vat

P

person

Guest
Hi, i have a VAT query... i am currently doing books for a company.. regarding their sales invoice - they provide a prof service at 21%.. but then they also do repair work (buy the materials and provide the service) is this at 13.5%??

Then can the whole invoice be charges at 13.5%?? when majority of it is regarding the repair work??

Any suggestions would be much appreciated!!
 
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Brendan
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This is know as the 2/3rds rule in VAT. If the goods you are supplying are normally 21% VAT, and the service you are supplying is normally 13.5% VAT (e.g. construction services), but you supply goods and services together, then you are allowed charge the customer the 13.5% VAT rate on the total supply so long as the cost of the goods is less than 2/3rd of the total cost of supply - in other words labour element is more than 1/3rd.
Normally if cost of goods is more than 2/3rd then must charge VAT at high rate on total invoice (labour & goods) but this can be avoided using the composite/multiple supply rules
Kieran Coughlan, Tax Manager, CXC
 
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