Confused with VAT

[solar122]

Hi its my first post on here and i was wondering if anyone could help me,
I am just about to set up in business installing solar panels, in this industry the customer would pay the lower rate of VAT at 5% as they are installing solar. We are buying the solar panels of our suplier and we get charged 17.5% Vat can we claim back the whole 17.5% or 12.5% (less the 5%)
or can we only claim back 5% Vat.
Anybody one know??
Thanks

[oliver3487]

i dont see why you are paying and charging different VAT amounts? shoudn't it be 5% or 17.5% on both.

Anyway you can claim back any VAT you have been charged whatever amount it is. the form is fairly simple to fill out and should make sense as you do it, if not then ring the number and they will tell you.

[David Griffiths]

You can claim back the full amount of input tax that you are charged - i.e. the 17.5%

You then charge your customer the appropriate rate, which in the case of installation of the panels is 5%. Note, however, that if you simply supply panels then the full rate applies.

[solar122]

thanks David, we shall be installing the panels for the customer you have helped a great deal thanks again.

[spidersong]

i dont see why you are paying and charging different VAT amounts? shoudn't it be 5% or 17.5% on both.

Oliver,

This is quite common with VAT. The liability of goods can change depending either on what you do to them or who your customer is.

Obviously if you change goods it happens, i.e buy in cloth (@17.5%) but make a childrens T-Shirt out of it (@Zero rate), buy in food (@Zero rate) to use in a catering business (@17.5%).

A more relevant example is buy in bricks (@17.5%) but construct a new dwelling (@Zero rate).

In this case the lower rate applies to the installation of energy saving materials in homes, the OP isn't receiving anything installed, and as far as their suppliers concerned could be using them in homes, in businesses, or as very expensive tobogans, but when (s)he makes an onward supply they will be installing them in homes and the 5% applies.