sole trader offers service (landscape gardening). Any reason why he can't just charge for essentially labour....and advise client which materials (water features etc!) will be needed (his client would buy the materials directly from say B&Q), rather than the gardener charging the client. The reason being that if for a job he buys the materials, the fee to his client will be made of up materials + plus the cost of his time..and very quickly vat threshold reached...which he'd like to avoid
John
Replies (4)
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I agree with the last replies.
I have a number of 'small' clients who operate in this way. In particular one mechanic and it works very well.
agree no problem...
....it is in fact standard practice. Do ensure it is done properly (any contract or commitment as well as payment for materials, plants, subcontractors etc direct in customer name, not through landscape gardener)and this is clear in contract between customer and landscape gardener.
Can cause some issues if question of responsibility where major sub-contracting goes wrong, but contractual arrangements should be clear in any event, and no tax problem per se on acting as project manager.
No problem!
Nothing wrong with doing that. Especially good to aviod VAT registation if the end user of your servies is not a business, but a member of the public.
HMRC may pay close attention...
This sort of arrangement does work and many SPs use it. It can run into difficulties if the customer asks the contractor to collect and/or pay for the goods on the customer's behalf. This should be avoided as much as possible as HMRC, if they ever check the contractor, can try to argue that the arrangement is a sham.
Regards
Paul Taylor
VATease - VAT Advice