VAT question letting agent and maintenance

[-AndyH-]

Hi

I have a basic question about what my letting agent is doing.

They fully manage one of my properties and recently had to do some plumbing work. Unknown to me, they have their own maintenance company who does this work (presumably owned by the same person who owns the letting agency).

On the invoice, the maintenance company has billed the letting agency for the work including the VAT at 20%. I queried why the invoice is not in my name and they said because they instructed the work to be done and they will not issue the invoice in my name.

I assume the letting agent will recover the input VAT on the invoice, but they would not be able to do this if it was invoiced to me? If I am to pay the invoice with the VAT should I make sure it is in my name? I am not VAT registered.

I am wondering whether this is a method used by the agent to pocket an extra 20%.

Thanks

 

[faradaykeynes]

Invoice should be in your name, letting agents wont be able to claim vat even invoice is in their name bcaz they are not paying for it if you pay direct to plumber. If you pay to letting agent then they need to issue you an invoice with vat if they want to add their margin as well in case.

I hope letting agent is aware of CIS regulation as far as subcontractors are concerned for CIS related work

 

[-AndyH-]

Invoice should be in your name, letting agents wont be able to claim vat even invoice is in their name bcaz they are not paying for it if you pay direct to plumber. If you pay to letting agent then they need to issue you an invoice with vat if they want to add their margin as well in case.

I hope letting agent is aware of CIS regulation as far as subcontractors are concerned for CIS related work

The agent issues me with a monthly invoice, which will have a category called "Expenditure" and the Maintenance company invoice amount will be there with the VAT.

Could you elaborate on CIS?

Thanks

 

[faradaykeynes]

CIS mean construction industry scheme , more details here http://www.hmrc.gov.uk/forms/cis340.pdf

 

[David Griffiths]

Why do you think that the agent needs to be concerned with the CIS?

 

[faradaykeynes]

Normally letting agents dont get directly involve in doing maintenance/refurbishment work on properties for landlords, they just get contractor to invoice directly to landlord. BUT some letting agents perhaps not knowing that if they add their margin on these activities they would be subject to CIS regulations as contractors are not on their payroll. Seen recently cases where HMRC handed letting agents CIS assessment.

 

[David Griffiths]

But in this case the agent is acting as agent, and there is no margin on the invoice, if I've read the post correctly (Any margin will be in the maintenance company)

 

[faradaykeynes]

even its zero margin they cannot ask contractor to invoice them and not landlord if they do most likely HMRC will ask then to register for CIS regardless there is any CIS payments due or not

 

[Mitchells Bristol]

On the invoice, the maintenance company has billed the letting agency for the work including the VAT at 20%. I queried why the invoice is not in my name and they said because they instructed the work to be done and they will not issue the invoice in my name.

Can you clarify the billing amounts (assuming you have sight of the plumber's invoice)? Say the plumber cost was £100 + VAT = £120, then the cost to the agent would be £100 as he will recover the VAT. So how much has the agent then charged you? Have they charged you the full cost of the plumber £120 + their own VAT of 20%? Or have they just charged you for £100 + VAT?

 

[-AndyH-]

Can you clarify the billing amounts (assuming you have sight of the plumber's invoice)? Say the plumber cost was £100 + VAT = £120, then the cost to the agent would be £100 as he will recover the VAT. So how much has the agent then charged you? Have they charged you the full cost of the plumber £120 + their own VAT of 20%? Or have they just charged you for £100 + VAT?

I've not seen the latest statement - but it is like this:

Rent received (no VAT on this)

Less expenditure (which is the management fee and the cost for the plumber + VAT)

Using your £100 + VAT example, the agency will charge £100 (ex VAT amount) and the VAT £20 added to the invoice, along with the management fee + VAT.