Can I claim VAT on goods paid by contractor?

Discussion in 'Accounts & Finance' started by antoine82, Sep 6, 2019.

  1. antoine82

    antoine82 UKBF Regular Free Member

    173 29
    Hello!
    I have a bit of an issue with a contractor who installed a AC unit for me. Our company is VAT registered but the contractor is not VAT registered.

    We agreed on an installation based on the fact that I would reclaim VAT on the goods that he would use for the job. I therefore expected 2 invoices, one with VAT for the goods (from the other company selling the material) and the other without VAT from the installer for his service.

    I however received only 1 overall invoice from the installer for the job (including goods and service). He paid the supplier for the goods. He then forwarded me the invoice he received from the goods supplier with our company name as a reference. He says I can now claim back VAT on that invoice eventhough I did not pay for it directly.

    I don't know what to think. Can I claim back VAT on that invoice ? I indirectly paid for it via the payment I made to the installer but the transaction is between the the supplier and the installer.

    Thank you!
     
    Posted: Sep 6, 2019 By: antoine82 Member since: Oct 26, 2010
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

    15,117 3,208
    Is the invoice made out to your company?
     
    Posted: Sep 6, 2019 By: Scalloway Member since: Jun 6, 2010
    #2
  3. antoine82

    antoine82 UKBF Regular Free Member

    173 29
    No the invoice is made to my contractor. My company name is used as the reference for the invoice.
     
    Posted: Sep 6, 2019 By: antoine82 Member since: Oct 26, 2010
    #3
  4. Mr D

    Mr D UKBF Legend Free Member

    16,097 1,797
    So you have an invoice showing you have paid the VAT?
    Or contractor has an invoice showing they have paid the VAT?
     
    Posted: Sep 6, 2019 By: Mr D Member since: Feb 12, 2017
    #4
  5. STDFR33

    STDFR33 UKBF Big Shot Free Member

    3,885 979
    Then VAT cannot be reclaimed.
     
    Posted: Sep 6, 2019 By: STDFR33 Member since: Aug 7, 2016
    #5
  6. antoine82

    antoine82 UKBF Regular Free Member

    173 29
    Yes the contactor has an invoice with the VAT he paid. But himself is not VAT registered.
    The transaction for the goods is between the supplier and my contractor who then issued an invoice for a package "supply and install".
     
    Posted: Sep 6, 2019 By: antoine82 Member since: Oct 26, 2010
    #6
  7. Mr D

    Mr D UKBF Legend Free Member

    16,097 1,797
    So he cannot charge you VAT.
    So you haven't got anything saying you have paid VAT.
     
    Posted: Sep 6, 2019 By: Mr D Member since: Feb 12, 2017
    #7
  8. Newchodge

    Newchodge UKBF Big Shot Free Member

    12,446 3,231
    You have not been charged VAT as your supplier is not VAT registered, so cannot charge VAT.

    As you have not paid VAT you cannot reclaim it.
     
    Posted: Sep 6, 2019 By: Newchodge Member since: Nov 8, 2012
    #8
  9. Energise Accounting

    Energise Accounting UKBF Ace Full Member

    1,003 165
    How can you reclaim VAT you have not paid?
     
    Posted: Sep 6, 2019 By: Energise Accounting Member since: Sep 24, 2014
    #9
  10. justintime

    justintime UKBF Regular Free Member

    516 69
    No, sorry you can't. Had the supplier invoice been made out to you then you would have been able to. I would suggest, if you are in a similar situation again, to pay the supplier direct and have the invoice made out to your company.
     
    Posted: Sep 6, 2019 By: justintime Member since: Apr 12, 2009
    #10
  11. John Hemming

    John Hemming UKBF Regular Full Member

    135 17
    Posted: Sep 7, 2019 By: John Hemming Member since: May 23, 2019
    #11
  12. STDFR33

    STDFR33 UKBF Big Shot Free Member

    3,885 979
    Posted: Sep 7, 2019 By: STDFR33 Member since: Aug 7, 2016
    #12
  13. Newchodge

    Newchodge UKBF Big Shot Free Member

    12,446 3,231
    I have only read the first part, but does that apply only when the 'intermediary' is themselves VAT registered?
     
    Posted: Sep 8, 2019 By: Newchodge Member since: Nov 8, 2012
    #13
  14. John Hemming

    John Hemming UKBF Regular Full Member

    135 17
    It may be the case that it doesn't qualify and it would be best to get the original supply invoices in the name of the final customer. (which should not be that difficult), but the question as to whether invoices have to be in the name of the final customer has been determined so that this is not necessarily the case.

    This, however,falls into the category of online debate where I don't want to do the background research.
     
    Posted: Sep 8, 2019 By: John Hemming Member since: May 23, 2019
    #14
  15. justintime

    justintime UKBF Regular Free Member

    516 69
    Whilst it's true that the invoices don't necessarily have to be in the name of the person who claims the VAT, there should be other documentary evidence to show that the claimant has paid the invoice direct with the supplier.

    That's not the case here, the non registered contractor has paid it himself then passed the cost on to the OP.
     
    Posted: Sep 9, 2019 By: justintime Member since: Apr 12, 2009
    #15
  16. spidersong

    spidersong UKBF Newcomer Free Member

    234 100
    Disbursements and agency questions, which is what the debate above would fall under are both questions of supply: who has commissioned the supply and who has received it.

    One good indicator is the invoicing arrangements, but not the only one, so yes the absence of an invoice made out to the OP is not the death knell of a claim, I would say that everything else in this case is though.

    So say I in my Victorian benevolence give a street urchin 5 shillings and tell him to go and pick up my Christmas Turkey from the butcher and give him sixpence for his troubles. We have a clear agreement that he is merely getting my goods on my behalf, his intercession doesn't change anything about the goods purchased, they have no effect on their nature or price, the butcher is fully aware that the goods are for someone else and the urchin never takes title to them.

    Now if I give the urchin 5 shillings and tell him I need a Christmas dinner then I may get a turkey, I may get some brussels (for which of course I would thrash him within an inch of his life as they are an abomination), but we do not have an agreement for him to purchase a turkey on my behalf from my butcher, we have an agreement for him to provide dinner and even if he bought me a raw turkey (thrashed again, so lax there's a cookhouse nearby) so that the nature of the 'goods' was unchanged it wouldn't be a disbursement, he would have purchased the things he needs to make a supply to me.

    Likewise in this case; I also suspect the intermediary has an effect on the price in that there may have been trade accounts or discounts used so that is not just someone popping down the shops on his behalf. So the price may well be changed and the onward supply is therefore changed by having an intermediary.

    We're it not and I'd had my heart set on a particular AC unit and told my fitter I needed a "Hal 9000" in order to make sure I didn't overheat and told him to pop down to Wickes but unfortunately, like royalty, I have no cash on me and so I'll give him the money when he gets back then that is a disbursement.

    Also the real killer is the invoice saying 'supply and install', if you want to argue that the goods were supplied by person A to person C through the agency of person B (a disbursement) then it's not a good indicator when person B in the middle spits out a piece of paper saying he supplied them.
     
    Posted: Sep 9, 2019 By: spidersong Member since: Aug 20, 2008
    #16