Do the banks we work for get to reclaim the VAT the have to pay on our daily rates?

[booms]

Just curious - the last bank I contracted for, probably like most of us, paid VAT on top of my daily rate. Which I then paid to the tax man less my own payments with VAT.

I was trying to work out whether the HMRC does quite well out of all the VAT that we contractors end up paying to them - or is it just being deducted from the bank's own VAT returns? Do the services they sell tend to attract VAT?

[Lance]

The bank reclaims the VAT.

As for the last question. When did you last see a VAT charge on any bank charges?

Banks have to charge vat on anything service or product they sell that attracts vat. Normal banking stuff doesn’t attract vat. That doesn’t mean they don’t do other services . So it depends on the bank and the services.

[Lambert Simnel]

In the bank where I work, the convention for internal accounting and budgeting is to assume you can reclaim half of the VAT paid for contract staff. I was told that this was to reflect the fact that not all of the contract services provided were in areas where the VAT could be reclaimed. I've never looked at the detail of the VAT laws to confirm, but I'd be surprised if a large IB was actually claiming less VAT back than it could - they tend not to be the most charitable of organisations...

[MB2]

Banks themselves are not VAT registered so you will probably find you are contracted to A Bank Property Services or similar so they can recover the VAT.

[v8gaz]

Banks can only reclaim a small amount of VAT, something in the order of 1.8% Not only will HMRC be keeping most of the VAT you raise, they will also be getting most of the agency VAT on their markup.

[eek]

Banks can only reclaim a small amount of VAT, something in the order of 1.8% Not only will HMRC be keeping most of the VAT you raise, they will also be getting most of the agency VAT on their markup.

But unless you are contracting directly with the bank (highly unlikely) vat is once again a zero sum game between you and the agency. So the fact the bank cannot reclaim it is irrelevant as you aren’t receiving the money directly from the bank.

[v8gaz]

Ok, so technically they lose the VAT on the agency invoice, minus the 1.8% they can claim, or whatever the amount is. But they wouldn't be getting that invoice if you weren't there. The answer to the OP's question, minus the pedantry, is that the banks can't claim most of it back, even if it comes in via a third party agency.