Builder vat fraud

leveller2911

Dr.Shoe wrote: »

Hang on. Is he defrauding you or the chancellor of the exchequer?

When he buys all his materials he has to pay VAT. When he buys tools he has to pay VAT. When he puts petrol in his van he has to pay VAT.

His invoices may well "include VAT" but how do you know that the VAT includes labour costs? If he invoices you a cost and then adds VAT to that to arrive at a total then he is committing an offence but not against you.

Errrm because by law he must charge VAT on his labour if VAT registered.


I'm guessing you took the cheapest quote, am I right?

I fail to see how that matters? IMO he,s defrauding both the client and HMRC.....Also being a complete knob who gives all tradesmen a bad name.....If in fact he is doing what we have been led to believe..

CB1979_2

yeah Dr Shoe, makes a massive difference.

you can't charge VAT on anything unless you're VAT regged.

in essence he's profiting as he won't be passing that charged VAT back to HMRC (that's pretty much what us VAT regged do, are just VAT collectors for HMRC).

Drinda

Early this year I had a similar problem but not on such a big scale.
I went to the CAB for advice because the builder asked for £300 on top of his quote and threatened me he would remove items if I did not pay.

The CAB told me to report him to the office of fare trading and they would look into his dealings and the OFT would also tell the Tax office, but I did not want all that hastle so I wrote a letter to the builder telling him of my intentions and put it through his door, same night he phoned me as nice as pie and appologised, he also came back and put right some work that I did not like, and needless to say he did not get a penny more he was going out of his way to smooth me over so that I did not report him, He had also asked for payment in his wife's name so he knew he would be in a lot of bother.

Good luck Drinda.

jimbo88_2

Dr.Shoe wrote: »

I'm guessing you took the cheapest quote, am I right?

Not at all- infact, i had 2 cheaper ones, but I chose him because he "seemed" like a decent bloke at the time, and he was more local to where we live!!!

The only problem I have/had, was the extra payment he wanted for the build of the extension out of the blue- no mention of this in writing or during the 4-5 mths he has been working on our house, and that he has been stealing from us under the disguise of vat, when he is NOT vat registered. He was using an INVALID number, and therefore should not be charging me vat on anything.

leveller2911

How many other customers (possibly pensioners living on the breadline) have been defrauded by him? thats the question people need to ask.Its all very well saying "I complained and he was nice as pie and we came to an agreement for refunding some money " but your missing the bigger picture here.

Heres a man who possibly has gained significantly financially at the expense of his customers, some of who may not have been able to afford it........

No excuse, the OP should report him ,kick up a stink and make sure justice is carried out.

stone7

I'm a VAT registered sole trader.

I doubt that the builder has defrauded the Revenue on the VAT element of his invoices. Unless he earns above the level for compulsory VAT registration (and assuming he wasn't voluntarily registered for VAT), the Revenue has no claim to what is described as the VAT of the bill. If his earnings remain below the level at which VAT is paid (£68K ???), then no VAT is due, despite what he's put on his invoice. I see this as more a case of False Accounting and a blatant attempt to swindle the OP by flowering up the bill with bogus VAT.

The reason for him having payments made to his girlfriend is a bit more unclear. Perhaps he is barred from holding an account of his own due to the recent bankruptcy, it could be to avoid paying income tax on his earnings, or it could be to use up his girlfriends tax free allowance... really can't be sure about that one.

OP, if the total inclusive cost was £21.5k then over £3k was the VAT element.(17.5%) He's now ramped up his bill by a further £3k to cover costs that should have been include in the original quote. He will have had you over for over £6k... and you don't want to upset the poor soul.

Goodness gracious me.

vaio

leveller2911 wrote: »

I remember when I applied to become VAT registered I was told by HMRC NOT to raise any VAT rated invoices until I had been issued with my number.I don't understand how he can "back date" any invoices because he clearly won't have a number. Surely from what the OP has said he,s commited fraud end of?? and the first thing he should do is refund ALL the VAT on the labour that he has charged and should only begin charging vat when he,s been issued with his number..... I smell something here and its not fresh..

Not what they say on their web site…….
[FONT=&quot]
“Invoicing in the meantime[/FONT]

[FONT=&quot]Until you receive your VAT registration number you must not charge VAT, or show VAT as a separate item on your invoices. To make sure that you do not lose income in the period after you applied for VAT registration but before you receive your VAT registration number, you should increase your prices by the VAT rate relevant for your goods or services, and explain to your customers why you are doing so.[/FONT]
[FONT=&quot]
Once you are registered, you can then reissue those invoices, amended to show your VAT registration number and the VAT charged. This will ensure that your VAT-registered customers can reclaim the VAT that they have paid.”[/FONT]

Alan_M_2

JasonLVC wrote: »

http://ec.europa.eu/taxation_customs/vies/vieshome.do

This is a 'live' database of all EU VAT numbers including the UK.

Type the number in and if it is valid it will confirm that the number is valid. What it will not do is confirm if that number belongs to this builder (ie, he could easily give you the VAT number for Argos which is of course, valid, but not his!)

Actually in most cases the above link does confirm who the VAT number belongs to. It's something I use with reasonable regularity particualrly when exporting to other businesses registered in the EU.

Try it with my vat number...it gives you my company details.

GB 827152729

Alan_M_2

sunshinetours wrote: »

Calm down dear,lol:D

Perferctly calm squire I thank you!



I've read my " VAT in the Construction Industry" from HMRC and can't find anywhere where it says this.

Maybe you could help me out and post a link?

Hmm will have look Monday when back in the office. Its the same principle as any retailer dealing with Joe public ie tyre centre all prices should be quoted inc VAT. You may be right that it might not be down in Tax law, just best practice. I'm not a VAT specialist, I have others who deal with that!

It is a legal requirement for any prices advertised for public consumption include vat.

You may show something as £1000 + vat but you must also show this as (£1,175.00).

However this is specific to Advertised prices - on website, brochures, or any advertising materials.

When supplying a quotation or estimate, as long as the VAT situation is clearly defined I don't think the same obligation applies, in so much as £1000 + vat is acceptable and there is no legal requirement to show the figure as £1,175.00 - I'm happy to be proven wrong if someone can point me towards the relevant information.

leveller2911

vaio wrote: »

Not what they say on their web site…….

[FONT=&quot]“Invoicing in the meantime[/FONT]

[FONT=&quot]Until you receive your VAT registration number you must not charge VAT, or show VAT as a separate item on your invoices. To make sure that you do not lose income in the period after you applied for VAT registration but before you receive your VAT registration number, you should increase your prices by the VAT rate relevant for your goods or services, and explain to your customers why you are doing so.[/FONT]

[FONT=&quot]Once you are registered, you can then reissue those invoices, amended to show your VAT registration number and the VAT charged. This will ensure that your VAT-registered customers can reclaim the VAT that they have paid.”[/FONT]

If a trader is nearing the VAT threshold and is in the middle of a job which he is quoted for say a couple of month previously that is say £10,000 in total.He then suddenly realises he could go over the threshold then tells his customer that he would like to charge them £1,175-00 extra would they mind? I know what I would tell him, not gonna happen in my view...

I can only post what I was told by HMRC when I applied for VAT registration,the guidelines may have changed but theres o way as a customer I would be stumping up the vat money...Remember that only vat registered customers can re-claim the vat back, poor old Joe Public can't.