What VAT does a builder pay on PC Sum related Items

igilvarry

I have an RIAI-based contract (blue form) in process with a building contracter. In that contract €4000 is allocated for all the sanitaryware.

I have a quote from a supplier which shows a price of approx that amount which is ex VAT. The builder tells me that when he goes to purchase this he will have to pay 21% VAT on top. I thought this should have been 13.5%.

He is also looking for MCD/Prompt Payment of 1/19th.

Three questions on this situation:

1) What is the advantage in having the builder procure the goods rather than myself if VAT rate will be 21% in each case?

2) Why is MCD and Prompt Payment terms seemingly used interchangeably? Which one should apply here? If it is Prompt Payment then does that not imply that the builder should be given a discount because he has paid the sanitaryware supplier promptly, rather than being in effect an extra charge that I have to pay to him? I know that the builder has to take responsibility for minding the goods once they are delivered but even so the use of the term Main Contracters Discount or the term Prompt Payment are misleading in that for someone outside the building industry like myself, they do not imply an extra charge that the client has to pay, but rather a rebate that the builder would receive from a supplier in return for paying for the goods within a certain timeframe.

3) What rate should apply? I have heard some say 5%, and others say 1/19th (or 5.26%).

muffler

Was this not all explained here?

igilvarry

muffler, on initial reading that might seem to be the case, but look again at the detail behind these new questions and you can see they are in fact different issues. Thx.

sinnerboy

Your queries are answered in the other thread so I'm locking this one .
If anything remains unclear to you raise the issues in the other thread .