# VAT query



## europhile (4 Nov 2008)

I'm getting some tiling work done.  I've selected the tiles which the tiler is purchasing.

Say they cost €1,000 plus VAT at 21% = €1,210 and labour is €500. Total = €1,710.

The tiler is charging VAT at 13.5% on the lot.  Is this correct?


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## mathepac (4 Nov 2008)

europhile said:


> ...I've selected the tiles which the tiler is purchasing.
> 
> Say they cost €1,000 plus VAT at 21% = €1,210 and labour is €500. Total = €1,710.
> 
> The tiler is charging VAT at 13.5% on the lot.  Is this correct?



Do you mean he is charging you (€1,210 +  €500) x 1.135 =  €1,940.85 ?

In my view he should be charging  (€1,000) X 1.05 =  €1,050 for the tiles (Say 5% mark-up on the material costs)

So  €1,050 +  €500 =  €1,550 + VAT =  €1,550 X 1.21 =  €1,875.50 

The reason for VAT at the higher rate is the "2/3 rds rule" for labour vs material costs.


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## europhile (4 Nov 2008)

> Do you mean he is charging you (€1,210 +  €500) x 1.135 =  €1,940.85?



Yes.

The tiles would cost me €1,210 if I were to buy them in the shop.


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## ubiquitous (4 Nov 2008)

mathepac said:


> In my view he should be charging  (€1,000) X 1.05 =  €1,050 for the tiles (Say 5% mark-up on the material costs)
> 
> So  €1,050 +  €500 =  €1,550 + VAT =  €1,550 X 1.21 =  €1,875.50



Why, exactly?

"2/3 rds rule" only applies if material costs exceed 2/3s of total. 

Otherwise, he can charge 13.5% for the lot.


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## europhile (4 Nov 2008)

What precisely is the two-thirds rule?


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## mathepac (4 Nov 2008)

ubiquitous said:


> Why, exactly?
> 
> "2/3 rds rule" only applies if material costs exceed 2/3s of total.
> 
> Otherwise, he can charge 13.5% for the lot.



2/3 rds of 1,550 (total net of VAT) = 1,033.33

Material costs in my example = 1,050 which is greater than 1,033.33, therefore VAT rate = 21%, or are my sums wrong?


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## mathepac (4 Nov 2008)

europhile said:


> What precisely is the two-thirds rule?


When the materials portion of an invoice exceeds 2/3 rds of the invoice value net of VAT, than VAT is charged at the higher rate.

A couple of examples :

Materials 100, Labour 300, Total = 400, VAT @ 13.5%, Invoice = 454

*but*

Materials 300, Labour 100, Total = 400, VAT @ 21%, Invoice = 484.

I suspect that either


Your tiler isn't registered for VAT
He / she doesn't know how VAT works
He or she is taking you for a ride


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## allaboutheat (4 Nov 2008)

That rule does not excist anymore it is 21% on goods and 13.5% on labour this should be charged at seperate rates this being correct.  That rule is gone since last year I believe.


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