £4 on the builders £20

 

[binky]

the builders I know would work it as £144 + VAT to the customer  :innocent .

 

[Andy™]

the builders I know would work it as £144 + VAT to the customer  :innocent .

probably. but the fact still remains that they will reclaim the VAT youve charged and go by net, then add their own VAT so the end customer is still only paying VAT once

 

[Rob.]

https://professional-electrician.com/features/the-upcoming-vat-reverse-charge/

Link here if anyone needs it. 

 

[Evans Electric]

VAT is weird  .   

What if a non registered spark  does elects for a builder , he invoices £100  lab  + £100 mats  + VAT   Total  £220.00 

Sparks has paid  £20  VAT to wholesaler .

Builder adds elects to his bill  which comes to £1000 .00   + VAT  to the end user / householder /Joe Public .  who pays Builder £1200.00 .

End user has paid VAT on top of the spark's  £20 .          Or has he ?   

And HMRC have received  £20   from Sparks via the wholesaler .     So they have received  £220   Or have they ?   

So we are being ripped off .  Or are we ?   :C  

 

[Andy™]

So we are being ripped off .

always

 

[Murdoch]

VAT is weird  .   

End user has paid VAT on top of the spark's  £20 .          Or has he ?   

I guess using that scenario the answer is yes ......... but the customer has also paid the builders mark up on the sparks bill too !

More and more people I deal with contract the builder, spark and plumbers directly to "avoid" VAT and mark up