VAT payable?

[LS7TANGO]

Quick question - I have some ongoing building works due for completion in the week......if VAT rate is reduced to 15% I assume I will pay reduced rate on builders labour charges but what about materials he purchased prior to reduction? Thanks.......

[paoloh]

I would say that whatever rate is on invoice is what you pay.

Has he already paid for materials?

[LS7TANGO]

I think he has already paid for some but not all......

[paoloh]

LS7TANGO said:

I think he has already paid for some but not all......

Tell him to hold off on paying then

[Eric Mc]

I would think that, if he has already received invoices from his suppliers showing the current VAT rate of 17.5% then he must pay the full VAT inclusive invoices as shown.

Indeed, if the VAT rate is going to be reduced, we don't yet know from what date the new rate would become effective so 17.5% invoices might be invoiced for a while yet.

[sgrimshaw]

The builder will presumeably have already been invoiced for materials at 17.5% VAT, that is his input tax which he will pay to his Supplier and subsequently reclaim on his VAT return.

The rate he paid is immaterial to you.

Eventually, he will charge you VAT at the rate applicable at the Tax Point of the invoice.

If at that time the rate is 15% then you will be charged 15% VAT which will be his Output Tax which he will again declare on his VAT return and you will have to pay him.

[Dirty Boy]

LS7TANGO said:

Quick question - I have some ongoing building works due for completion in the week......if VAT rate is reduced to 15% I assume I will pay reduced rate on builders labour charges but what about materials he purchased prior to reduction? Thanks.......

So long as you are invoiced on completion of the works, then whatever that VAT rate is at that time would be applicable to your invoice.

The rate of VAT on the materials already purchased is irrelevant to you.

[s,one]

Isn't a lower rate of Vat (5%)applicable on major home inprovement, material elements only. Can't remeber exactly but I did a domestic job for a chap a couple of years ago about 200k if I remember correctly and charged him 5% on just about everything apart from the kitchen I think. Might be taking rubbish but deffinetly something along those lines.