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Apologies if this is a total red herring...
Is there any way this is a miscommunication around the customer trying to claim the 13.5% VAT equivalent credit under the HRI scheme for a "supply and fit" contract?
http://www.revenue.ie/en/tax/it/reliefs/hri/hri-general-faqs.html
Apologies if this is a total red herring...
Is there any way this is a miscommunication around the customer trying to claim the 13.5% VAT equivalent credit under the HRI scheme for a "supply and fit" contract?
http://www.revenue.ie/en/tax/it/reliefs/hri/hri-general-faqs.html
I take it from your post that you are not VAT registered and your client is.
It is costing him more to have used your services and material supply, than it would have done if he had purchased the materials himself. If he had purchased the materials he could have claimed the VAT back.
He may have assumed you were VAT registered, in which case he could reclaim the VAT. Of course he should have thought of all this before he gave you the job.
If you are not VAT registered and supply materials to VAT registered clients, this puts you at a disadvantage vs competitors who are VAT registered. This might be worth looking at for the future.
I am not sure that the Revenue would be interested, if they investigated everyone who thought about how to deal with VAT they would be busy. But you never know, it just may scare him.
You could offer him a discount for prompt settlement, roughly equivalent to the VAT on the materials, that might get things moving.
Undoubtedly this guy owes you the money and you are entitled to pursue him for it. But it can be difficult in practice.
Actually compared to my competitors I am far cheaper, he can still use the invoice I gave him against his business costs at the end of the year, he just can't reclaim something that I don't charge for.
If a client needs a job involving say €100 labour and €100 materials then if the contractor is VAT registered that is what it costs the client.
If he gives you the job it costs him €100 labour and €113.5 materials. Unless you swallow that €13.50 of course.
Either way if you are not VAT registered you are at a disadvantage supplying a VAT registered business.
Hmmmmm no that is not how the VAT refund works (I'm open to correction of course)
The entire job you mention would be €100 labour and €100 materials which would have a 23% VAT added = €23.
No it's €200 plus 13.50%= €227 and they can claim back €27.
But you charge them €223 and they can't get anything back!
No it's €200 plus 13.50%= €227 and they can claim back €27.
But you charge them €223 and they can't get anything back!
So I am out of pocket by a 4 figure some and still have bills outstanding from this job.
So I contacted him again and asked how would we proceed if I gave him the receipts to which he told me he'd give them to his accountant and the accountant would pay me.
So it seems to be constant obstacles.
Forget the noise about VAT, this isn't a VAT problem, it's a debt collection problem. The idea of his accountant paying you is bull of the highest order. That's not what accountants do.
Being unregistered for VAT puts the OP is at a competitive disadvantage vis a vis other contractors who are VAT registered, when tendering for work with clients who are VAT registered. Or would you disagree ?
That's very arguable and may well be true, but it's not the problem here. The OP tendered and did the work satisfactorily only for their customer to renege on their commitment to pay for it.
No it's €200 plus 13.50%= €227 and they can claim back €27.
But you charge them €223 and they can't get anything back!
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