We are a construction company and work to VAT notice 708 guidelines. We have a new project which we will bill at 5%. I believe our subcontractors should also charge us at 5% although am being told that it is "safer" for us to be billed at 20%. Any suggestions/experience of this? Many Thanks
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Yes, sub-contractors can use the reduced rate if the project qualifies as a dwelling or a number of dwellings.
No, sub-contractors cannot use the reduced rate if the project is an RRP or RCP building.
If a sub-contractor charges you the wrong rate, you cannot claim it.
I am going to disagree with Les because how does the sub contractor know that the works undertaken will result in a reduced rate supply. For example a property which has remained unoccupied for two years would qualify for the reduced rate but how would the carpenter know it was a reduced rate supply by the main contractor? Furthermore, if the main contractor gets the liability wrong it is the sub contractor who will also get the liability wrong.
I always advise the sub contractor to charge 20% and numerous verifications of the main contractor applying for reclaims have passed without comment.