News1 min ago
VAT added to quotation
I asked a local reputable tree surgeon for a price to pollard a large willow tree. He gave me a verbal quote of £600. When I phoned him back to tell him he had got the job he asked me to remind him of the price he quoted; I told him £600 which he agreed and confirmed.
The invoice he has sent, however, includes VAT at 15%, making the total price £690.
At no point during either of our conversations did he say the price quoted was "excluding VAT".
I have sent him a cheque for £600 as "full and final settlement of his account"
Am I right to do this?
And before everybody jumps down my throat, yes I know I should have got a written quote, but out here in the Fens we tend to trust people, especially small local businesses.
The invoice he has sent, however, includes VAT at 15%, making the total price £690.
At no point during either of our conversations did he say the price quoted was "excluding VAT".
I have sent him a cheque for £600 as "full and final settlement of his account"
Am I right to do this?
And before everybody jumps down my throat, yes I know I should have got a written quote, but out here in the Fens we tend to trust people, especially small local businesses.
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In many (probably most) countries throughout the world, it's standard practice for prices for goods and services to be quoted exclusive of taxes. (For example, hotel prices in the USA normally need to have both state and local taxes added onto them. Similarly, restaurants in many European countries advertise prices which exclude their equivalent of VAT).
The UK is different in that the prices goods and services which are generally not supplied to other VAT-registered businesses (e.g. prices in High Street shops) must include VAT. However it's still perfectly normal practice for businesses like garages to provide quotes which exclude VAT. (If a garage says that they'll fix your car for a certain price you should ALWAYS assume that VAT will be added to the price, unless specifically stated otherwise). Similarly businesses which provide many of their products or services to other businesses will nearly always quote prices which exclude VAT. (Staples, the office stationers, used to have all of their shelf labels displaying non-VAT prices. It was perfectly legal but it would have been illegal for, say, Tesco to do the same with their stationery products at the same time).
If I'd got that quote from a tree surgeon it would never have occurred to me not to add VAT to the total, as this is standard practice with such businesses. You haven't got a leg to stand on; you still owe £90.
Chris
The UK is different in that the prices goods and services which are generally not supplied to other VAT-registered businesses (e.g. prices in High Street shops) must include VAT. However it's still perfectly normal practice for businesses like garages to provide quotes which exclude VAT. (If a garage says that they'll fix your car for a certain price you should ALWAYS assume that VAT will be added to the price, unless specifically stated otherwise). Similarly businesses which provide many of their products or services to other businesses will nearly always quote prices which exclude VAT. (Staples, the office stationers, used to have all of their shelf labels displaying non-VAT prices. It was perfectly legal but it would have been illegal for, say, Tesco to do the same with their stationery products at the same time).
If I'd got that quote from a tree surgeon it would never have occurred to me not to add VAT to the total, as this is standard practice with such businesses. You haven't got a leg to stand on; you still owe £90.
Chris
Thanks for your varied answers.
Re assuming quotes do not include VAT - one builder who does work for me is not Vat registered and therefore his prices never include VAT. How am I to know who is VAT registered and who is not, unless they tell me. If I ask for a price and am given one, then that's the price I expect to pay.
When I was a National Account Manager all my quotations to customers crossed the T's and dotted the I's in that I covered everything in the quote eg VAT, delivery charges and times, time limit for acceptance of the quotation, so that the customer could not then come back to me later and say "You never mentioned VAT", and believe me a lot of my cunning customers would have done just that.
Regarding sending the cheque - I sent the cheque with a letter saying this was in full and final settlement of the account. I have always understood that if the guy then banks the cheque he is accepting this fact. If he wants the full amount then he should not bank the cheque and come back to me for the full amount.
I will have to wait and see what he says. But he definitely won't be getting any more work from me, or any of my friends and customers.
Re assuming quotes do not include VAT - one builder who does work for me is not Vat registered and therefore his prices never include VAT. How am I to know who is VAT registered and who is not, unless they tell me. If I ask for a price and am given one, then that's the price I expect to pay.
When I was a National Account Manager all my quotations to customers crossed the T's and dotted the I's in that I covered everything in the quote eg VAT, delivery charges and times, time limit for acceptance of the quotation, so that the customer could not then come back to me later and say "You never mentioned VAT", and believe me a lot of my cunning customers would have done just that.
Regarding sending the cheque - I sent the cheque with a letter saying this was in full and final settlement of the account. I have always understood that if the guy then banks the cheque he is accepting this fact. If he wants the full amount then he should not bank the cheque and come back to me for the full amount.
I will have to wait and see what he says. But he definitely won't be getting any more work from me, or any of my friends and customers.
Apply the 'contra proferentem' rule ! That's lawyer's language for a rule for resolving ambiguity in a contract. The ambiguous term is construed against the one who is seeking to gain from it.Each party has interpreted £600 differently. Here one party will be seeking to say 'My words, the offer incorporated into the contract, are to be construed so I get the VAT on top and keep the whole of £600' The rule counts against him, for otherwise he gains, gets more money, and so the court rules that he's entitled to just £600 not more. It doesn't seem to me that it matters that the contract was oral, though in practice such arguments are amost invariably about interpreting written terms, because the rule is a practical rule aimed at consistency in resolving ambiguities and uncertainties, not ensuring correct grammar or unambiguity only in writing !
