HI
I have client that I do the bookkeeping for who is a builder. He has been given £400 goodwill credit from a supplier because they supplied a kitchen to someone on their account. Is there VAT on this goodwill?
Thank you.
Replies (15)
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Who supplied what to whom?
In other words, did your builder make a supply to the kitchen company? If not then there is no VAT-able supply and VAT is not in point.
I would recommend you look for a VAT invoice if thinking of reclaiming VAT. Presumably there is a paper trail of some sort?
' because they supplied a kitchen to someone on their account.'
This sounds like builder ordered on his trade account, in his name, for his own client and the the client paid the account balance
I would be asking questions and considering what else there is to this, and whether this was really a trade discount that the client did not get
Is it really commision and did the builder really do the work for cash
Agree with the above. You need to see exactly what has happened here - it is not always clear.
Howdens for example get customer in, price the job using the trades account but then you can either add a mark up on recharge to customer at cost.
For example kitchen costs 5k but you say to Howdens tell the customer it is £6k, customer pays £6k to Howdens which is credited to your account and they raise an invoice for £5k to your account leaving you with £1k credit which you can either leave there or take out cash. Customer is none the wiser that the tradesman is making a mark up on the kitchen.
If it’s the builder pricing the job for labour and materials why would Howdens be giving a price to the client?
If Howdens were, as the client I would expect to see the invoice, which would show 5K not 6k
FWIW Howdens are 'trade only' ... they won't allow someone who is not registered on their system as a tradesperson onto their premises, let alone issue any sort of quotation (even a mere verbal one).
What I wasn't aware of (and am surprised by) is Viciuno's assertion that (although definitely only contracting with the tradesperson) they will issue some paperwork to the client after the event. As what (hardly an invoice)?
The scenario as set out sounds more like a contract to purchase (between Howdens and the tradesperson) for £6k + a separate 'commission' agreement that earns the tradesperson a £1k credit against future purchases.
That sounds to me like the 'loyalty card' in which I accrue points when I buy my food at the Co-Op.
None of which necessarily helps OP with the VAT question that I leave to others.
FWIW Howdens are 'trade only' ... they won't allow someone who is not registered on their system as a tradesperson onto their premises, let alone issue any sort of quotation (even a mere verbal one).
Definitely not Howdens. They won't fit your kitchen. They just supply units and appliances.
Confused.
I never said it was Howdens in OP's scenario, I was merely responding to Vicunio's and doubletrouble's sub-thread. And anyway, my made-up example didn't suggest that Howdens were fitters (quite the opposite in fact).
It sounds like an introductory commission to me.
Taxable, but I'd be surprised if the input tax was irrecoverable.
The caveat to all that is the paucity of hard facts.