We include a refundable security deposit on any orders. This is scaleable to the amount ordered, however, on most small orders this will be £100. Replacement costs are shown on our orders. Any breakages will be charged at these rates and deducted from your security deposit accordingly.
How does your security deposit work?
We will charge a refundable security deposit for all goods hired. For orders up to £500 we will charge a £100 security deposit. After this the security deposit is scaleable to the amount ordered. The deposit will be returned after any breakages have been assessed and deducted accordingly.
I've just changed my question to:
How am I going to post the deposit in Sage? And does the supplier have to charge VAT on the deposit?
Thanks.
-- Edited by Diona on Thursday 2nd of February 2012 12:18:56 AM
-- Edited by Diona on Thursday 2nd of February 2012 12:24:35 AM
My question is regarding VAT on replacement cost of any Hire Goods which are lost.
"The Customer will pay to the Supplier the replacement cost of any Hire Goods which are lost, stolen and/or damaged beyond economic repair during the Hire Period less the amount paid to the Supplier under any policy of insurance taken out in accordance with these conditions."
Does the Supplier have to charge VAT on replacement cost of the Hire Goods?
The problem is I have an invoice from a supplier for replacement costs of goods that we hire. The invoice is without VAT. I asked them why and the answer was:
- They've charged VAT already when we hired the goods. So they couldn't charge VAT twice on the same goods.
I think they actually supply two different things with the same goods. Am I right? OR...Replacement costs are exempt from VAT?
VAT is applied by a business when it supplies goods, or services. In the case of a replacing damaged plant, then your client is neither receiving goods, or services but is making a compensatory payment, which is outside the scope of VAT.
Extract from HMRC website:
VATSC61800 - Consideration: payments that are not consideration: compensation for damaged goods
This covers the situation when goods are lost or destroyed when out of the custody of the owner when they are either supplied on hire or left in trust, for example leaving them for repair. Either replacement goods similar to the original will be given or a payment made to cover the cost of repair or replacement. These are not supplies made for any consideration and so are outside the scope of VAT.
