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PRO

VAT question

Am I right in thinking the following?

I am quoting for a commercial client (let's call them "Client FMT") against another company (let's call them LW) for some fencing.

Client FMT and LW are both VAT registered, we are not (yet).

So, my thinking is that my price has to be no-more than LW's price BEFORE VAT.  Otherwise we are technically more expensive as Client FMT will claim the VAT back if LW do the job, but cannot claim it if we do the job.

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Replies

  • PRO

    Forget about quality etc. This is just a price question.

  • PRO

    Forget the VAT. Just price the job as you would any other.

  • PRO

    I'd agree, but be careful how you Quote it as I can see a future problem depending on wording of contract if you subsequently go VAT registered.

    You need to retain right to 'raise' your price, ie add VAT at a future date during life of contract if it happens - technically you could end up "defaulting" on terms of contract....

    I've seen this aspect covered off in a set of T&C's - trying to think where

    • PRO

      This is what I ws thinking of:

      "4.1      The Client accepts that they will pay to the Contractor the contract sum together with any Valued Added Tax (VAT) if and when applicable and properly chargeable upon the contract sum."

  • PRO

    Hi guys, this is just a one off quote for some fencing.  Our regular work with this client is completely separate.  I'm not desperate for the job, it just got me thinking how the client would compare the two quotes assuming everything was like for like except the VAT.  More for future reference really.

  • PRO

    If you are purely basing it on price, then you could split the job into labour and materials and get the client to buy the materials directly (with a markup if you have good relationship with supplier) and they'd be able to claim the vat back from that part. Then invoice for labour only.

    Unless it's a big job are they really going to be that bothered? I'd keep simple and transparent and just price like any other job.

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