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VAT on deductions from subcontractors

Tool hire/use of van etc.

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Company A (Vat reg) uses a non VAT registered subcontractor. Company A applies a fixed charge to the subby of say £50 per week for the use of their vans/tools etc. Should this be subject to VAT on the basis that Co A is VAT registered and it is them charging the subby rather than the subby reducing their price? I have seen a couple of occassions when VAT isnt charged. 

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By susieq
05th Jul 2022 10:24

I had a job where the company (vat registered) charged for van usage to the subbies and we accounted for vat on the deduction. Had a vat inspection and it was the first question the inspector asked - confirming it was subject to vat.

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By Jason Croke
05th Jul 2022 12:09

It sounds like Company A are hiring vehicles/tools to the subby, as Company A is VAT registered, then the charges are subject to VAT at the standard rate.

The subby is not reducing their price, their price remains the same, their costs have gone up because the subby is buying in services of van/tools. But the subby would not be able to reclaim any VAT of course as they are not VAT registered.

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Replying to Jason Croke:
By lionofludesch
05th Jul 2022 23:52

Agree. It's two supplies, netted off.

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