payment of additional expenses in cash - VAT issue

Hi, it shouldn’t matter on your end how he receives payment. It won’t affect your vat at all Many thanks, Luke

I am not a legal expert, but I can provide some general information that may be helpful. It is not uncommon for builders and contractors to request reimbursement for expenses incurred during a "costs plus" contract. However, the method of reimbursement and its implications can vary depending on the local laws and regulations. Regarding the VAT issue, it's essential to understand that Value Added Tax (VAT) is a consumption tax levied on goods and services. The rules and regulations surrounding VAT can differ from country to country, and sometimes even within different regions of a country. Therefore, the specific VAT implications in your situation may depend on your location. Here are some general points to consider: VAT on Goods and Services: When the builder purchases goods and materials for the project, they may be subject to VAT. If the builder is VAT registered, they can often claim back the VAT they paid on these purchases as input tax. VAT on Reimbursement: When you reimburse the builder for the expenses they incurred, you may need to consider whether the reimbursement amount should include VAT. This will depend on whether the builder is required to charge VAT on the expenses to you. Proper Documentation: Ensure you have proper documentation for all expenses and reimbursements, including receipts and invoices, clearly stating whether VAT was charged or not. Consult a Professional: Due to the complexities of VAT regulations, it's always a good idea to consult with a tax professional or accountant who is familiar with the local tax laws. They can provide specific advice tailored to your situation and location. In conclusion, while it's not uncommon for builders to request reimbursement in cash for expenses incurred during a "costs plus" contract, you should ensure that all transactions are properly documented and comply with the relevant VAT regulations. It is advisable to seek professional advice to ensure you handle VAT correctly and avoid any potential issues.

As long as he gives you a VAT receipt to claim back your VAT (if your registered) if your not registered for VAT ask for a receipt excluding the VAT as he/she will claim any VAT on their quarterly returns. Paying in cash is no issues as long as you get a receipt as proof of payment.

No problem with cash as long as you have a paid invoice