Frequently Asked Questions
If the person’s contract of employment requires the benefits listed in item 13 to be provided, the schedule of cost components makes it clear that the contractor can get paid whatever costs it has paid for these, no matter what it was. VAT would normally not be included, because the contractor can recover that and therefore clause 52.1 applies. But if the contractor cannot recover a tax paid for a component listed in the schedule of cost components, it is entitled to be paid for the non-recoverable parts. This conclusion is fortified by item 13(i), as this payment is also made to meet ‘the requirements of the law’.
Finally, if taxes were excluded just because they are taxes, that would mean that the contractor would not be paid for items such as landfill tax for spoil taken from the site, or national insurance contributions for people it employs. But those items can be and are payable because they are payments made to provide the works. Therefore, non-recoverable VAT on contractor’s lease cars is an item that should be paid.