Should carpenter charge vat on materials supplied?

crebel81

Hi all,

Just a quick question. If a carpenter supplies materials as part of job, does he have to charge vat on this? for example,

Cost of materials;

net = €100
Vat = €21
Gross = €121

Should he charge an additional 21 % on the gross amount of 121e to the customer?

Can a profit be made on the supply of materials from a legal point of view?

Cheers

aujopimur

Nett cost of materials xxxx
Labour xxxx
VAT 13.5% xxxx
Total xxxx

He is entitled to have a markup on the materials

barneystinson

Assuming you are VAT registered, then the cost to you of the materials is €100, since you are entitled to claim the VAT back.

As Aujopimur says, generally you will invoice your customer at 13.5% VAT; so taking the example of materials that cost you €100, you might invoice your customer as follows:

Materials: €125 (i.e. a mark-up of €25)
Labour: €100
Invoice subtotal: €225
VAT @ 13.5%: €30.38
Total: €255.38

Mr. Incognito

You can find a guide to VAT in the stickies.

The rate is 13.% on the cost of goods and materials

UNLESS

The cost of the materials exceeds 2/3rds of the total cost in which case the rate is the material rate i.e 21%

Mongarra

Just a (very small) correction and expanding on two-thirds rule for clarification on last post.

Rate is 13.5%.

Two thirds rule applies to VAT exclusive figures. If materials, excluding VAT, cost more than 2/3rds of final invoice price, again excluding VAT, then 21% must be charged on full amount (materials and labour). If less than 2/3rds then 13.5% is the rate.

Was originally brought in to stop, say, plumber buying washing machine to fit for customer and claiming 21% VAT back and then charging customer 13.5% on whole job. Revenue were losing out.