Having a new kitchen installed - is the builder right to charge VAT this way?

ClassicRyu · 22 Mar 2016 at 11:59

Hello all.

I am having a new kitchen installed. The company I am getting the kitchen from is Howdens, and they sell direct to contractor/builder, and not the customer. The builder then adds in his labour cost to make up the total quote.

The builder is the owner/director of his own property renovation company, and it is a Ltd company.

So the pricing is:

Materials - £2500 (includes VAT)
Labour - £2000 (includes VAT)

Which of course, means that the total is £4500, with all the VAT included in both the Materials and Labour costs.

However, the builder is asking for ANOTHER VAT charge for the total sum above (£4500), which means that it comes to a grand total of £5400.

I'm not an expert on finances, so I want to ask if he is right to do that? I'm asking because the VAT was already included in the materials and labour prices?

Any help will be most appreciated, thanks for your time.

GinG · 22 Mar 2016 at 12:07

Are you 100% sure the VAT is included in the Materials & Labour?

£2500 inc.VAT for a kitchen seems very cheap (only around £2k exc.VAT)

Trade prices are usually always Ex.VAT...even in B&Q Tradepoint all prices are shown as VAT.

Regardless there is no way he should be adding VAT on top of VAT.

Ricochet J · 22 Mar 2016 at 12:08

Materials and labour includes VAT. If he's adding VAT on top of that I'd ask him to politely but firmly leave.

cadmunkey · 22 Mar 2016 at 12:22

Nice little earner if he often gets away with it. You could always ring HMRC and ask for their advice on the matter!

Rwac · 22 Mar 2016 at 12:24

Note you can deal with howdens directly yourself and indeed pay - but it just goes on your builder's account. Some builders just try to make some margin on the units.

I did this for a kitchen recently - only time my builder delbt with howdens was when they sent a wrong part to my house.

the_r_sole · 22 Mar 2016 at 12:28

that doesn't sounds right - you don't pay vat twice, either the labour/materials are charged ex vat and then the Vat applied to a subtotal or if it is applied already there is no further VAT to pay.
Sounds like a confusion over the invoice imo

If he really is dodgy check his VAT registration number in case he's not on there and pocketing the money!

cheesyboy · 22 Mar 2016 at 12:29

Cost to builder is £2,083.33 (£2,500 less the input VAT which he reclaims (being £416.67))

He then bills you his cost of £2,083.33 plus output VAT, which grosses back up to £2,500.

ClassicRyu · 22 Mar 2016 at 13:30

GinG said:
Are you 100% sure the VAT is included in the Materials & Labour?

£2500 inc.VAT for a kitchen seems very cheap (only around £2k exc.VAT)

Yes I'm sure, I have the invoice from Howdens. I chose the most standard/cheaper items, lol.

And the builder told me the labour includes VAT as well.

ClassicRyu · 22 Mar 2016 at 13:38

cheesyboy said:
Cost to builder is £2,083.33 (£2,500 less the input VAT which he reclaims (being £416.67))

He then bills you his cost of £2,083.33 plus output VAT, which grosses back up to £2,500.

I guess I will ask the builder for a detailed, thorough break-down of the price.

Adam · 22 Mar 2016 at 20:00

Howdens offer bigger discounts to tradespeople who buy a lot through them.

I needed 11 lengths of MDF skirting board and 5 sets of architrave. My mrs' business account came in at £220 and the carpenter got the same materials for £160 on his account. Quite a big difference.

Dr House · 23 Mar 2016 at 18:05

I bet he is not even vat registers.