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Deleted member 23452
Guest
Everyone ready for the VAT reverse charge to start on the 1st of March?
smoother09
Well-Known Member
Only doing cash jobs I'm at home shhushh!
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Deleted member 23452
Guest
The biggest issue will be the hammering cash flow will take for those main and sub-contractors and paid/paying under CIS. You can't charge VAT to anyone other than the end user.
tapit
Well-Known Member
True but you may get a rebate.
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Deleted member 23452
Guest
That's the cash flow issue. You buy materials for a job in January with a VAT content of say £200. You can't put that £200 on the invoice so you have to wait until mid-April to get it back in a rebate. Scale that up across the three month period on material intensive work like rendering or EWI jobs (even worse for the sort of work I do) and it's a big hole in your cash flow.
The other problem is if you have someone sub-contract to you, a sparky for example. They can't invoice you with VAT, so you can no longer offset that against the VAT you charge to the customer.
It's all manageable, but people need to be aware of what's happening and the implications so that they're not caught out.
why not deregister?
Was not aware of this. I'm not registered so mine goes straight onto the clients bill, with interest. Helps to know though, why the builders are looking a bit stressed. Some will only be able to survive the cash flow hit by pulling some dark cash out of their back pocket that the tax man didn't know about, but might suss now.
The new quartery full book returns are going to give HMRC lots of interesting info now, at the press of a button on their Big Dog IT.
The new quartery full book returns are going to give HMRC lots of interesting info now, at the press of a button on their Big Dog IT.
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Deleted member 23452
Guest
They're doing it because of all the money HMRC have lost due to VAT scams. People charging VAT but not passing it on to HMRC. As always though it will impact people who're trying to run a company properly more than the scammers.
Still, as you say it will go a long way to clipping the wings of those who want to avoid various sorts of tax as the information gather will be huge. Even at the most basic level comparing VAT returns directly to CIS returns will throw up some interesting discrepancies. As for those dodging CIS who've been claiming back VAT, I imagine they'll be twitching a bit.
I can't pretend I have any sympathy to be honest, slap it into 'em.
TonyM
Private Member
Because I do mainly new work, I claim back every quarter. It’s to my benefit being registered
They’ve moved this 3 times already, looks like they might finally implement it.They're doing it because of all the money HMRC have lost due to VAT scams. People charging VAT but not passing it on to HMRC. As always though it will impact people who're trying to run a company properly more than the scammers.
Still, as you say it will go a long way to clipping the wings of those who want to avoid various sorts of tax as the information gather will be huge. Even at the most basic level comparing VAT returns directly to CIS returns will throw up some interesting discrepancies. As for those dodging CIS who've been claiming back VAT, I imagine they'll be twitching a bit.
I can't pretend I have any sympathy to be honest, slap it into 'em.
As usual it’s a half baked idea, it’s more hastle for the contractor. The simplist way to avoid vat scams, give construction a boost is to just make all construction work levied at 5% across the board. It’s all ready a ball ache for us 0% on new builds, 5% on Ewi, 20% on domestics now this to hamper the cash flow.
Osprey maintenance
Member
Not being vat registered will I have to pay a vat reverse charge? or is this only for the lads/ladys that are vat registered?
Don't think so, you're like me,so at the moment you include it in your price to the client. As you are not registered you cannot charge VAT, and neither you or the client can recover it from HMRC.
My % mark-up on materials includes the full vat element.
If the client is insistent on recovering the VAT then I will charge labour-only & they buy and take liability for getting the materials - shortfall, quality, wrong spec etc. although I do tell them what to buy. Good luck with getting the same prices, but sometimes they can.
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Deleted member 23452
Guest
You have to be VAT registered and paid/paying through the CIS.
Osprey maintenance
Member
Makes sence,
Just thought it was something HMRC brought out to make up for the money they have and out lately
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Deleted member 23452
Guest
It sort of is, they reckon HMRC were losing £100 million a year to VAT fraud in the construction industry. People were charging VAT then trousering it rather than handing it over.