Domestic Reverse Charges for VAT?

Domestic Reverse Charges for VAT?

10:22 AM, 6th December 2021, About a month ago 11

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I am a Director of an RMC (Right to Manage company) and we recently had a Fire Risk Assessment wherein we were told all 30 Flats were required to have Fire Doors Installed.

The Lease states that the individual Leaseholder is responsible for the cost of the door replacement, and I am one of those leaseholders who rents my property out – it has been an empty property since Jan 2021.

On a personal basis (not as a Director of the RMC) I offered to Project Manage, obtain estimates and liaise between Leaseholders and installation companies as a group to see if we could get a “group discount/reduction” and the plan was that each Leaseholder would pay me for the cost of the door installation upfront before acceptance of the estimate and I would then pay the Contractor.

I have received one estimate which asks if I can provide confirmation if Domestic Reverse Charge applies. I had never heard of this. I am not VAT registered, nor do I own a Company (I am retired), so how will the VAT Domestic Reverse Charges affect this “project”?

Having gone to the Gov Website in an effort to understand it, I am none the wiser and even more baffled. Would someone be kind enough to explain it to me?

Many thanks

Silvershine



Comments

by Dylan Morris

12:14 PM, 6th December 2021, About a month ago

Unless I’m missing something here, why not just ask the person giving the estimate what it means.

by paul kaye

12:25 PM, 6th December 2021, About a month ago

The contractor (you ) would not pay Vat if you Google
domestic reverse charge you will see a lot on this
Paul

by Laura Delow

12:37 PM, 6th December 2021, About a month ago

Under the domestic reverse charge procedure, the buyer (contractor) accounts for the VAT rather than the supplier (subcontractor). From March 1st onwards, the buyer will account for the VAT on their VAT Return, and the supplier will need to issue a reverse charge invoice.
See link to Gov.uk recommended flowchart for suppliers to use:-
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/878587/Annex_1_-_VAT_domestic_reverse_charge_for_building_and_construction_services.pdf

Also see following 2 links for detailed/further explanation if interested;
http://www.ciafireandsecurity.co.uk/wp-content/uploads/2021/03/CIS-Reverse-VAT.pdf

https://www.fortus.co.uk/blog/25-faqs-you-need-to-know-on-vat-reverse-charge/

by p118a

13:14 PM, 6th December 2021, About a month ago

Be careful.

By acting as an project manager you are at risk of needing to register under the CIS if you are making supplies of construction services using subcontractors.

If you are not required to be VAT registered (turnover below £85,000 per annum) then the VAT domestic reverse charge will not apply.

Suggest you take advice from your accountant before signing up for a single overarching contract that is then re-sold to the leaseholders.

by Graham Bowcock

13:52 PM, 6th December 2021, About a month ago

Just a thought about acting as property manager - why?

If you're not being paid, what's in it for you? You are taking on a liability as PM but without recompense. You should really be insured for the work you are doing. You are responsible for health and safety on the site.

How will you handle the money? Do you have a clients' account? Can you offer any safeguards to the residents?

Forgive the negativity, but I see a lot of this type of post. Whilst helping people can be seen as commendable, some of us are in business offering these services. It costs us a lot of money each year to be regulated and to ensure we meet (exceed!) minimum standards. We are very accountable to our clients and those we deal with.

by Silvershine

15:32 PM, 6th December 2021, About a month ago

Reply to the comment left by Graham Bowcock at 06/12/2021 - 13:52
As a Leaseholder myself I was hoping to take advantage of a "group Discount" for my Door to be replaced by a Fire Door (along with the other 23 Leaseholders) - that is all that is in it for me. As a Director of the RMC I am responsible for Fire Safety & H&S but not as an individual (as in the case of getting estimates etc). I apologise but I don't see how obtaining estimates (for installing 24 Fire Doors) is taking anything away from a business - if that business is then chosen by the Leaseholders to use (individually) - that business will need to be regulated to meet minimum standards and be accountable? I seem to be missing something?

by Silvershine

15:35 PM, 6th December 2021, About a month ago

Reply to the comment left by at 06/12/2021 - 13:14
Thank you for your advice, especially regarding the overarching contract

by Graham Bowcock

15:38 PM, 6th December 2021, About a month ago

Reply to the comment left by Silvershine at 06/12/2021 - 15:32
Hi Silvershine

In your post you specifically said you were looking to "project manage" the works and said you would be collecting money from the leaseholders. That's where I got my information from.

by Silvershine

15:41 PM, 6th December 2021, About a month ago

Reply to the comment left by Graham Bowcock at 06/12/2021 - 15:38
That is what I said - I was to collect the money from the Leaseholder and I would then pay the chosen (from the estimates) Contractor.

by Peter G

18:16 PM, 6th December 2021, About a month ago

Reply to the comment left by Silvershine at 06/12/2021 - 15:41collecting quotes and project managing are very different things, and as others have recommended, it is not a good idea for you to be considered "the project manager" in case of problems with the installations. Organising a quote so everyone benefits from a group discount and a single supplier should benefit everyone, but once the supplier has been chosen IMHO it would be best for you to step back and focus on your own installation only, leaving the other property owners to manage their own installations with the supplier - much less risk for you then.

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