Vat and prices

[b0atman]

Why do some marinas and sellers quote price and not include Vat do they think we cannot work it out ?

General one is Blacking some include Vat some do not why ?

Surely the majority of boaters are not able to claim Vat back ?

[alan_fincher]

Well stating the bleedin' obvious maybe.....

 

Some people doing blacking work will be VAT registered, other will claim to be below the VAT threshold.

 

This made a significant difference when I was comparing blacking costs local to me last summer, because in one case I needed to pay the VAT as well, and in the other case I was told I didn't.

 

I was surprised though that the yard claiming they were below the VAT threshold actually were, as they seemed to be getting a lot of work.

 

But that, I guess, was their issue, not mine.

[Paul's Nulife4-2]

Yes,it can be annoying I think.

If someone asks me for a price to do Xx, surly they want to know how much it's going to cost 'Them' for the item or job in question. If the company has to add VAT then add it, Then tell the customer how much as a 'whole' it's going to cost them. As per the original question 'How much will it cost me for you to XXXXX ?.

I wouldn't say Oh that will be

£X so it looks a good price to get the job

Then tactfully worded add

+ Vat + fuel + phone costs + a lunch allowance for the lads.

Yep,can be annoying.

Edited February 8, 2014 by Paul's Nulife4-2

[ditchcrawler]

I know of one establishment that is several companies at the same premises that do the same work by the same people, some of the companies are VAT and some aren't, the work they did for me was by the company that wasn't, I would guess if I had been a VAT registered business I would have been dealing with the VAT company

[Paul's Nulife4-2]

I know of one establishment that is several companies at the same premises that do the same work by the same people, some of the companies are VAT and some aren't, the work they did for me was by the company that wasn't, I would guess if I had been a VAT registered business I would have been dealing with the VAT company

That I can sort of understand, the company is obviously trying to give the customer who is not VAT registerd a better price from a company that doesn't have to charge VAT.

Who owns / runs the company doesn't really matter to the customer,that's for company & Her majesty to sort out.

Edited February 8, 2014 by Paul's Nulife4-2

[Tim Lewis]

That I can sort of understand, the company is obviously trying to give the customer who is not VAT registerd a better price from a company that doesn't have to charge VAT.

Who owns / runs the company doesn't really matter to the customer,that's for company & Her majesty to sort out.

 

That I can sort of understand, the company is obviously trying to give the customer who is not VAT registerd a better price from a company that doesn't have to charge VAT.

Who owns / runs the company doesn't really matter to the customer,that's for company & Her majesty to sort out.

 

Except that a company that is VAT registered can claim back the VAT it has paid out so the cost to the customer should not be that much different

 

Tim

[Paul's Nulife4-2]

 

 

Except that a company that is VAT registered can claim back the VAT it has paid out so the cost to the customer should not be that much different

 

Tim

Yes,indeed.

But a non VAT registerd customer couldn't claim back the VAT they would be charged by a company that was VAT registerd for doing the work for him. There for would be out of pocket as the end user.

[Quinafloat]

 

 

Except that a company that is VAT registered can claim back the VAT it has paid out so the cost to the customer should not be that much different

 

 

 

Depends whether it is labour or materials intensive. For blacking their is little vat to be reclaimed.

[Henhouse]

Although there is no written formal protocol, I think that you will generally find that businesses who are providing a service tend to quote cost + vat.

 

ie Garages, Builders, Hauliers, etc.

 

Trade retail outlets, such as Builders Merchants, do likewise.

 

 

Whereas the general high street type retail outlets will display the all in price.

 

( assuming of course that they are VAT registered )

[cariad]

Except that a company that is VAT registered can claim back the VAT it has paid out so the cost to the customer should not be that much different

 

Tim

 

A company that is v.a.t. registered will charge the current rate, whereas someone who isn't registered should be charging less.

Yes you are correct in stating that they can reclaim v.a.t., but for work that is labour intensive there can be large savings if unregistered.

[Mike Todd]

That I can sort of understand, the company is obviously trying to give the customer who is not VAT registerd a better price from a company that doesn't have to charge VAT.

Who owns / runs the company doesn't really matter to the customer,that's for company & Her majesty to sort out.

Makes the accounting horrendous! (assuming that labour is correctly accounted)

[Timleech]

A company that is v.a.t. registered will charge the current rate, whereas someone who isn't registered should be charging less.

Yes you are correct in stating that they can reclaim v.a.t., but for work that is labour intensive there can be large savings if unregistered.

 

Depends on other overheads as well as materials costs. Certainly a small trader with minimal overheads & no VAT registration can offer a better deal.

 

edit - all other things being equal, someone who is not registered will/should be charging a higher basic hourly rate then the pre-VAT rate of someone who is registered. How much more will depend on overheads, and how much of those includes reclaimable VAT, but it would usually be less than the other's VAT-inclusive rate..

