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Vat Rate on building materials?

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  • 15-08-2005 7:56pm
    #1
    GG66
    Registered Users Posts: 712 ✭✭✭


    I'm building a 200sq ft house and at the moment I'm deciding on which contractor to go with.

    Most have just given a single figure for the job butone has broken it down. He has charged 21% VAT on materials.

    I was under the impression that when builders but the materials they are charged 21% but when they charge me for the work they should charge 13.5% on all work. Thiswould also apply to any materials they have used. It would tehn be up to them to reclaim the difference from Revenue.

    Am I correct on this and can I insist that teh builder charges thelower rate of VAT?

    GG


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    #2
    rooferPete
    Registered Users Posts: 1,497 ✭✭✭rooferPete


    Hi GG,

    The way you describe the system is how it should work, that is the builder charges a flat rate 13.5% for the materials, labour and gross profit margin.

    It appears that the builder is marking up the materials 21% but making it appear as the vat element of the job instead of calling it what it is a mark up.

    There is nothing wrong with any contractor adding a percentage to the total material cost, in fact it's good business as it allows for transport, waste etc.

    Each contractor will have have their own mark ups based on their gross overheads, type of materials and profit margins, I do not agree with any contractor trying to disguise the margin as vat when he is then going to charge 13.5% on the total figure.

    Perhaps the contractor has decided that the cash flow out, being material cost plus 21% is the best way to run his business, he should if he wants to mark up the material and show detailed estimates at the same time show the 21% for what it is.

    He is in business with all the risks and expences that go with the running of a business, it could be he wants to pretend he is not making money off your job or maybe he just doesn't know how to price the job properly.

    .


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    #3
    Victor
    Registered Users Posts: 78,436 ✭✭✭✭Victor


    VAT is still charges at 21% on certain items - loose laid carpets, light fittings, things that are removable without being damaged.

    I suspect it may be down to naivety, inexperience or a cash economy.


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    #4
    GG66
    Registered Users Posts: 712 ✭✭✭GG66


    Thanks, I guess I'll just have to ask him his logic. In fairness I've only spotted it on one item (warmcell insulation) elsewhere he hasn't stated rate. So it could be that he lifted the price from the supplier at 21% in error. Although I would have thought that warmcell suppliers would also fit it meaning 12.5%. Hmm.?


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