Hi
I have a client (builder), doing a project for his customer. It is applicable to the 5% vat rate for new build.
His customer, has paid for 'goods for the house build' seperately and had them invoiced to the builder.
He wants the payments to be deducted from the amount due for the building work.
My concern is that it is not a valid reclaim on VAT. The builder should have paid for the goods and reclaimed the VAT, then charged the client the 5% VAT?
Can anyone provide advice on this?
Replies (5)
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Not the right way to do it, but
The builder may have a valid VAT reclaim, if the goods are invoiced to him.
HMRC probably won't like it but if he's claiming on invoices rather than on payment, it's a simple contra to resolve the problem.
Vat on money transfer commission
An off licence receives money on behalf of a money transfer company and receives a commission for each transaction. Do they have to declare VAt on this commission.
Relevance
An off licence receives money on behalf of a money transfer company and receives a commission for each transaction. Do they have to declare VAt on this commission.
I'm afraid I don't see the relevance of this to the question asked, perhaps it would be better under it's own thread?
Who received the supply?
Did the builder order the goods and are they the ones that the end customer will be raising queries through rather than going direct to the merchants?
If this is the end customer merely meeting the traders bills as a kind of defacto cash flow advance then they can probably get away with it as Pawncob says, however depending on the structure it does look very open to a challenge that the builder never received the supply, even if they've got an invoice in their name.
To be honest if I were an HMRC officer I'd probably look at it and think that the customer was trying to get some false accounting done as they'd just realised they'd be worse off ordering the materials direct and were now looking to adjust reality in order to get them under the 5% rate. So if there is something demonstrating that the builder has been involved in the materials supply and the direct payment for materials just saves them taking in the money then paying it out immediately then I'd have it ready to produce if HMRC ask.