Tax Query

B-D-P--

Hi all,
I'm doing direct labor build,

Just looking for clarification on Tax on materials.

We'll go with brickey for example,

I paying for labour (All above board and through books)
And I'm supplying materials, However, Can I ask my bricky who is vat registered and paying it, to buy the supplies and charge me 13.5% on them as technically he's supplying and fitting, or do you have to manufacture the product to be able to charge 13.5%?

eadt14

Any contractor can supply materials at 13.5% once the materials make up a certain portion of the job

B-D-P--

B-D-P-- wrote: »

Hi all,
I'm doing direct labor build,

eadt14 wrote: »

Any contractor can supply materials at 13.5% once the materials make up a certain portion of the job

Not getting contractor, Doing direct labour

Metric Tensor

For this part of the project is your blocklayer not the/a contractor?

B-D-P--

I dont know, is he?

I've asked him and he was sure that if he bought the materials he'd have to sell them to me for 23%

I just looking for clarification.

sydthebeat

B-D-P-- wrote: »

Not getting contractor, Doing direct labour

your still getting contractors to do individual jobs though....

http://www.boards.ie/vbulletin/showthread.php?t=2057056174

have a read

Calahonda52

B-D-P-- wrote: »

Hi all,
I'm doing direct labor build,

Just looking for clarification on Tax on materials.

We'll go with brickey for example,

I paying for labour (All above board and through books)
And I'm supplying materials, However, Can I ask my bricky who is vat registered and paying it, to buy the supplies and charge me 13.5% on them as technically he's supplying and fitting, or do you have to manufacture the product to be able to charge 13.5%?

Technically he is not, you are asking him to engage in tax fraud and am glad to see he is not going down that road

B-D-P--

Calahonda52 wrote: »

Technically he is not, you are asking him to engage in tax fraud and am glad to see he is not going down that road

I knew someone would jump to that,
I'm on boards looking for legalities not the opposite obviously.

Calahonda52

B-D-P-- wrote: »

I knew someone would jump to that,
I'm on boards looking for legalities not the opposite obviously.

You wrote:
And I'm supplying materials, However, Can I ask my bricky who is vat registered and paying it, to buy the supplies and charge me 13.5% on them as technically he's supplying and fitting, or do you have to manufacture the product to be able to charge 13.5%?
Keep well:D

B-D-P--

Calahonda52 wrote: »

You wrote:
And I'm supplying materials, However, Can I ask my bricky who is vat registered and paying it, to buy the supplies and charge me 13.5% on them as technically he's supplying and fitting, or do you have to manufacture the product to be able to charge 13.5%?
Keep well:D

We are in hypothetical,
I havent supplied anything yet, My suggestion was the man who's laying my blocks to buy the materials from the shop himself.

JimmyMW

B-D-P-- wrote: »

Hi all,
I'm doing direct labor build,

Just looking for clarification on Tax on materials.

We'll go with brickey for example,

I paying for labour (All above board and through books)
And I'm supplying materials, However, Can I ask my bricky who is vat registered and paying it, to buy the supplies and charge me 13.5% on them as technically he's supplying and fitting, or do you have to manufacture the product to be able to charge 13.5%?

Blocks and concrete are at 13.5% to everyone, the cement and sand are the only things that you will be paying 23% on, as far as I know I'm correct on that. A contractor can do what is being asked provided the cost of the labor is >50% of the cost of the material. Prob not worth it in the above described situation as the most of the cost is @ 13.5% anyway.

BERmad

Your sub contractor can charge you 13.5% on the materials.
If he has any sense he will charge you a mark up on this or get an additional discount from the supplier to make it worth his while

Bonzo Delaney

B-D-P-- wrote: »

I dont know, is he?

I've asked him and he was sure that if he bought the materials he'd have to sell them to me for 23%

I just looking for clarification.

