SHOULD YOU PAY FOR VAT?
Should you pay for VAT
This post is more suited for the UK market, though may resonate with others across the shores.
Before diving into the website side of things, let’s throw in some analogies that I am sure we have all experienced.
You need some decking put up in your garden, a side extension to be built, maybe a door to be fitted, a room to be painted, or how about some laminate flooring laid. You know the drill – you reach out to friends/family or pop onto a site to get quotes in. In come the experts with their quotes.
Your insides cringe up on hearing the price of £5000.
But then the contractor makes you an offer. Pay in cash and they’ll knock the VAT off. The reduction works out to be £4166 (what a deal!!). but if you prefer to not pay cash, they you have to pay the VAT, thus taking you back up to £5000 (weep).
Or… there may be no offer, and the contractor quotes £5000 for the job, plus VAT, so the final cost is now £6000 (triple-damn-weep!!)
Where am I getting at with this?
Did you know that for a company to charge VAT – they have to be VAT registered and to be VAT registered they have to be earning £85000 a year.
Hold up. Let’s re-explore the above examples. Mrs Smithsonian who quoted £5000 for installing the laminate flooring; does she earn £85k a year, and if she did, is she VAT registered?
If the answer is no and no – then I’d instantly question the honesty of the person you’re contracting with.
Website Designers and those that offer hosting are known for charging VAT on top of their prices. Before you get sucked into believing it, because let’s face it, paying VAT feels like the norm and would be odd to question, then query the VAT.
Ask them for their VAT Registration Number – it should be on their communication information.
Then check here: https://www.gov.uk/check-uk-vat-number
If the company is not present, then inform the company that you will not pay the inflated cost and if you have it written as £5000 + VAT, then only pay the £5000.