 

I thought the practice of 'mushrooming' - dividing a business to avoid VAT thresholds - had been clamped down upon a long time ago?

 

Tim

Edited February 8, 2014 by Timleech

[furnessvale]

 

Depends on other overheads as well as materials costs. Certainly a small trader with minimal overheads & no VAT registration can offer a better deal.

 

edit - all other things being equal, someone who is not registered will/should be charging a higher basic hourly rate then the pre-VAT rate of someone who is registered. How much more will depend on overheads, and how much of those includes reclaimable VAT, but it would usually be less than the other's VAT-inclusive rate..

 

I thought the practice of 'mushrooming' - dividing a business to avoid VAT thresholds - had been clamped down upon a long time ago?

 

Tim

Provided you can demonstrate the businesses are separate you can still get away with it.

 

I know at least one marina where its dry dock operation is technically a separate company from the moorings.

 

George ex nb Alton retired

[b0atman]

I am not concerned as to whether firms are Vat registered or not I just want a price that I will be expected to pay .

If I ask a garage price of Car on forecourt they would not say £10,000 then when I go to pay have them say that will be £12,000 sir

same with repair work.

Now if I go to a Builders merchants who primarily deal with the trade then I expect price to be net of Vat .

So please when I am looking for Boat blacking can I have prices including Vat because it is what we all pay.

Now if I was Vat registered and boat was part of my business then with the receipt showing Vat I could claim it back.

[MtB]

Yes,indeed.

But a non VAT registerd customer couldn't claim back the VAT they would be charged by a company that was VAT registerd for doing the work for him. There for would be out of pocket as the end user.

 

That is missing the point being made.

 

A VAT registered company reclaims the VAT paid on all its purchases and supplies so gets them cheaper than the non-VAT firm.

 

You are still paying VAT to the non-VAT firm, on all the materials, fuel, etc they included in their supposedly VAT-free quote. This means you end up only paying extra VAT on the value added by the VAT firm. Hence the name Valued Added Tax.

 

Hard to explain and not well understood by the public. Not sure I've explained it very well!

 

MtB

[Alan de Enfield]

Very loosely (with nice round numbers) :-

 

Scenario 1 - VAT registered company

 

I buy £100 + VAT of steel (cost £120)

I can claim the VAT back from HMRC (£20)

I weld the metal together to make a gate, I paint the gate and sell it for £200. (+ VAT)

 

The metal cost £100, I ‘added value’ by processing it and sold it for £240 (inc VAT).

I have to pay HMRC the £40 ‘sales’ VAT

 

The gate materials actually cost me £100

Labour (certified welder) cost me 2 hours at £40 / hour*

I paid HMRC £40 (of the £240 sales price)

I made a profit of £20.

 

I have to pay for the electricity to run the welder, rent on the ‘unit’, business rates and at the end of the year corporation tax on any profits.

 

Profit = 3 & 4 pence

 

* Holiday pay, pension costs, insurance etc etc.

 

Scenario 2 - ‘Jack The Lad’ with a welder in his shed

 

Buys the same steel cost £120

Knocks up the gates in his spare time (no labour cost)

Electricity ‘lost’ amongst his general domestic usage

No rent on his shed, no business rates, no corporation tax, no VAT to pay

 

Sells gates for £220 (undercutting the ‘company’ by £20 – as the buyer sees it) and makes himself £100 clear profit

 

 

 

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Amended in view of Ianali's post - which made valid points

 

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No I dont expect to pay the welder £40 per hour (amended from £50) but employees have a lot of additional costs other than their 'pay' (NI, holiday pay etc). The welder is a qualified welder and if he doesnt do this 'job' then he still gets paid - I cannot pay him based on the 'quality' of the job he is doing.

Edited February 8, 2014 by Alan de Enfield

[Boat&Bikes]

Very loosely (with nice round numbers) :-

 

Scenario 1 - VAT registered company

 

I buy £100 + VAT of steel (cost £120)

I can claim the VAT back from HMRC (£20)

I weld the metal together to make a gate, I paint the gate and sell it for £200. (+ VAT)

 

The metal cost £100, I ‘added value’ by processing it and sold it for £240 (inc VAT).

I have to pay HMRC the £40 ‘sales’ VAT

 

The gate materials actually cost me £80

Labour (certified welder) cost me 2 hours at £50 / hour*

I paid HMRC £40 (of the £240 sales price)

I made a profit of £20.

 

I have to pay for the electricity to run the welder, rent on the ‘unit’, business rates and at the end of the year corporation tax on any profits.

 

Profit = 3 & 4 pence

 

* Holiday pay, pension costs, insurance etc etc.

