Question

Who pays the Vat when a builder receives income for taking scrap to a scrap metal recycler ?

Forum|Forum|4 years ago
January 6, 2022
2 replies
1 view

No text available

Level 14

Hello Jan4Ben,

Welcome to the Community page,

We would advise you speak to HMRC about this as they would be able to advise you better on this then us here. If your making money it should be you probably as its scrap and not a job per say for CIS but i would get that clarified with HMRC.

paul72

Level 6

Hi @Jan4Ben

The scrap metal merchant will pay the VAT if the sale is VATable - but that depends on whether the owner of the scrap metal is VAT registered or not.

Are you asking this because you think it might be inside the scope of Reverse Charge?
(it isn't - it's a straightforward sale of goods, albeit scrap)

To avoid this becoming one of those riddle that ends up with everyone mistakenly counting kits, cats, sacks & wives, I think you need to give a bit more detail.

Who owns the scrap metal?

Is the owner of the scrap metal VAT registered?

Who ends up with the money?

G

garethaethwy

I came here to ask the same question!

Scrap metal is ours and we're VAT-registered. Not had any to get rid of for years and I've no access to records that show how it was handled last time, but given some of the many errors I've found from that time I doubt they'd have been handled properly!

Money will end up with us.

We're not in construction so wouldn't be able to take advantage of any reverse-charge schemes open to that industry.

paul72

Level 6

Hi @garethaethwy

We're not in construction so wouldn't be able to take advantage of any reverse-charge schemes open to that industry.

Reverse Charge is not an advantage - in any way - it's inflicted on the construction industry by our vengeful & distrusting overlords (aka HMRC)!

If you own the scrap metal & you're selling to a scrap merchant, this is a simple sales transaction - same as any other sale of goods. You raise an invoice for the amount (VATable). The scrap merchant will pay you the value plus VAT. You account for the VAT on your VAT100 return.

However, many scrap merchants operate a Self-Bill arrangement (this is for their accounting system). If they insist on using self-bill, that's OK (they will need your company details & VAT number) but you will still need to enter an Invoice into QBO for your accounts.

Hope this helps.

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