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Insurance Claim Question Regarding Vat On Invoice

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Nosha123 | 17:13 Mon 25th Jan 2016 | Insurance
21 Answers
Long story short (and its been a LONG time since I have visited here!!! So apologies folks!).
Husband is a builder. He subcontracted a plumber to carry out some work on a project he was working on.
Plumber didn't connect a pipe properly. Leak caused damage running in to thousands and the location of leak couldnt be found straight away.
Plumber has accepted liability
We have raised an invoice for all the remedial work that we had to do (plumber was on holiday in USA at time!). Our invoice is for time to locate the leak, damaged to floors trying to find the pipe, and then repairing it all and relaying flooring etc) Our invoice is to the plumber for the cost +vat.
He is claiming for the costs using his Public Liability policy.
The Loss Adjustors have advised that they cannot pay the vat element on our invoice and that we can reclaim it from HMRC.
This makes no sense to me - as we are invoicing for a service provided and thus have to CHARGE the vat. We haven't paid it to HMRC as we haven't received payment for the invoice.
Surely it is the PLUMBER who has to reclaim the vat from HMRC?
I am trying to argue the point. That we cannot issue a ZERO rated vat invoice nor is there anyway we can reclaim the vat as we haven't paid it out for our invoice.
I found this on HMRC - but Loss Adjustor is still arguing that I am wrong.
http://www.hmrc.gov.uk/manuals/vitmanual/vit13500.htm

Loss adjustor read the link above and responded with:
I am afraid that you are confusing first party and third party claims.

The section on the HMRC applies where an Insured is claiming for damage to his works - the same section should be read replacing the words 'policy holder' for 'claimant' when we are concerned with a third party loss.

"The Insured cannot recover the VAT element because the service has not been provided to them - the service has been provided to you, the Claimant, and therefore, you are the appropriate party to recover the VAT. If we were concerned with a first party claim, i.e Contract Works, the Insured would have received the benefit of the repairs and would then be in a position to reclaim the VAT. "


What am I not getting here? Am I being thick? Yes the Plumber provided a service to us - but he didn't repair the leak nor repair all the damaged flooring nor have to buy new tiles. We did! The receipts for materials do form part of our vat submission but I have to charge the vat on the work done for labour and materials! Someone has to pay that vat surely!!
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Question Author
understood Dogsbody!
And I really appreciate your advice!
I'll keep you posted with how far it gets me!!!! Fingers crossed!!!

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