First Previous - Page 1 of 1 - Next Last

Vat on invoices to subcontractors

  • 14 posts
  • # 100881

Hi - Please can anyone tell me if VAT should be charged on invoices to subcontractors

 

We have just paid public liability insurance on behalf of our subcontractors and are now raising an invoice to them.  The original invoice did not have VAT but should we be charging them vat as a service?

 

Many thanks

 

 

  • Member
  • Practice Licence
  • 88 posts
  • # 100888

Hello Woody,

If your business is merely recovering the insurance cost then this would be exempt from VAT.

However if a premium is added to the recharge to recover overheads, then a sevice has been provided  which is vatable.

  • Fellow
  • Practice Licence
  • 36 posts
  • # 101511

Suggest you check with HMRC and get a written response or verbal one with detailed reference of date and time of call and name of person you spoke to about your exact circumstances.  

In the past - I have had to charge VAT at standard rate when dividing up a water bill three ways which did not have VAT on it.  I was not making a charge for the division of the bill - merely charging on sub meter water usage (each of the 3 parties had own meter which I read to be able to compare usage and apportion bill).  The argument from HMRC was that I had provided the service of dividing up the bill between the relevant parties - which made the whole thing VATable.  Because of that decision I then had to charge standard rate VAT on water rates - did not affect the other parties costs other than in cash flow in my instance tho'.

Sounds like you are doing something similar, so would get it checked out.  Last thing you want is to find out in an inspection that you should have charged VAT and become liable for it.

  • 794 posts
  • # 101513

Hi Woody,

I would agree with Nicki P that Vat should be added to the invoice as HMRC will look upon it as a service that you are giving the subcontractors.

I have come across this in the past and always been told that Vat is applicable.

Marilyn

First Previous - Page 1 of 1 - Next Last
bottomBanner
loading