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VAT Reverse Charge for building Errors

VAT Reverse Charge for building Errors

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A plumber client subcontracting to a small building company on a domestic property extension and refurbishment has charged standard VAT.

The building company is VAT and CIS registered as is my client.

The client has received full payment from the builder including VAT.

How should this be corrected and what is the risk to my client if they take no action other than getting it right going forward?

 

 

  

Replies (5)

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RLI
By lionofludesch
29th Nov 2021 18:47

An extension?

What's the problem you perceive? The reverse charge? Surely the VAT needs to be repaid and reinvoiced.

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Replying to lionofludesch:
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By Paul Crowley
29th Nov 2021 20:26

+1
Thre true risk is to the building company
Is this one went through then lots of others as well could be wrong
Expecting numerour such issues on next year's returns and accounts

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Replying to lionofludesch:
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By CWservices6064
29th Nov 2021 21:04

Agreed, it's a straight forward correction but convincing my client to refund the VAT to the builder who has been a poor payer will not be easy.

My understanding is that it's the main contractor that has the problem here in that they cannot recover the VAT charged.

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Replying to CWservices6064:
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By Paul Crowley
29th Nov 2021 21:15

"My understanding is that it's the main contractor that has the problem here in that they cannot recover the VAT charged."
And the recient must pay over the VAT actually charged

A bit like the TOGC risk

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Replying to CWservices6064:
RLI
By lionofludesch
29th Nov 2021 21:23

CWservices6064 wrote:

Agreed, it's a straight forward correction but convincing my client to refund the VAT to the builder who has been a poor payer will not be easy.

My understanding is that it's the main contractor that has the problem here in that they cannot recover the VAT charged.

Well, he could always keep the VAT as a credit against future work.

This contractor seems to be a regular customer. Does your client wish to keep it that way? Up to him, obviously.

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