Hi i,ve had 2 quotes for extension work one at 20k + vat and the other chap said he's not vat registered and will beat any quote I get I told him the other price he's now come in at 23,800 surely he should be able to do it for 20k no vat or am I missing something is he just trying to con the vat out of me. Both were well recommended.
vat or not
- Thread starter jamiecharlotte
- Start date
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that's what I thought he trying to get the vat out of me without paying it himself.
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M
merlin50
he still has to pay the VAT on any thing he has to buy so you still have to pay that so offering him 20k is taking p**S
Correct.
The previous builder-shafting, penny-pinching posters are clueless.
The only thing a non-vat builder is able to save you on is vat on the labour.
surely a builder who isn't vat registered should be cheaper than one who is?
First quote was £20,000 for labour and materials. VAT would be £4000. Total £24,000
Second quote is for total of £23,800 with VAT at 20% of the materials only .
If both quotes were based on the same labour and material costs, then the labour content would be £1000 and the materials £19,000.
I doubt it ! Looks like the exempt guy is charging a lot more for his labour.
Ask for the quote from the VAT exempt guy to be broken down;he should be willing to do this as he is selling his VAT exemption as a competitive advantage feature.
Second quote is for total of £23,800 with VAT at 20% of the materials only .
If both quotes were based on the same labour and material costs, then the labour content would be £1000 and the materials £19,000.
I doubt it ! Looks like the exempt guy is charging a lot more for his labour.
Ask for the quote from the VAT exempt guy to be broken down;he should be willing to do this as he is selling his VAT exemption as a competitive advantage feature.
And how would you know?
...and he should say none of your business.
To the OP;
Get more quotes but ultimately go with a builder that you are happy with. Quibbling over small differences in pricing could become largely irrelevant once the job is underway as things rarely go according to plan.
You need to work with a builder you can trust, not one that is a few hundred quid cheaper than another. If you start rattling feathers at this stage it may bite you in the bum.
The only thing a non-vat builder is able to save you on is vat on the labour.
And profit (pre tax)
VAT threshold is around £75k, hard to believe many builders take less than that a year.
And it's my VAT, not the builder's. The builder is an unpaid tax collector, he collects it for the taxman for nothing and passes it onto the taxman for nothing.
And I know this as I operate a VAT registered business too.
All you should care about when getting quotes is the cost. Beware the builder who gives you a VAT free quote as that extra 20% will come as a nasty surprise.
If he gives you a VAT free quote add 20% and negotiate from there. I have no problem with paying cash in hand if the builder is happy to take it and it makes the final price more acceptable.
But if a builder starts talking about VAT then simply tell him to quote you the all in price and then find ways to reduce it that you are both happy with.
If he insists on charging VAT then insist on a VAT invoice. Remember it's your VAT, not his, so make sure it makes it harder for him to pocket it, make sure he passes it on.
If he is not VAT registered...
he will not be able to claim back the input VAT he pays on the materials. So it is your business as you are quite entitled to have a materials/labour breakdown (you are essentially paying for the materials).
However if he buys a brick for £1 + 20% VAT = £1.20.
He might sell it to you for £1.50. That 30p will be labour and his profit (if any). Even though you have paid £1.50 for that brick you only paid VAT on the £1 he paid for it.
If he is VAT registered....
You will have to pay the VAT on the brick. This will net out on the VAT return so he just passes on your 20p to the supplier of bricks who puts it on his VAT return etc etc
You will also however have to pay VAT on the 30p builder's labour/profit and builder should pass that VAT onto the VATman. It's not his, it's yours. So the brick costs you more.
Clear as mud? Probably not...
It gets more interesting if the builder is registered for Flat Rate VAT but that is getting a bit complex...... If he is, and he knows what he is doing, he can make VAT a profit centre and legally put some of your VAT in his back pocket.
he will not be able to claim back the input VAT he pays on the materials. So it is your business as you are quite entitled to have a materials/labour breakdown (you are essentially paying for the materials).
However if he buys a brick for £1 + 20% VAT = £1.20.
He might sell it to you for £1.50. That 30p will be labour and his profit (if any). Even though you have paid £1.50 for that brick you only paid VAT on the £1 he paid for it.
If he is VAT registered....
You will have to pay the VAT on the brick. This will net out on the VAT return so he just passes on your 20p to the supplier of bricks who puts it on his VAT return etc etc
You will also however have to pay VAT on the 30p builder's labour/profit and builder should pass that VAT onto the VATman. It's not his, it's yours. So the brick costs you more.
Clear as mud? Probably not...
It gets more interesting if the builder is registered for Flat Rate VAT but that is getting a bit complex...... If he is, and he knows what he is doing, he can make VAT a profit centre and legally put some of your VAT in his back pocket.
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