Im confused and late here but are you working off all prices exclusive of vat here
Contractors of trades only ever charge the client vat at 13.5% unless their consultancy related which is 23%vat eg accounting, structural engineer ect
A straight forward example would be your contractor (brickie) gives you a bill of 10k plus vat @13.5% =11350
Lab 5000
Sand&cement 1500 incl vat @23 (280 )
Blocks. Cills ect 3500 incl vat@ 13.5(416)
Sub total 10000
Vat @13.5% 1350
Total 11350

Contractor returns the vat of 1350 to revenue and claims back the 280+416 he spent on materials

If you supply materials the contractor charges you 13.5% on the 5k labour and you take full responsibility for the materials. And the contractor claims back that vat on his not for sale expences eg van. tools. fuel. administration ect

Calahonda52

The above is not right as it is explicitly verboten to charge VAT on VAT as is done in the above calculation.
Its actually an activity that brings a serious hammer down.

As I don't understand how two VAT rates apply to materials I won't try and redo the calc

Bonzo Delaney

Calahonda52 wrote: »

The above is not right as it is explicitly verboten to charge VAT on VAT as is done in the above calculation.
Its actually an activity that brings a serious hammer down.

As I don't understand how two VAT rates apply to materials I won't try and redo the calc

And there's me over charging on vat all these years and still cant turn a profit
No wonder I never got pulled up on it

Metric Tensor

I'm fairly sure CH is spot on one this one Bonzo - definitely check this with your accountant - I think you may have been taking a lot more VAT of the client than you should be. This hasn't hurt your own pocket but has hurt theirs.

Say the Blocks are €1000 + VAT.

So if the client goes to the shop he should pay €1230 for the blocks.
If he gets them through you he should be paying €1135 for the same blocks.
But what you've been charging him is €1396.05 which means it is significantly more expensive for him to get them through you than buy them himself ... which is the exact opposite of the purpose of you being able to charge 13.5% on the goods.


CH might help me out here but if you pay €1230 for them I think you should be taking €1135 from the client which leaves you having overpaid 95 in VAT that you can subtract from the VAT returns due from your labour charges. Please check with your accountant because I may have this wrong.

Calahonda52

MT is correct in his assessment.
For my sins I am an accountant so have a reasonable chance of being correct.

VAT paid and VAT received should always go into a separate column in the accounts other than purchases and sales

So You buy the blocks, inc VAT at 23%
Dr: Raw Materials 1,000
Dr VAT paid........... 230
Cr Bank ..............1,230

How you book sales depends on whether you run the accounts on an accruals basis or a cash receipts basis.
The difference is that on an accrual basis you need to pay the VAT for the VAT period in which the invoice was raised.

So you invoice client for labour and materials, say 2,000 plus VAT at 13.5% = 2,270

To keep it simple when you get the 2,270, the 270 is due to the Revenue, which can be reduced by the 230 above

exaisle

Calahonda52 wrote: »

MT is correct in his assessment.
For my sins I am an accountant so have a reasonable chance of being correct.

<snip>

So You buy the blocks, inc VAT at 23%
Dr: Raw Materials 1,000
Dr VAT paid........... 230
Cr Bank ..............1,230

Sorry Calahonda, for my sins I'm an accountant too....and VAT on supply of concrete blocks is charged at 13.5%, not 23%.

Easy know it's the Friday afternoon of a bank holiday weekend....! ;-)

Metric Tensor

Ah yes. Blocks was a bad example!

Perhaps we should have used wavin pipes in our example. They are 23% aren't they?

Calahonda52

exaisle wrote: »

Sorry Calahonda, for my sins I'm an accountant too....and VAT on supply of concrete blocks is charged at 13.5%, not 23%.

Easy know it's the Friday afternoon of a bank holiday weekend....! ;-)

My mistake Doh: I was more exercised with the VAT on VAT:)

exaisle

Calahonda52 wrote: »

My mistake Doh: I was more exercised with the VAT on VAT:)

It's been a long week....have a good weekend! ;-)