# Double Charging of Vat from Builder



## jumper1 (12 May 2011)

Hi Am, building a house at the moment and i have a builder as the main contractor and any other contractors such as electricians , plumbers e.t.c employed as sub-contractors to the main contractor(the Builder). 

Currently i have a nominated plumber working on site as a sub contractor to the Buidler and he is looking for part payment  of 4,000 Incl 13.5% vat for work carried out .So the builder will pay the 4,000 Inclusive of Vat to the Plumber but then the builder will charge me 4,000 (which already included vat for the Plumber) + another 13.5% vat which is the Builders Vat which totals up to €4540. 

In effect i am paying i am double paying of vat , is this correct 

regards, Jumber 1


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## callybags (12 May 2011)

The builder will pay the plumber €4,000 (3,524.23 + 13.5% VAT) but will reclaim  €475.77 so the net cost to him will be €3,524.23.

This is the starting figure for when he charges you.

I don't know if he puts a mark-up on the plumbers fee, but if not then you should be charged €3,524.23 + VAT.


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## kkelliher (12 May 2011)

Under current VAT regulations the builder will actually pay the Plumber €3524.23 directly. He will then return the VAT to the revenue commissioners as part of his VAT return. The plumber no longers get paid VAT as the Main Contractor is now responsible for VAT returns

Based on the standard form of RIAI contract, you said the plumber is nominated therefore would be included in the Contract as a PCSUM. Based on this the Contractor is entitled to charge you €3,709.72 plus VAT as he is entitled to a main contractors discount (1/19th) of the price.

Not all builders know this as many have never read the contract so you may get away with simply paying the €3524.23 plus VAT. Alternatlivly if he have made an addition to the PC SUM at contract stage he would be intitled to this addition ontop of the €3524.23.


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## jumper1 (12 May 2011)

Hi , thanks for replies. Was onto the revenue and they said that the Builder has to charge me another 13.5 % Vat on the 4000 as he is doing up and Invoice . e.g
(a) Sub contractor charges 3524.23 for work and sends it to the Builder
(b) Builder calculates vat at 13.5 % which is 475.77 and sends this onto the revenue
(c) builder calculates what he is to charge me which is  3524.23 + 475.77 (which has been paid to the revenue) and as he is sending me an invoice he has to charge me another 13.5% on the 4000(3524.23 + 475.77) which is 540 which has also to be sent onto the Revenue .
(d) So for an original bill of 3524.23, the builder has to pay vat of 1015.77 to the revenue, which in turn is passed onto me and so i end up paying the builder 4540.

Please not the builder is not adding any markup or anything like this , he is just charging what he believes he has to pay to revenue. 

Regards, Jumper1
can somebody confirm this is correct


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## T McGibney (12 May 2011)

This isn't correct.  callybags' explanation is more or less correct, ie

Plumber charges builder €3524. VAT applies at 13.5% under reverse charge rules. This amounts to €476. The builder pays €3524 to the plumber and adds the €476 to their VAT liability for the period. The builder also reclaims the €476 VAT element on their VAT return, meaning that their net VAT cost on the deal with the plumber is zero.

The builder then charges you a price, presumably the €3,524 plus a margin for themselves. They must charge 13.5% VAT on this and pay it on to Revenue. This is the VAT cost to you.


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## jumper1 (12 May 2011)

Hi , Again Thanks for that . So can i confirm the Builder can only charge *extra vat* on any markup/profit he makes on the transaction not on the original figure charged that already includes vat 

*Example 1* :  3524.23 for plumbing work excluding Vat , Vat paid by builder €475.77 to Revenue. Builder has not markup so bill charged to me is 4000. Included in the figure is the Total vat paid to Revenue by Builder of €475.77 

*Example 2* :  3524.23 for plumbing work excluding  Vat, Vat paid by builder €475.77 to Revenue, Builder has markup of 1000 euro so he has to pay revenue 135 Euros . So final bill to me is 5,135 . Included in the figure is the Total vat paid to Revenue by Builder of 610.77

Am i correct in this or am i still missing something 

Regards, Jumper1


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## T McGibney (12 May 2011)

jumper1 said:


> Hi , Again Thanks for that . So can i confirm the Builder can only charge *extra vat* on any markup/profit he makes on the transaction not on the original figure charged that already includes vat
> 
> *Example 1* :  3524.23 for plumbing work excluding Vat , Vat paid by builder €475.77 to Revenue. Builder has not markup so bill charged to me is 4000. Included in the figure is the Total vat paid to Revenue by Builder of €475.77
> 
> ...



I think the way you're putting it is confusing. The bottom line is that he must charge you 13.5% VAT in addition to the Net amount invoiced to you.  How he deals with VAT on his subcontractor costs is of no relevance to you.


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## kkelliher (12 May 2011)

To Put it in simple terms the plumber does not charge vat to the main contractor so forget about vat in that transaction

You pay the nett plumbers cost plus any markup and then 13.5% of this total in vat


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## jumper1 (13 May 2011)

Thanks again for that . I have just nominated a Window company to make and install the windows in my house and the total that they are charging is 49,000 Incl Vat(43,171.8 + 13.5% vat of 5828.2). The Builder has nominated these windows people as subcontractors and when the windows have been installed he will be charging me 49,000 (net cost of 43,171.8 + 13.5% vat of 5828.2) the 5828.2 will go to the revenue. The Builder said he will also have to charge me 13.5% vat on the 49,000 as he also has to pay vat him self on the 49,000 even though there will be no mark-up from him .

BUT By what you are saying KKeillher i should only be paying the Builder 49,000, including the 13.5% Vat ,if the Builder is not taking any mark-up 

Regards, Jumper1


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## kkelliher (13 May 2011)

If the 49,000 includes VAT you pay the builder a total of 49,000.

You pay the builder the VAT on the nett amount which is the 43,171.80 which gives you 49,000. He willpay VAT on the 43,171.80 not the 49,0000


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## jumper1 (13 May 2011)

Thanks for your Help , now to get back to the builder and see what he says


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