Recharge of damages to suppliers - VAT?

Recharge of damages to suppliers - VAT?

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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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By occca
21st May 2015 06:59

Yes

You must charge VAT if you are VAT registered as you are then the supplier

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By Coeus
21st May 2015 08:38

Thanks Occca,

 

Though we are VAT registered it is not a trade of our business.

 

We are not a supplier per say there has been no trade of goods or services, merely a damage recharge.

 

Do you have any HMRC links please to evidence please?

 

 

Thanks,

 

 

Coeus.

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By shaun king
21st May 2015 09:31

No

I cannot see there is any supply, only a compensation payment which is outside the scope of VAT.

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By spidersong
21st May 2015 09:48

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.

 

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By Richard Willis
21st May 2015 13:21

Restitution of damages

No supply, no VAT

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