MSE News: How to avoid duping by VAT fraudsters

Regshoe

I have to agree with ZTD here. Certainly as a society want to ensure that if a company is VAT registered then they pay the requisite VAT to HMRC (in the same way that anybody dodging tax denies the public purse money, which, theoretically at least, should benefit us all) and it is preferable to make sure they describe their services and pricing accurately.

As a non-business consumer / non-VAT registered Business I can't claim back any VAT regardless of whether the builder/plumber (etc) charges it to me or not.

If I get three quotes for a job and they are as follows:

1) £600 no VAT (legitimately - they aren't registered).
2) £600 inc VAT (£500 net + £100 that they do include in their VAT return).
3) £540 inc VAT (they claim the cost is £450 + £90 VAT they have to pay to the government, but are lying and pocketing the £90)

Which do you choose?

Well obviously you should never knowingly assist in defrauding HMRC, but in all likelihood you wouldn't know about the situation in 3 and you can hardly expect your average consumer to carry out some sort of due diligence check that they are paying their VAT / taxes. Given that you would go for option 3) (if you are basing the decision on cost alone). Similarly if the total in 3) was £600 then financially it would be the same to you as the other two.

I don't see this as any different to the spate of advertisements recently that claim you don't pay any VAT (generally on cars I've noticed), this is blatant rubbish, they simply give a price reduction so that the new price + VAT is the same as the old net price. The only reason they get away with this is becuase they explain it in the small print and do actually pay the required VAT to HMRC.

I suppose you could argue that if you agreed a price up front of £500 assuming that the figure either included VAT or was not subject to it then an invoice arrived for £500 + VAT of £100 then you would be annoyed, but then you would be similarly annoyed whether the VAT charge was genuine or not. You should just ensure at the beginning that any firm quotes are clear about whether or not they include VAT and whether VAT is chargeable.