Business VAT

A Business get paid invoices inclusive of VAT - at the same time the Business pays subcontractor who are not VAT registered. How should the Business VAT be accounted for? Should the business deduct subcontractors' invoice, then account for VAT on the Balance or the VAT Returns will be based on the gross received by the Business?

Hi Paul.
There are 2 supplies taking place here,the supply from the sub contractor to the contractor and then the supply by the contractor to the end customer.
Regardless of whether or not the subcontractor is VAT registered or not the entire supply by the contractor to the end customer would be a Vatable supply.
Thank you.