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Domestic VAT reverse charge and scaffolding hire

Does it also apply to just a hire invoice?

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Could someone please clarify, we have a scaffolding provider who generally supplies us with both hire and labour to erect the scaffolding and take it down and their invoices are now showing that the Domestic VAT reversal charge applies.  Firstly, they still show the VAT on their invoices even though they state the new reverse charge applies, is this correct?  Secondly we have just received an invoice for purely hire of equipment, is it right that they are charging VAT on this and that it doesn't qualify for the reverse VAT charge scheme?

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By Truthsayer
10th Jun 2021 12:18

What does your accountant say?

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By Janipops
10th Jun 2021 12:20

I haven't asked them yet, I am a book keeper and I have done a lot of reading up but cannot find a definitive answer.

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By Leywood
10th Jun 2021 12:41

Janipops wrote:

I haven't asked them yet, I am a book keeper and I have done a lot of reading up but cannot find a definitive answer.

Perhaps not looking in the right place?

Took a second to locate this via google so (re) start your reading here https://www.gov.uk/guidance/vat-reverse-charge-technical-guide

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By doubletrouble
10th Jun 2021 16:31

If the invoice is only for the hire of scaffold then it is exempt from CIS so would not fall under the DRC anyway, so correct to charge VAT

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By rmillaree
10th Jun 2021 16:39

" Firstly, they still show the VAT on their invoices even though they state the new reverse charge applies, is this correct?

Presuming its cis supply and you are not an end user thats fine as long as the vat is just a memo figure - note its not alwalys easily clear if it is amemo figure for example sage cloud adds it on then takes it off - bottom line is client should not be expectuing vat to be paid !! and you shouldnt pay it !! if its agreed that its reverse charge.

"Secondly we have just received an invoice for purely hire of equipment, is it right that they are charging VAT on this and that it doesn't qualify for the reverse VAT charge scheme?"
Yes that is correct presuming the supply is not part of a mixed supply that is within cis
confirmed as follows
"Payments for the hire of plant without an operator are outside the scope of CIS."
https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-re...

Obviously whether cis applies and whether you are end user will depend on the standard rules involved which be dictated by the services you provide to customers - i am guesing you are asking the question because you supply construction services and currently engage scaffolder suppliers within cis

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Replying to rmillaree:
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By Janipops
11th Jun 2021 10:24

Hi

Yes that is correct the company is a property maintenance company and therefore not the end user. We are a CIS registered contractor and also sub contractor. I appreciate your help on this Thank you!

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RLI
By lionofludesch
10th Jun 2021 17:39

The DRC applies to the labour but not the hire but there is a provision for mixed supplies on the same invoice to be charged under DRC rules.

https://www.accountingweb.co.uk/tax/business-tax/domestic-reverse-charge...

Alternatively, have separate invoices issued for the labour and the hire.

The labour invoices (or mixed ones) should show the amount of VAT as a note (so that you know how much to pay and claim) but should not be added into the invoice total. Obviously, you shouldn't pay the VAT even if they demand it.

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Replying to lionofludesch:
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By doubletrouble
10th Jun 2021 18:11

Even if separate invoices are issued if they are both part of the same contract then they will still be deemed a mixed supply and then fall under CIS.
The only way to avoid this would be for the scaffold company to hire out the scaffold and deliver it, and a separate firm of scaffolders then erect it.
But I think we all know that never happens.

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