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as there is no VAT element in the sale price
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Surely, there is no VAT element in the
purchase price (i.e. the price
you purchase at)?
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and in return he waves you vat on item/services you buy to run your biz,.
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Does he? (I assume you mean waives?) Looks to me like he's telling you to absorb it. That means it's costing you more. If it was waived, it would be costing you less.
Don't miscalculate this. If you are VAT registered, you recoup part of the amount of VAT you are paying, by deducting the purchase VAT element from what you pay to HMRC, when your supplier is VAT registered. if your supplier is not VAT registered, the odds are that he is rounding up the charge to you by the amount of VAT he has paid, and you can
not claim that amount back.
Put another way, your non-VAT registered supplier has to undercut your VAT registered supplier by a clear 17.5% in order to offer you a better price.