tax compliant tradesmen. Vat reg versus non Vat reg

mickdw

I thought it might be worth mentioning this here.
A roofer or blocklayer etc can be fully tax compliant but may or may not be registered for VAT. Now this makes no difference if that person is doing work for a business person as the VAT works itself out in the end but for a private person building a house etc, there are huge savings to be made in employing a compliant person with such a small turnover that they are not required to register for VAT. They therefore can not charge you VAT and should (legally) be cheaper.

paddy147

mickdw wrote: »

I thought it might be worth mentioning this here.
A roofer or blocklayer etc can be fully tax compliant but may or may not be registered for VAT. Now this makes no difference if that person is doing work for a business person as the VAT works itself out in the end but for a private person building a house etc, there are huge savings to be made in employing a compliant person with such a small turnover that they are not required to register for VAT. They therefore can not charge you VAT and should (legally) be cheaper.

Wait till the mods see this thead......:D:pac:

mickdw

Everything there is perfectly above board.

Carlow52

interesting idea.

Just some musings

Assume no mark up on goods and ignore 2/3rds rule

Plumber A registered for VAT

Goods 100 euro plus 21% paid to H**T merchants

labour 100

Bill to client 200 + 13.5% = 227

VAT drops out so profit 100

Plumber B not registered for VAT

Goods 100 euro plus 21% paid to H**T merchants

labour 100

Bill to client 221

Profit 100 and client saves 2.7%

DOCARCH

Carlow52 wrote: »

....2/3rds rule....

Someday the Revenue will have a field day on the 2/3rds rule! I am constantly shocked how few people know about this rule.

E.g. quote for supply only of windows = E10K + 21% VAT or alternativley for supply and fit of windows = E11K + 13.5% VAT (E10k for the windows and E1K for fitting). On the basis of the 2/3rds rule, the VAT on the supply and fit should also be 21%.

Carlow52

DOCARCH wrote: »

Someday the Revenue will have a field day on the 2/3rds rule! I am constantly shocked how few people know about this rule.

E.g. quote for supply only of windows = E10K + 21% VAT or alternativley for supply and fit of windows = E11K + 13.5% VAT (E10k for the windows and E1K for fitting). On the basis of the 2/3rds rule, the VAT on the supply and fit should also be 21%.

Down my way: "Which two turds would that be now?':D

sinnerboy

Supply only Materials – VAT rate 21%
Supply and Install Materials VAT rate 13.5%

BUT

If value of Materials is 2/3 or more of total ex VAT price then
Supply and Install Materials VAT rate 21%

Example

Floor area 200m2
“Value” tiling €30/m2 ex VAT
“Finest” tiling €75/m2 ex VAT
Labour Tiling €30/m2 ex VAT

4 Permutations

1. Supply and install “Value” tiling – not VAT registered
2. Supply and install “Finest” tiling – not VAT registered
3. Supply and install “Value” tiling – VAT registered
4. Supply and install “Finest” tiling VAT registered


Permutation 1 Supply and install “Value” tiling – not VAT registered

Materials 200 x 30 x 1.21 = €7,260.00
Labour 200 x 30 = €6,000.00
Total = €13,260.00

Permutation 2 Supply and install “Finest” tiling – not VAT registered

Materials 200 x 75 x 1.21 = €18,150.00
Labour 200 x 30 = €6,000.00
Total = €24,150.00

In these situations it is likely that Materials are client supplied. Breakages in transit, wrong colours, sizes, delays – all down to client to sort out. Alone.

Permutation 3 Supply and install “Value” tiling – VAT registered

Materials 200 x 30 = €6,000.00
Labour 200 x 30 = €6,000.00
Sub Total Ex VAT = €12,000.00
VAT @ 13.5 % * =€1,620.00
Total = €13,620.00

1. *2/3 Rule – Materials are less than 2/3 of Ex VAT total , so lower rate applies .
2. Costs €360.00 more than Permutation 1.
3. If client gets samples and tells contractor to purchase then supply / delivery issues are the contractors

Permutation 4 Supply and install “Finest” tiling – VAT registered

Materials 200 x 75 = €15,000.00
Labour 200 x 30 = €6,000.00
Sub Total Ex VAT = €21,000.00
VAT @ 21 % * =€4,410.00
Total = €25,410.00

1. *2/3 Rule – Materials are more than 2/3 of Ex VAT total , so higher rate applies .
2. Costs €1,260.00 more than Permutation 2.
3. If client gives samples and tells contractors to purchase then supply / delivery issues are contractors

sinnerboy

Any hint of evading VAT , or any other taxes due , will get one banned .

bwdbwd

you'll find that there is a revenue list of services that will always qualify for the lower rate of vate e.g. servicing a car and supply and fit of windows