And it's possible that the VAT office has some rule about quoting prices with and without VAT, a rule which may be applied to some businesses and not others (the VAT man likes complexity) and to some contracts and not others. It may be worth asking.
And it's possible that the VAT office has some rule about quoting prices with and without VAT, a rule which may be applied to some businesses and not others (the VAT man likes complexity) and to some contracts and not others. It may be worth asking.
Incidentally 'stopping' a cheque is not normally a wise practice in disputes like this. It doesn't resolve the party from liability, of course, but , worse than that, the other party can sue 'on the cheque' that is, claim its value quite regardless of whether or not he's in said to be in breach of his contract or owed the full sum. He can sue just because the cheque has been dishonoured.The reason for the rule is that cheques may be transferable, made over by the payee to some third party who gives value for it. The world is not concerned about private disputes about a deal giving rise to a cheque, only that a cheque in circulation is good for the sum named on it.
Another rule is that cheques may be marked on the face "without recourse" ( or "sans recours") which means that the person who pays with it is putting the world on notice that it may not be honoured and he is not to be liable for that. That does not commend itself for everyday transactions ! It won't do your credit rating any good ! It does however stop the recipient from suing on the cheque.
Another rule is that cheques may be marked on the face "without recourse" ( or "sans recours") which means that the person who pays with it is putting the world on notice that it may not be honoured and he is not to be liable for that. That does not commend itself for everyday transactions ! It won't do your credit rating any good ! It does however stop the recipient from suing on the cheque.
This has always irritated me.
I can understand giving a quote to a business ex' VAT on the basis (if they are VAT registered) they can reclaim it from HMRC.
But individuals are not VAT registered and therefore cannot claim the VAT from HMRC and as a result I believe ALL prices quoted should always include VAT to avoid problems such as this.
I can understand giving a quote to a business ex' VAT on the basis (if they are VAT registered) they can reclaim it from HMRC.
But individuals are not VAT registered and therefore cannot claim the VAT from HMRC and as a result I believe ALL prices quoted should always include VAT to avoid problems such as this.
Good grief, didn't know it could get so complicated. See what happens when lawyers get involved.
Only joking, I know in law everything has to be laid out without ambiguity.
Sorry, bednobs, but I disagree with you. Screwfix, Wickes and Toolstation all quote prices incuding Vat in their mail order catalogues, so I assume that any price quoted by a builder will include Vat as this seems to be the industry standard.
Fred - can you answer the question about him banking the cheque; does this mean that he accepts the amount I've paid him?
Only joking, I know in law everything has to be laid out without ambiguity.
Sorry, bednobs, but I disagree with you. Screwfix, Wickes and Toolstation all quote prices incuding Vat in their mail order catalogues, so I assume that any price quoted by a builder will include Vat as this seems to be the industry standard.
Fred - can you answer the question about him banking the cheque; does this mean that he accepts the amount I've paid him?
Yes once he's on notice that the cheque is in full and final settlement and he then banks the cheque, he's estopped from claiming any more in respect of that debt. You can do that by letter with the cheque, referring to it, or you could, I suppose, write it on the face of the cheque itself.
It's in the public interest that there be an end to litigation and disputes and the law does its best to ensure finality
It's in the public interest that there be an end to litigation and disputes and the law does its best to ensure finality
Thanks Fred, I thought that was the situation.
When a customer owed us money we did not bank the cheque she sent, instead we held it until the case had gone through the small claims court and the bailiffs had got the rest of our money (She would not pay a bill of £46 and ended up paying £130 by the time it had gone through Small Claims Court. Silly woman).
Re our case, I did send a letter with the cheque setting out why I felt I only owed £600, and I did say that the enclosed cheque was in "full and final settlement of the account", so we'll have to wait and see what he does.
Just hope he doesn't sent "the boys" round with a chainsaw to collect the rest of the money!
When a customer owed us money we did not bank the cheque she sent, instead we held it until the case had gone through the small claims court and the bailiffs had got the rest of our money (She would not pay a bill of £46 and ended up paying £130 by the time it had gone through Small Claims Court. Silly woman).
Re our case, I did send a letter with the cheque setting out why I felt I only owed £600, and I did say that the enclosed cheque was in "full and final settlement of the account", so we'll have to wait and see what he does.
Just hope he doesn't sent "the boys" round with a chainsaw to collect the rest of the money!
A VAT registered company dealing in cash transactions, thereby thwarting VAT payments is illegal and carries heavy penalties & imprisonment. You DONT cheat the IR!
VAT cannot be charged unless the company is VAT registered, thus showing its VAT number. As for claiming VAT refunds, that's only for similarly VAT registered businesses.
http://www.businessli...1167573&r.s=e&r.lc=en
VAT cannot be charged unless the company is VAT registered, thus showing its VAT number. As for claiming VAT refunds, that's only for similarly VAT registered businesses.
http://www.businessli...1167573&r.s=e&r.lc=en
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