Tax question

ykwong1978

Hi all,

I was sent an invoice for a portacabin that we have currently hired. The company that we have used has hired this from another company, so for example lets say they were charged £117.50 (£100 + £17.50 VAT).
We are billed £138.06 (£117.50 + £20.56 VAT), which they attach their invoice as a backing sheet.
Can anyone please let me know if this is correct/legit?
Thanks
Ying

coojee

Well they can charge you whatever they like. They could claim that they were adding on 17.5% as their profit. If they've paid £100 plus VAT for it and assuming they can reclaim the VAT then what's in it for them if they recharge it to you for £100 plus VAT? They haven't made any money on it then have they.

ykwong1978

Thanks for your response.
My boss wanted me to find out, and I thought that it seemed fair, as they would just be recharging us, and earning no profit from this service.

coojee

It depends what's in the contract. If your contract says that they will recharge you at cost then it's not legit (assuming they can reclaim the VAT)