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system
is vat applied when a tradesman charges for materials?
user
the plumber will apply for and receive a refund of the amount of vat he paid on the purchase amount.  that's the cornerstone of how vat works, as opposed to a sales tax.  so for example: (rounded approximate amounts for simplicity) now, at each point, the amount between (original cost vat) and (new vat) is refunded.  so by the end, a total of £3 vat is paid on the pipe (not £6.2); and at each point the business 'adding value' at that stage pays that much.  the material company adds £1 value; the producer adds £4 value; the supplier adds £5 value; the plumber adds £5 value.   each pays some amount of vat on that amount, typically 20% unless it's zero/reduced rated.  so the pipe supplier pays £1 but gets a £0.2 refund, so truly pays £0.8.  the plumber pays £3 (from your payment) but gets a £2 refund.   so at each level somebody paid a bit, and then that bit is then refunded to the next person up the ladder, with the final person in the chain paying the full amount.  the £0.2 is refunded to the producer, the £1 is refunded to the supplier, the £2 is refunded to the plumber.
assistant