My builder became VAT registered after I’d appointed him. Do I have to pay the additional cost?

Q: I appointed a builder to install my new bathroom. The builder was not VAT registered when I appointed him. Now, as the final bill needs paying, he has alerted me to the fact he is VAT registered. It seems unfair that I have to foot this additional cost. What are my options?

 

The first thing to do is check whether the builder is genuinely VAT registered. The VAT number will be on the invoice you’ve received – you can check this by either contacting HMRC directly or checking online. If the VAT number is fake then HMRC may want to investigate.

Assuming the builder is genuinely VAT registered, your options depend on whether a contract was signed. It’s always a good idea to have something down on paper when hiring a builder for precisely situations such as this. If you have a contract, the most obvious course of action in this instance would be to contact an adjudicator to resolve the issue.

If you’d rather avoid adjudication, I would say that if the builder has signed a contract or agreed to carry out the work for a fixed price, then the fixed price is inclusive of any VAT unless otherwise stated.

If the builder was not VAT registered, they would have had to include the VAT element on any materials they’d have had to supply within this fixed cost. You could make the argument that now they are VAT registered, they can claim back the VAT they spent on materials – this should minimise any extra costs to them and therefore yourself.

Answered by Matt Bridge, Build Colonial

 

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