Had a quote - got a query on parts

[Alfie25]

I’ve had a quote for a new heating installation and the RGI has said the following with regard to parts. Basically as I understand it if he buys parts for all his jobs and effectively sells them to customers then this counts as income, although obviously he’s not really making any/much money on these. He says the customer ideally should buy the parts (boiler, rads etc) all up front from his supplier, quoting his name in order to get his trade rates. He orders them etc so you know you’re getting the right parts, but I as the customer would need to physically go to the supplier and pay with my money. At the end of the job I pay his labour rate. It seems he wants to avoid purchasing the parts himself as this counts as income, and makes his earnings look higher than they are, and would make him have to become VAT registered, which he doesn’t want.

Is this normal practice? It seems strange to me that although he has a trade account with the supplier that I could go in and pay (obviously not through his account) and still get his trade prices. And is it that bad being VAT registered?

 

[D_Hailsham]

I’ve had a quote for a new heating installation and the RGI has said the following with regard to parts. Basically as I understand it if he buys parts for all his jobs and effectively sells them to customers then this counts as income, although obviously he’s not really making any/much money on these.

You must be joking. He will buy the boiler etc from his supplier at much lower prices than you, even if you buy off the internet, and then sell to you at a much higher price. This helps keep the labour rate down and gives a margin to cover any remedial work or warranty claims.

However, I don't think he really has your interests, or VAT, in mind. His real reason for wanting you to pay for the boiler directly is that, if you buy the parts yourself, the installer has no responsibility if something goes wrong, particularly with the boiler. He is trying to avoid his obligations.

No, it's not normal practice.

Find another installer.

 

[Dan Robinson]

It is a way for the installer to dodge the vat threshold and also means he had no responsibility for guaranteeing the operation of the appliance.

Not common, not uncommon either. Could give you problems if the boiler goes Pete Tong.

Certainly not the way I would do business with the exception of designer products and swanky bathroom furniture.

 

[Alfie25]

Thanks, I appreciate your replies.

Dan - does him not being vat registered have an impact on the warranty? He said to me that it makes no difference who buys the parts, and that he will sign off the paperwork and the guarantee will be just the same. He's on the gas safe register and has done work for people I know and came recommended. I was just surprised at this side of things.

D_Hailsham - I also thought he would make good money on the parts but it seemed it wasn't worth his while. He said it was simply he was better off only selling labour as opposed to parts and labour, avoiding the vat threshold etc. It seemed to be that this also keeps costs down for the customer - although I am of course, more concerned with a proper job being done and costed accordingly. Again, is the warranty dependent on who supplies the boiler as opposed to who installs and comissions it?

 

[Agile]

You must be joking. He will buy the boiler etc from his supplier at much lower prices than you, even if you buy off the internet, and then sell to you at a much higher price. This helps keep the labour rate down and gives a margin to cover any remedial work or warranty claims.

Find another installer.

That is a common fallacy! Hailsham is a homeowner and not in the trade.

The reality is that anyone can buy a boiler for the same price or even less than the RGI who would deal with a local supplier rather than an often cheaper supplier by mail order.

It is very common for an RGI to not want to be VAT registered because that makes him 20% MORE expensive.

Dan above has a high turnover and has to be registered for VAT.

Take advantage of someone who is saving you money!

Tony

 

[Agile]

Although some do add a small margin to parts which is perfectly reasonable, it then leaves us open to the customer complaining that "I have seen that boiler on the internet for £40 cheaper"

I like to be perfectly transparent and get the boiler at the best price and then add about £20 for ordering and delivery.

Adding 30% to a boiler price is just a way of making the labour element look cheap.

Of course those who do that will not install the boiler for you at the same labour cost if you buy the boiler yourself.

It is the total cost which matters and many sensibly only quote a single inclusive price! Unfortunately some customers then ask for a detailed breakdown! They are the customers to be avoided!

Tony

 

[GavThePlumber]

If you buy the parts, on his account or not, you will only be partially covered under the Supply of Goods & Services Act, thus this will only be to the detriment of the consumer (i.e. you)

You must be joking. He will buy the boiler etc from his supplier at much lower prices than you, even if you buy off the internet, and then sell to you at a much higher price.

