Flat rate VAT

Flat rate VAT

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Client is a one man band company whose role is project management of earth moving, landscaping, groundworks type work. 

The role is quite varied and he is involved in the following:

Pricing and Tendering for contracts;

Managing the works and sub-contractors on site;

'Hands on' work using the diggers etc (this does not make up a significant proportion and only where sub-contractors are unavailable)

We initially discussed using the 14.5% rate for labour-only general construction services.  However, I wonder if it wouldn't be unreasonable to use the 12% rate of 'business services not listed elsewhere'. 

Does anyone have an opinion on this?

Thanks

Replies (7)

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By pauld
01st Aug 2014 08:41

what about

General building and construction services 9.5%

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Replying to andy.partridge:
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By bajones
01st Aug 2014 08:49

"use this where materials supplied are 10% or more of turnover"

"General building or construction services - use this where materials supplied are 10% or more of turnover"

We don't know the facts, but sounds like he just turns up, does some paperwork, manages the staff, and operates the machinery. 

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By bajones
01st Aug 2014 08:45

it sounds to me

It sounds to me like he would fall under the former, with the trade being earth moving, demolition and landscaping under the sector labour-only general construction. http://www.hmrc.gov.uk/manuals/frsmanual/FRS7300.htm

With the Idress Ltd case, HMRC seem to be beginning to challenge even fairly reasonable FRS choices that they disagree with so it might be dodgy ground not to pick such a seemingly close fit.

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By Alex999
01st Aug 2014 12:12

I had this issue with a plumber

Same issue with a plumber/gas engineer (he's Gas Safety), I contacted HMRC to check if he could use the 9.5% rate and was told he would fall under the "business services not listed elsewhere" rate of 12%

You may want to check with HMRC as I would have thought that both plumbing and general ground/landscape work would fall under general construction 9.5%.

In my case I choose the 12% option as I did not want to get 2,3,4 years down the line and HMRC to say "you should have been using the 12% rate"

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By bajones
01st Aug 2014 14:02

Agreed that the distinction can be made, it's just open to challenge by HMRC, who could summise that there is an existing category so "any other activity" should not have been selected.  If the original post wording was provided to HMRC, I would expect a challenge.

Even with HMRC "pre-approval" (anything an operator suggests will not count as HMRC advising what FRS rate to use), they can still challenge at a later date.

But, so long as the original choice is reasonable, HMRC are not able to backdate the change of rate, even if they challenge it.  From the stated facts "any other activity" may be reasonable, but may be subject to challenge, particularly if the client begins to do more groundworks machinery operation than paperwork..

 

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By zebaa
01st Aug 2014 16:24

@Alex999

I think your plumber may have over paid.

http://www.hmrc.gov.uk/manuals/frsmanual/frs7300.htm

 

sector G

If materials were +10% of turnover it should be 9.5%.

Unless he is sub-contract only I would have thought most plumbers would go over the 10% materials. If he is sub-contract only then he may not be over the vat threshold in the first place.

PS it is Gas Safe (not Gas Safety). Okay, I'm a pedant.

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Red Leader
By Red Leader
01st Aug 2014 16:33

IR35

Is his limited company operating IR35?

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