Builder not VAT registered - Is he dodgy?

ahfh1

Hi,

I'm on the lookout for a builder. One of them says he is not VAT registered. Is he dodgy and should I not consider using him?

Cheers

Doozergirl

Unless you bill over £55,000 (I think the amount is) a year then there is no need to be VAT registered.

You just might have to question him on how much work he does. If he does a bit here and there then he might not bill that much, if he's got loads of staff and building entire houses then you'd be surprised!

Might as well ask him straight out - if he's legit, he'll give you a sensible answer.

MX5huggy

The limit is £70,000. So quite easy to make a living without being VAT registered, he may ask you to buy materials to keep his turnover under the £70k.

buglawton

Sometimes a pair of tradesmen working together will each be sole traders, each just under the VAT limit of £68,000, also they will let you order & pay for major items for the job, all this legally lets you avoid VAT on labour.

Don't forget, your income is taxed first before you can spend the remainder on a project. Then each sole trader is taxed on his income anyway. It is probably not worth taking on more work if you are just under the VAT threshold. B&Bs are similarly affected and will close off rooms or close for long breaks to stay under £68,000.

Being just over means doing a lot more work for the tax man.

phill99

Its also not uncommon for a builder to deregister if his turnover drops below the registration limit for a period of time.

baldelectrician

I would check things out thoroughly.

Also it may be a good idea to google him and ask about

Make sure, if you go ahead that everything is in writing

If your getting a quote for a large job (>£11000) it doesn't sound good on the face of it.

What are you getting done?
Where are you?
Is he registered?

diable

If he isn't VAT registered then pay him in cash and ask for a discount.

Alan_M_2

diable wrote: »

If he isn't VAT registered then pay him in cash and ask for a discount.

I get monkey's like this in my business every day.

It now costs us more to take cash than to accept payment by debit card, or bank transfer.

I'm not about to commit tax fraud to save anyone a couple of pounds, don't assume any decent builder will either.

diable

The government put VAT up fuel is rising the rich get away with tax evasion MP's claim all they can so I see no reason why not to join the gravy train in thinking about number 1

property.advert

When dealing with any builder or tradesman, remember the golden rule.

Any price they quote you will have a large chunk of profit in it for them. If it did not, they would be out of business. Thus, when paying in advance, there is never any need to pay their profit margin in full, if at all.

Thus, if the job cost £10,000 and the profit was £3,000 with materials at £3,000 and other labour at £4,000 then you would, over the course of the job have to perhaps pay for materials and other bought in labour but there would be no need to pay all of his £3,000 profit before the job was completed and you were happy with the result.

As for VAT, any builder worth his salt will be VAT registered as just how much can you have as profit out of £70,000 to live on ? Then again, you can still be VAT registered and do some work or purchases off the books.

buglawton

A well organised tradesman - or pair of them - can charge separately for their labour (you buy the materials) and live on £68,000 per year. Some people can live on that actually.