VAT on materials.

[pjfplumbright]

I've just started subbying. When it comes to buying materials should I be charging 20% on top of the VAT Ive paid for materials? That's what I've been doing so far so that is my profit but a mate of mine recently said that because I get the VAT back Im effectively making 40% on the materials so I should only be charging the contractor the VAT inclusive price that I paid??

 

[tamz]

Charge whatever you can get away with. You are entitled to add a markup and if they have not pulled you over it being too high who cares. They are claiming the vat back anyway so your mark up is 20%.

 

[Guest123]

Keep everything above board or some day it might come back and haunt you. I'd contact HMRC and get the facts "straight from the horses mouth".

 

[tamz]

Btw if you are not vat registered you can't charge vat on anything.

 

[AWheating]

unless your vat registered its not something i would worry about.

 

[anz]

Once you've purchased the materials from your supplier, you can claim the VAT back. Which you are doing.

Your then selling the materials to whoever your working for. You can charge whatever you want for this. 20% extra makes sense, it keeps the maths easy.

You then need to add 20% for VAT, on to the price your selling them for.

Obviously only applies if your VAT registered.

So I can't see anything wrong with what your doing, as long as you've calculated it correctly.

 

[moony]

Should be like this

Boiler 1000 (not including vat)
Plus your percentage 200
Plus labour 600

Plus vat 360

£2160

If you've paid the vat at the merchant of 200 you then claim that back.

 

[moony]

And also the builder you sell your services to will just claim the vat back that you charged anyway. It's the end user that picks up the final vat bill on the job.