VAT charged twice on work?

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    VAT charged twice on work?

    If a one-off service charge has already had 20% VAT applied by the contractor, can an additional 20% VAT be charged on this total by the managing agent in the service charge schedule (before the fee % has been applied)?

    I am wondering if this is normal practice or an error.

    #2
    An error; they can only charge VAT on their markup.

    Comment


      #3
      Thank you for your response - this is useful information.

      Comment


        #4
        Under UK Tax rules, a trader with sales turnover exceeding £83,000 per year is required to charge VAT at 20% ( or a lesser rate may apply for energy and insurance ).

        For a service charge account for maintenance of a block of flats, each supplier charges VAT on its own cost for supplying service.

        Managing Agent charging annual fee at say £200 per flat and will add 20% VAT on its charge for the entire block.
        Electricity Supplier will the energy costs plus 5% VAT.
        Building Insurance company will charge the cost of insurance for building plus 12% IPT
        Cleaning company will charge its cost for service plus 20% VAT
        Window cleaner will charge its cost for service plus 0% VAT ( turnover below £83,000 threshold . )

        Comment


          #5
          Gordon, this managing agent seems to be ignoring best practice and charging everything on a commission basis. As such, for your nominal £200 you need to substitute a percentage of the payment to the contractors.

          For VAT purposes, the payment to the contractor itself does not go through the agent, and it is not possible to reclaim the VAT.

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            #6
            L64,

            OP has asked what is normal practice? I posted an example to show normally , the VAT is charged by each service company on its own cost.

            If the Agent sets its management fee based on, say 15% of total spending = total billing by other suppliers = £50,000 ( example )

            The agents own bill will be £7,500 + 20% VAT ( on £7500 ) = £7500 + £1500 = £9000.

            It is NOT calculated as .£7500 + 20% ( on £50,000 ) which is wrong.

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