We’ve had a couple of builders round to quote for a loft extension. Our isn’t the best house to be extending so the extension is a bit tricky, and we expect it to be pricey.

We’ve had a couple of quotes, one from a small local builder we’ve used before, and one from a larger operation. The larger one’s quote is in excess of 10K less, which surprised us. A great deal of this seems to be because he’s charging a lot of it at 5% VAT, apparently because we are having energy efficiency measures installed. I thought this was a bit fishy, so checked HMRC website. It seems you can charge 5% VAT if you are installing energy efficiency measures alone, but if it is part of larger works (like ours) you must charge VAT at the full rate.

I think he’s pulling a fast one, but my Mrs is convinced that because the are some kind of “Eco” company it’s all above board. The other builder knows nowt about it.

Any STW builders shed any light on the situation please?

Its his responsibility to pay HMRC the output tax on his sales (VAT). Not your responsibility to worry about his tax affairs.

Pick the price, quality and service you feel happy with.

That is until you get to the end having budgeted for the quote and they then turn round and say …. Oh dear. We. **** up the vat and thats goverment mandated so cough up.

Not your responsibility to worry about his tax affairs.

I’d disagree personally!

Pick the price, quality and service you feel happy with.

When there’s nearly 10 grand in it, that’s kind of hard!

Maybe he’s just made a mistake.
Ask him to confirm the rate.

He was explicit in the quote about the amount of work being charged at 5% and the amount at 20%, but I’ll ask.

Probably find it will be split billed.

Ie on the 30th your conversion was done. On the 31st your cheaper vat green building work was done.

That was kind of my thinking t_r, I wonder if he’s splitting the work into 2 jobs (from his point of view) and charging the VAT accordingly on each bit. Maybe a bit grey, but possibly nothing dodgy.

Can’t the first guy do the same then ?

It is the builder’s responsibility for the VAT – I know cos I ran a PV installation company for a while and we were given the old VAT inspection enema once as we were getting VAT refunds every quarter, which at the time was almost unheard of. They went through everything and it would have been down to us to make up any errors.

That said, if they have a clause in the T&C that says VAT will be charged at the applicable rate on the day of invoice (as most do to avoid falling foul of any changes made by the chancellor) they may have a get out.

Can you get the builder to give you a lump sum quote inclusive of VAT..

Ie. £20,000 Incl. of VAT.

As he has to show the VAT being charged his invoice is either

£19,047.62 + ECO VAT @ 5% ( £952.38 ) = £20,000

Or

£16,666.66 + Vat @ 20% ( £3,333.34 ) = £20,000