This is not correct any more, 20 years ago this is how it was done maybe, trade accounts are not even worth having these days due to low prices available on the internet pushing prices down across the board.

Bulk purchasing is where it's at these days, purely down to the economy of scale, which consumers have no need to be apart of.

 

[Alfie25]

Tony - thanks for the reply. What is your understanding on the impact upon warranty? The RGI said it makes no difference who buys the boiler, whereas several responses on here say it does. The RGI was explaining the boiler could come with 7 or 10 years warranty (Baxi) depending on the price/package purhcased. He would do all the paperwork after installation and I'd get the certificate.

 

[D_Hailsham]

That is a common fallacy! Hailsham is a homeowner and not in the trade.

I'm speaking from personal experience within the last four years.

My son had a new boiler about then and I was guarding his house while he was at work. The new boiler was delivered by the merchants and I was asked to sign the delivery note. The paperwork left with the boiler etc showed the prices charged to the installer. They were much less than I could have purchased the boiler from any internet source; and that' taking VAT into account.

I agree that the installer is restricted by the retail prices available on the internet as to what price he can charge the customer.

I'm more interested in the effect on installers of the very long warranties offered by the boiler manufacturers. If a boiler, which is still in warranty, develops a fault after six or seven years, does the manufacturer pay all the costs of repair, parts and labour? Or does the manufacturers provide the parts for nothing and expect the installer to provide his labour for nothing?

Some installers, on this forum, have referred to "adding a margin to the equipment costs" to cover warranty work, so I assume they are expected to provide labour for nothing.

 

[Aquilani]

The installer is looking to stay below the VAT threahold and in doing so is passing the benefits onto you.
Have you had any other quotes and if so is the fact he is not VAT registered refect in the price quoted?

As long as the installation is per the manufacturers instructions and serviced each year then your guarantee will be fine.

 

[Mark Br]

The warranty will not be affected by you purchasing the boiler. As stated the installer does not want to reach the vat threshold and hence gets his customer to purchase the boilers so that his turnover remains low

 

[Alfie25]

Ok so Dan, as an installer yourself, why say that it could be a prob if the boiler goes wrong and that the installer has no responsibility for guaranteeing the operation of the appliance?

 

[FiremanT]

The new boiler was delivered by the merchants and I was asked to sign the delivery note. The paperwork left with the boiler etc showed the prices charged to the installer. They were much less than I could have purchased the boiler from any internet source; and that' taking VAT into account.

Loathe as I ma to distrust anyone, it is not normal practice for a merchant to deliver product with a priced delivery note - whether or not the fitter is there. We f=get a delivery or consignment note, and the priced invoice is sent to the account address. It is possible, I suppose, if the fitter raid cash rather than account.

But it is definitely cheaper on the internet, if you do a bit of googling.

And yes, there are plenty of guys who do this to avoid VAT registration, although it only affects the labour element.

It will NOT affect the manufacturers warranty in the slightest, but the installer could not be held responsible under the SOG act (for the product).

I know a guy who ran a small building firm who "employed" all the trades. The client then paid him by several cheques to each individual PLUS cheques for the merchants.

 

[Dan Robinson]

The contract of sale is between you and whoever you pay for the goods. If the boiler goes wrong the installer is not going to be liable.

The manufacturer may well refer you back to your installer as a first port of call. Your installer won't be interested (maybe).

What then if it turns out to be an installer error and the manufacturer charge you for the call?

As a vat registered company this whole thing seems a bit of a performance and smacks of unprofessionalism. I think we demonstrated a while ago that using a non vat registered company only saves you a fraction because of course you are still paying vat on the materials.

Like I said. Seems very unprofessional to me.

 

[GavThePlumber]

I think we demonstrated a while ago that using a non vat registered company only saves you a fraction because of course you are still paying vat on the materials.

Like I said. Seems very unprofessional to me.

Have to agree, VAT reg does not instant make someone/company 20% more expensive.

Sounds like a con man to me, getting clients to run around buying stuff on their behalf = Alarm bells.