VAT on compensation payments

BruceB · Jul 7, 2015

I adopted a broken Solar Edge installation and became the installer that handled the warranty claim, replacing an inverter and one optimiser. All is fine but now seeking to complete the compensation process.
I added VAT to my claim. Solar Edge are telling me not to. Anyone been through this already?

I have not read up in detail, but the general rule would be that straight compensation would be outside the scope of VAT, but that where any service is involved, like changing an inverter, that would bring it in scope.

Perhaps I will have the same issue with ABB?

whinmoor · Jul 7, 2015

ABB paid us £100 plus VAT = £120 in total after we invoiced for this amount.

It could be that SE are working from a base outside UK and therefore don't get VAT'ed? Just guessing - I'm not an Accountant.

BruceB · Jul 7, 2015

That is a good point and I have asked already and am awaiting answer. Currently my invoice is to their UK office.

whinmoor · Jul 7, 2015

How much did they pay for the swap-out? Is it worth getting involved in this kind of work or is it more trouble than it's worth?

BruceB · Jul 7, 2015

I have sympathy with the implication in the question. You will not become rich doing this work. I took it on because I did a weekend trip to Ireland and back as part of a flying club and the couple were part of the group and were stuck because their installer had packed up. I'll try to attach the compensation table:

I also invoiced and was paid by the couple, but we will consider anything back from Solar Edge a bonus. It will all take some time - I recall a bit of small print saying they only pay during the first 5 days of the month!

BruceB · Aug 25, 2015

For those that enjoy the detail of accounts, I thought I would close this thread down by answering my own question about the vat position.

When you bill ABB for a warranty claim, you bill ABB UK therefore you add and they pay you VAT.

When you bill Solar Edge (I have had x3 warranty claims, and you have to have done the advanced training), you bill Solar Edge Israel and therefore the transaction is outside the scope of VAT (according to Solar Edge's view). There might be some argument about the 'place of supply' in vat terms but life is too short to argue.

Both companies have paid up although the process takes about 2 months.