VAT issue

[worrywart98]

We have just had our kitchen redone, using a project manager who managed all the trades. When he quoted for us, he specifically said VAT not applicable.

Some time passed between the quote and the work starting. Before the work started I asked if the quote still was the same to which he never replied.

The work started and to be honest has been a total nightmare. It has dragged on and on and there are several things we are not 100% happy with/as we requested but we can live with. We just want them out of our lives!

The builder submitted his quote and in the intervening period appears to be VAT registered, resulting in £1k extra costs that we didn't anticipate. We are absolutely furious and feel very misled. (We have checked and the VAT number is valid before anyone asks!)

DH and I are adamant we don't want to pay the VAT and that he should take the hit but I'm wondering about the legal position? Help!!!

If the quote is silent on VAT, any VAT is deemed to be included. What exactly does it say in writing?

Do you have the original quote and the fact that he said VAT not applicable in writing?

Morally you should not pay. Hopefully you have a quote etc.

You could offer to pay in cash (the sum before VAT as per the quote). However you would expect a 10% discount for cash and get a very careful receipt. He will save half the VAT of the total he ought to pay.

Yes on the quote (which is in an email) it specifically says VAT not applicable

I feel like he had ample chances to notify us that he was now VAT registered and failed to come clean because he knew we would choose another builder...

Do not pay in cash to avoid VAT. That would be entering into an illegal contract that would be unenforceable were you to have to sue the builder later for some reason!!

VAT registration is based on a month to month rolling turnover and therefore when his turnover for the previous 12 month period means he has to register he should have informed you he was now VAT registered.

I would definitely have words with him that he will have to decrease his fee to absorb at least some of the VAT that is now legally chargeable and payable.

Thank you everyone!

Does anyone know where we stand legally?

We have told him we don't think we should pay it and that he should absorb the VAT element - that went down like a lead balloon (unsurprisingly!)

Was the original price a quote or an estimate? A quote is enforceable by law and cannot be changed. An estimate can be. It is not a quote unless the price written down for you at the time was specifically labelled on the same paper as a quote.

I would argue whether VAT is applicable is a different matter to whether an amount is inclusive or exclusive of VAT. It's a judgement on whether VAT should be charged, not on who is bearing that cost. You need to explicitly say a quote is exclusive of VAT at the prevailing rate if you want the customer to pay the VAT!

If he quoted a flat £1,000 and is trying to charge you £1,000 plus VAT now, i.e. £1,200 including VAT, he should be charging you £833.33 plus VAT, i.e. £1,000 including VAT. He's down £166.67, but that's his problem.

PS some of the comments made by other posters are not quite correct, so strictly, you should take my comments with a pinch of salt too.

Thank you so much everyone.

We have just heard from him and he's agreed to take on the VAT. Panic over and lesson learnt to thoroughly re-confirm quotes before work starts next time....