VAT on Solar System

[Rudy]

Forgive me everyone. New to this.
How is VAT charged on A Solar PV system?
If the system had 20% VAT put on by the supplier that sold to the installer...
Where is the 5% calculated from by the installer when billing the client?
Cheers

 

[bumcrack]

You pay 20% on goods

Charge 5% on sale


Your accountant will do the rest!

 

[TedM]

You might buy £5000 of components that all have 20% VAT added, so an extra £1000 and you pay out a total of £6000 to your suppliers.

You then charge the client for the complete installation at £5000 plus whatever amount you wish to add for labour, scaffolding, overheads and profit, say £10,000 plus 5% VAT so a total of £10,500.

You then fill in a VAT claim form where you claim back the £1,000 you spent and deduct the £500 you have charged, so you get a net £500 VAT refunded by HMRC (ignoring other VAT amounts on your overheads etc such as telephone bills here to keep it simple).

 

[Rudy]

Thank you very much Ted!

 

[TedM]

Just to add that that scenario assumes you are a VAT registered business, of course.

 

[grandfortune]

yeah im not vat registered, im not sure weather to bother done two jobs probably worth £2500 + in VAT i could get back, but im also a sparky and dont want to go VAT registered as the work id loose, not sure what to do