 

Scenario 2 - ‘Jack The Lad’ with a welder in his shed

 

Buys the same steel cost £120

Knocks up the gates in his spare time (no labour cost)

Electricity ‘lost’ amongst his general domestic usage

No rent on his shed, no business rates, no corporation tax, no VAT to pay

 

Sells gates for £220 (undercutting the ‘company’ by £20 – as the buyer sees it) and makes himself £100 clear profit

Rather inaccurate details here. The Vat registered companies steel cost seems to alter and would a company making this item really pay £50 per hour to a welder?

[Alan de Enfield]

Fair comment - it is only an example of the VAT 'process'

 

 

OK - replace 'gates' with a 'integral diesel tank' for a narrowboat.

[Paul's Nulife4-2]

Yep,have that.

As an end user or customer,it doesn't worry or concern me what Overheads, Business costs or Profits a company makes from supplying me a gate I asked for.

So long as it's as they are of the same spec & fit for purpose, I would ofcourse go for the cheapest irrespective if it was the VAT registerd company or not that ultimately supplies it.

The point I was trying to make is

Company A quote £200

Company B quote £200 + Vat.

As a domestic end user non VAT registerd customer I would be out of pocket buying from company B. As i can't clame the VAT back.

Edited February 8, 2014 by Paul's Nulife4-2

[Alan de Enfield]

Yep,have that.

As an end user or customer,it doesn't worry or concern me what Overheads, Business costs or Profits a company makes from supplying me a gate I asked for.

So long as it's as they are of the same spec & fit for purpose, I would ofcourse go for the cheapest irrespective if it was the VAT registerd company or not that ultimately supplies it.

The point I was trying to make is

Company A quote £200

Company B quote £200 + Vat.

As a domestic end user non VAT registerd customer I would be out of pocket buying from company B. As o can't clame the VAT back.

Exactly and thats what most of us would do

[MtB]

Yep,have that.

As an end user or customer,it doesn't worry or concern me what Overheads, Business costs or Profits a company makes from supplying me a gate I asked for.

So long as it's as they are of the same spec & fit for purpose

 

Now this is where things get complicated. There is another factor you may overlooked. Not important for the gate, but what if the diesel tank leaks after you've fitted it?

 

Will you be able to find the fly-by-night bloke who did it for cash under that table? Will he take the tank back and fix it? Who pays for draining it and storage of the diesel in the meantime? What value do you put on the tank maker testing the product properly rather than saying 'yeah it will be fine mate'? What value on the company being contactable, willing and able to correct a screw-up?

 

Even if you don't care about this sort of stuff, plenty of people do and will pay a premium to get it in my experience. VAT registration (or lack of it) is a broad-brush indication of the bona fides of a company.

 

MtB

[Paul's Nulife4-2]

Oh I'm sure you're right MTB. & I can see credence to that train of thought.

(Although in the example we where using I mentioned same spec & fit for purpose)

But I agree in some cases you pay peanuts,you get monkeys and there gone the net day just ask most people who has had a cheap spur of the moment Tarmac Driveway done by some 'companys' reported in the news over the years

Edited February 8, 2014 by Paul's Nulife4-2

[Alan de Enfield]

Oh I'm sure you're right MTB. & I can see credence to that train of thought.

(Although in the example we where using I mentioned same spec & fit for purpose)

But I agree in some cases you pay peanuts,you get monkeys and there gone the net day just ask most people who has had a cheap spur of the moment Tarmac Driveway done.

Or decided to moor at Pillings - here today, gone tommorow

 

Mike - QMP were VAT registered but didnt know that meant they had to pay VAT !!!!

[MtB]

Or decided to moor at Pillings - here today, gone tommorow

 

Mike - QMP were VAT registered but didnt know that meant they had to pay VAT !!!!

 

Yep, and I did say 'broad brush' indication. Plenty of exceptions in either direction. There are some top quality, highly responsible tradespeople out there not VAT registered. Trouble is, more are cowboys than good guys!

 

 

MtB

[Timleech]

Yep,have that.

As an end user or customer,it doesn't worry or concern me what Overheads, Business costs or Profits a company makes from supplying me a gate I asked for.

So long as it's as they are of the same spec & fit for purpose, I would ofcourse go for the cheapest irrespective if it was the VAT registerd company or not that ultimately supplies it.

The point I was trying to make is

Company A quote £200

Company B quote £200 + Vat.

As a domestic end user non VAT registerd customer I would be out of pocket buying from company B. As i can't clame the VAT back.

 

That's not really anything to do with VAT, one company is quoting you £200, the other £220, they just choose to present it in different ways.

 

My prices are +VAT, a fair percentage of my work is for VAT registered companies, and I've always quoted prices in that way since I registered.

I think retailers, selling goods mainly to the public, are required to quote their prices including VAT but that hasn't always been the case.

 

Edit - one reason for quoting prices 'plus VAT' is that they don't have to be changed if the VAT rate changes.

 

Tim

Edited February 8, 2014 by Timleech