Vat on sub contact services

Vat on sub contact services

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I have a client who has been on flat rate scheme for several months and has gained financially on it.The accountant for the main contractor has informed that the new contract that they are working on is "EXEMPT" and that he should no longer charge vat on his services .Is this correct? since my client is only the sub contractor and he would lose out financially !!
Magoo

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By adam.arca
12th Sep 2007 17:22

My heart bleeds...
..for this subbie.

Not content with ripping off (albeit quite legitimately) Joe Public, who has to swallow VAT costs as the end user, by making a profit on his VAT scheme, this chap now has the cheek to think he has a "right" to carry on doing so when, as an earlier poster commented, this sort of thing is all part of the swings and roundabouts.

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By skylarking
13th Sep 2007 09:42

I agree with Adam
As Mr Magoo has said, the guy has benefited financially from being on FRS. I don't actually think that's what HMRC had in mind when they agreed his registration. Naturally, he wants to continue to profit from it. Easy. He can make a commercial decision not to work on zero-rated projects. Go on, tell the contractor to stuff his job where the sun don't shine.

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By AnonymousUser
12th Sep 2007 12:18

Easy out

He just has to write to the VAT office and they will take him off the flat rate scheme.

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Euan's picture
By Euan MacLennan
13th Sep 2007 13:39

Zero-rated goods
Building materials and other fittings which are ordinarily incorporated into a building are also zero-rated provided that they are installed by the builder supplying the zero-rated services. VAT Notice 708 section 13 gives details.

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By User deleted
12th Sep 2007 12:19

Vat sub contractors
Apologies building should be Zero not Exempt.However my point remains the same can the main contractor force my client not to charge vat?The main contractor can claim the vat back surly?

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By theaardvark
12th Sep 2007 12:34

Not force..... by fact
The main contractor cannot, as such, force the subcontractor to zero-rate the invoice. The supply is, as a matter of fact, either zero-rated or it is not and the subcontractor must invoice accordingly. He cannot choose to charge VAT where it is not chargeable.

Regards

Paul Taylor
Dains
Dains

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By martinfoley07
12th Sep 2007 12:34

it would be very nice
if we could choose for ourselves whether or not we add VAT to our sales invoices.
Unfortunately the law tells us whether we can (=must) add VAT or not, it is not a personal preference point.
If it's a zero rated supply, you can't add VAT.
And of course the contractor could not reclaim it.

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By theaardvark
12th Sep 2007 14:48

Unfortunately not....
If the development is a new dwelling then zero-rating of the construction services applies all the way along the supply chain to sub-contractors and, if appropriate, to their subs.

If the development is a relevant charitable purpose or relevant residential purpose building , zero-rating does not extend to the services of sub-contractors.

Regards

Paul Taylor
Senior VAT Consultant
Dains

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By User deleted
12th Sep 2007 13:54

vat on sub contractors services
I was thinking on the lines that whether the work was Zero rated or not was between the vat man and the main contractor.the sub contractor is only providing a service to the main contractor in the same way as the provider of materials who would charge vat in the normal way.

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By neileg
12th Sep 2007 11:14

Exempt?
Assuming you're talking about the construction industry, there's no such thing as an exempt supply. Services in connection with new build domestic accomodation would be zero rated, but not exempt.

Having said that, you're correct that your client will loose out if he is making only zero rated supplies while being in the flat rate scheme. It's a swings and roundabouts situation.

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By nick farrow
13th Sep 2007 12:47

supplies to zero rated new build
where is the line drawn between what should be zero rated and what isn't ? is it just supplies of services or can it extend to goods?

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