VAT on retention?

[Alan @ BroomeAffinity]

VAT on retention?

The way I read OPs post is that they are the one keeping a retention.

Yeah you’re right. My bad. Same principles apply though.

[TheCyclingProgrammer]

Sorry, I pressed send before I commented. The above link explains it. Basically you charge vat on the £10k and the client deducts £500 retention from the gross. You pay £2k to vat under the usual time of supply regs. When you get the retention paid you don’t need to account for vat on that.

The way I read OPs post is that they are the one keeping a retention.

[Alan @ BroomeAffinity]

Sorry, I pressed send before I commented. The above link explains it. Basically you charge vat on the £10k and the client deducts £500 retention from the gross. You pay £2k to vat under the usual time of supply regs. When you get the retention paid you don’t need to account for vat on that.

[Alan @ BroomeAffinity]

https://www.gov.uk/hmrc-internal-man...ply/vattos2350

[MrButton]

It's always worth retaining something that gives you leverage if the work hasn't been up to scratch.

Makes sense. Thanks.

[MrButton]

Substitute or subcontract?

Substitute

[TheFaQQer]

What’s the reason for retention? Just wondering as I’m looking to sub someone in at some point.

It's always worth retaining something that gives you leverage if the work hasn't been up to scratch.

[northernladuk]

What’s the reason for retention? Just wondering as I’m looking to sub someone in at some point.

Substitute or subcontract?

[MrButton]

What’s the reason for retention? Just wondering as I’m looking to sub someone in at some point.

[TheCyclingProgrammer]

so i have a subbie , i have ordered a value of 10000, when he invoices i pay him 9500 ( 5% retention)
can i claim VAT on the 10000 or the 9500 and then claim the VAT when and if i pay him the retention?

It depends what you're invoiced for and when the tax point is.

https://www.gov.uk/guidance/vat-inst...s-credit-sales

If he invoices you for £9500 + VAT then you can recover the VAT on £9.5k as input VAT. You can recover the further VAT on the remaining £500 + VAT when he invoices you for it. Assuming of course, that the subbie is VAT registered.

[phil solihull]

what looks dodgy ?

Looks dodgy.

what looks dodgy ?

[northernladuk]

Looks dodgy.

[WTFH]

Welcome, Phil.
Your accountant should be able to clear it up for you.

Do you have a limited company?
Are you VAT registered?
If you were invoicing for £10k of your own time, what would you have on the invoice?

Generally you don't "claim" VAT, but charge it or pay it.
I would expect that if you are VAT registered, you would charge your client VAT and if the person you put in as a substitute is also VAT registered, then they will charge you VAT as well.

Potentially it is:
Invoice client £10k + £2k VAT
Pay substitute £9.5k + £1.9k VAT
Left in your company £500 + £100 VAT.
Then when you do your VAT return, that £100 goes to HMRC.

[phil solihull]

so i have a subbie , i have ordered a value of 10000, when he invoices i pay him 9500 ( 5% retention)
can i claim VAT on the 10000 or the 9500 and then claim the VAT when and if i pay him the retention?