VAT query

[leinsterman]

Hi,

First time poster, hoping to find an answer to whether the following example is an industry norm or is just someone trying to

I received a quote from a VAT registered home repair company to do a specific item of work.

The quote received was ~€1000 for equipment, ~€1000 for labour. The quote summed this up (€2000). AS equipment < 66.67% of total, the correct VAT to be applied is @13.5%, giving a total of €2270.

All above seemed fine, however when I checked the price of equipment myself on the internet, I found the the equipment price of €1000) was the price inc. 23% VAT, so ex VAT price was €813.

Am I not correct that the quote should use the €813 price for equipment cost, rather than the €1000, as otherwise I'm paying VAT twice on that equipment? i.e. the 'correct' price should be (813+1000)*1.135 =€2058?

If so, is this be an accepted 'norm' in the trade that allows an increase profits on jobs, so can expect to see this repeated in otehr quotations, or is this the exception, normally would not happen?

Thanks,
Paul

 

[callybags]

Are you expecting the company to supply the equipment at cost?

The norm would be that they would add a margin on the equipment cost to cover collection, finance costs etc.

It's possible that some would just use the VAT element as their margin on the equipment.

 

[leinsterman]

Are you expecting the company to supply the equipment at cost?

The norm would be that they would add a margin on the equipment cost to cover collection, finance costs etc.

It's possible that some would just use the VAT element as their margin on the equipment.

thanks for reply. First time dealing directly with trades myself for equipment purchase so not sure of the norms...

I would have no problem paying a fee for collection etc costs - however the idea of paying 13.5% VAT on 23% VAT just rang alarm bells, and reply was not to cover collection etc, had thought adding 23% to equipment pricing (i.e. €230 per €1000 of equipment) for this seems expensive, or am I being unreasonable?

 

[Purple]

thanks for reply. First time dealing directly with trades myself for equipment purchase so not sure of the norms...

I would have no problem paying a fee for collection etc costs - however the idea of paying 13.5% VAT on 23% VAT just rang alarm bells, and reply was not to cover collection etc, had thought adding 23% to equipment pricing (i.e. €230 per €1000 of equipment) for this seems expensive, or am I being unreasonable?

Do you now what your landed cost is for the equipment or is the €813 a delivered price?

 

[poolfanabc]

Do you now what your landed cost is for the equipment or is the €813 a delivered price?

The €813 is price at local wholesaler - is that what you mean?

 

[leinsterman]

Do you now what your landed cost is for the equipment or is the €813 a delivered price?

The price was an internet price, however it's an Irish company based in Dublin, so price is landed, subject to collection at that company premises.

 

[leinsterman]

The €813 is price at local wholesaler - is that what you mean?

yes, its a dealer in Dublin.

 

[Purple]

The price was an internet price, however it's an Irish company based in Dublin, so price is landed, subject to collection at that company premises.

ok, so it's his mark-up. Not a bargain but not excessive either.

 

[leinsterman]

ok, so it's his mark-up. Not a bargain but not excessive either.

thanks for the feedback. so that level of mark-up on equipment pricing would be normal in the trade - I suppose I thought that the equipment would be supplied at cost, with some collection charge separate.

 

[Purple]

thanks for the feedback. so that level of mark-up on equipment pricing would be normal in the trade - I suppose I thought that the equipment would be supplied at cost, with some collection charge separate.

If a business ties up a considerable amount of its capital by providing equipment (perhaps from stock they hold and have paid for) then there is a cost associated with it. They need to make a profit that covers their overheads; rent, rates, insurance, staff, utilities etc. from the transaction.
If they are borrowing to fund the provision of the equipment then they have additional costs.
Most businesses that fail do so because they run out of working capital, not because they can't make a profit.