Pricing a job 'plus VAT'???

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arcon5

Free Member
Sep 6, 2006
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Lincolnshire
Surely a quote should be how much the customer is due to pay - irrespective of whether some go to the government? The VAT element can be itemised within that quote to give the customer a view of the real cost to them.

IMO to give quotes out saying £x then asking for £y is really poor practice
 
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arcon5

Free Member
Sep 6, 2006
2,564
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Lincolnshire
That's a good point. But you can still quote net and gross on the same invoice. Problem with not quoting VAT is makes it more difficult to manage cashflow. Especially if for example settlement discounts or similar are available which would affect the vat anyway, since vat is calculated on the discounted figure whether taken or not
 
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Paul Kelly ICHYB

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Jan 21, 2008
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icanhelpyourbusiness.co.uk
It does not matter what total you put on your quote, as long as you specify if VAT is excluded or included in the total. You also have to be VAT registered to play with VAT!!!!

If you want to split parts and labour, fine!

Using the phrase 'plus VAT' is ambiguous! To me, it means the VAT is included; to others it means it is added after!

Have a look at HMRC guidance.
 
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sanjiv

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Feb 15, 2010
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www.splurgem.com
When you work out costs, you always use ex VAT as you claim the VAT back.

In your example, labour is £10k and materials £10k. This is £20k in total. On your sales, you have to pay VAT. So you would charge the customer 20% VAT on top of the total.

If you wanted a £5k profit in there, this is what your accounts would look like:
Labour £10k
Materials £10k
Profit £5k
TOTAL £25k

You would collect £30k from your client (inc. VAT) Then VAT owed to HMRC £5k.

I would suggest you mention prices excluding VAT on your quote just to be perfectly clear. There is no harm in writing it and is may help stop confusion - especially if you don't know your customers VAT position.

Hope that helps!
 
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The key to all this is in the name Value Added Tax.

This works on the principle that each business in a series of transactions ends up paying 20% tax to the government on it's own profit - i.e it's own "added value"
 
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When you work out costs, you always use ex VAT as you claim the VAT back.

In your example, labour is £10k and materials £10k. This is £20k in total. On your sales, you have to pay VAT. So you would charge the customer 20% VAT on top of the total.

If you wanted a £5k profit in there, this is what your accounts would look like:
Labour £10k
Materials £10k
Profit £5k
TOTAL £25k

You would collect £30k from your client (inc. VAT) Then VAT owed to HMRC £5k.

I would suggest you mention prices excluding VAT on your quote just to be perfectly clear. There is no harm in writing it and is may help stop confusion - especially if you don't know your customers VAT position.

Hope that helps!

not entirely correct, the OP states £10K + VAT cost of materials, therefore if your scenario was used, the VAT due would be £3k not £5k.

£5k collected
£2k already paid to supplier
£3k balance to pay
 
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