Gas/Heating Regulations

[chrishutt]

It amazes me how many people...don't realise that they actually have to charge VAT on all their work irrespective of their total annual turnover. These people have previously been committing VAT fraud.

If you've been charging VAT on all your work without being VAT registered, I'm afraid you may be guilty of VAT fraud!

Let me explain. I'm not VAT registered. I don't charge VAT on my invoices, but I do charge for materials that I supply taking account of the VAT that I pay when purchasing those materials.

On the other hand, my uncle Bob is VAT registered. He charges VAT on his invoices (which he must then pay to the government), but also claims back (from the government) the VAT he pays when purchasing materials.

The net result is that we both charge the same for materials but his labour charges are higher than mine because of the extra VAT.

 

[Stoday]

If you issue a VAT invoice it allows someone who is VAT registered to reclaim the VAT. The tax man is only to pay out what he's collected, and he won't have collected anything from you 'cos you're not VAT registered.

That's fraud and if he finds out he's going to be very upset.

Don't think only companies are registered - a guy building his own house can reclaim VAT.

Boy, are you in trouble...

 

[Softus]

If you issue a VAT invoice it allows someone who is VAT registered to reclaim the VAT. The tax man is only to pay out what he's collected, and he won't have collected anything from you 'cos you're not VAT registered.

That's fraud and if he finds out he's going to be very upset.

Don't think only companies are registered - a guy building his own house can reclaim VAT.

Boy, are you in trouble...

Boy are you misguided - you have utterly misunderstood the rules on charging VAT. And your view that the "tax man" [sic.] would ever get upset is just babyish. Sure they will prosecute, but this doesn't involve any emotion on the part of HMRC.

Moreoever, your reference to "the tax man" indicates that you neither are you VAT registered nor have you ever had to account for VAT. FYI, VAT returns are submitted to the VAT Central Unit at HM Revenue and Customs.

The act of "reclaiming" VAT is a misnomer; what actually happens is that you offset the "input tax" against the "output tax" - for almost every trading concern the resultant net amount is a positive sum that is payable to HMRC. BTW, not all input tax is necessarily recoverable.

Any company, or person, who is not VAT registered is NOT ALLOWED to show the VAT component on an invoice, despite the fact that materials purchased and sold include a component of VAT - the "output tax" for the company who sold you those materials. By the same token, if you manufacture something from raw materials for which you paid nothing, say a paperweight fashioned from dried cow dung, then you still do NOT add any VAT to the amount that you charge. Equally, you do NOT add VAT to any labour charges.

Conversely, any company, or person, who IS registered MUST account for all input and output tax, and they MUST charge VAT on all invoices, and they MUST show the VAT element on those invoices, which must also show their VAT registration number.

A web site suitably entitled "FAQ: VAT - A beginner's guide for businesses" can be found here - I suggest that you read it and learn, rather than spout off and pretend than you understand.

 

[Stoday]

Boy are you misguided - you have utterly misunderstood the rules on charging VAT.

Boy, I bet you wear starched knickers!

 

[*rab*]

Boy are you misguided - you have utterly misunderstood the rules on charging VAT.

Boy, I bet you wear starched knickers!

Don't listen to him Softus... I reckon it was a superb and deserved rant. He had it coming

 

[Bendo]

This may help... http://www.proz.com/topic/38112

 

[Stoday]

Boy are you misguided - you have utterly misunderstood the rules on charging VAT. And your view that the "tax man" [sic.] would ever get upset is just babyish. Sure they will prosecute, but this doesn't involve any emotion on the part of HMRC.

It’s called personification, sunshine. Grown-ups don’t always write with a literal meaning, they also use figures of speech, to write with more interest. Are you so naïve as to think that I see HMRC as an individual man?

Moreoever, your reference to "the tax man" indicates that you neither are you VAT registered nor have you ever had to account for VAT.

Sherlock Holmes you are not.

FYI, VAT returns are submitted to the VAT Central Unit at HM Revenue and Customs.

Last year they were returned to HM Customs and Excise.

The act of "reclaiming" VAT is a misnomer

No it’s not. It’s what really happens. If you buy goods or services for which you can reclaim VAT you can do so and the VAT man (or HMRC) will credit your bank account. You only net off if you collect more VAT (or invoice more VAT if you don’t use cash accounting) than you can claim.

; what actually happens is that you offset the "input tax" against the "output tax" - for almost every trading concern the resultant net amount is a positive sum that is payable to HMRC. BTW, not all input tax is necessarily recoverable.

“Output” and “input” are jargon. The guy who started this thread is not VAT registered, so he wouldn’t know the meaning of these terms.

Any company, or person, who is not VAT registered is NOT ALLOWED to show the VAT component on an invoice, despite the fact that materials purchased and sold include a component of VAT - the "output tax" for the company who sold you those materials. By the same token, if you manufacture something from raw materials for which you paid nothing, say a paperweight fashioned from dried cow dung, then you still do NOT add any VAT to the amount that you charge. Equally, you do NOT add VAT to any labour charges.

Conversely, any company, or person, who IS registered MUST account for all input and output tax, and they MUST charge VAT on all invoices, and they MUST show the VAT element on those invoices, which must also show their VAT registration number.

Quite so and I have not suggested otherwise.

 

[slippyr4]

The guy who started this thread is not VAT registered, so he wouldn’t know the meaning of these terms.

True. He was asking about the legalities of a DIY CH install. This is now well wide off topic. Perhaps we should put it to bed now.

 

[davidstanton]

Yes of course the fitter has to recharge VAT on the boiler when he sells it on, so there is no saving to the customer at all.

To be precise, the law is, as a householder you do NOT have to be CORGI to install gas fittings. You have to be "competent". If you are employed to do such work then you MUST be CORGI. Pedantic maybe, dangerous possibly, but that is the law.

Stoday said that "input" and "output" are just jargon. This is incorrect. These are legal terms quoted in legislation and have very specific meanings in VAT law.

Revenue and Customs remain as a single unit, so also incorrect there.