Hi all!
Hope all is well in your accounting worlds.
A VAT question if I may?
If a supplier 'X' causes damage to your property in the course of business and you agree to recharge the repairs to the supplier - should this include VAT if you are a VAT registered business?
For example a repair cost of £100 + VAT = £120.
Overall the VAT effect is £nil on the supplier whether we recharge the net only or gross if the supplier is VAT registered. Otherwise if we charge the net only this is £100 to the supplier whereas if we recharge the gross this is £120 and they cannot reclaim the input VAT as not being VAT registered.
I think the key question is has there been a supply of goods or services? I would say no as this is a recharge but looking for some advice from you knowledgeable people!
Thanks in advance,
Coeus.
Replies (5)
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No
I cannot see there is any supply, only a compensation payment which is outside the scope of VAT.
Agree with Shaun
Was "allowing" the supplier to damage your property 'a supply made to them in the course of business', I think it would be very hard to find a rationale that it was!
So: no supply - no VAT.