VAT query

E

europhile

Registered User
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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?
 
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?
Click to expand...

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.
 
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
Click to expand...

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.
 
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.
Click to expand...

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? :confused:
 
europhile said:
What precisely is the two-thirds rule?
Click to expand...
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

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