Paying labourers direct to avoid vat?

pat1976

Hi, I've just posted this on the Tax board and don't know if I can link the threads.

I'm having an extension built costing around £50k. I've seen several builders who offer to come to an arrangement over VAT, which I am not open to.

However, I've found a builder I like who has said that i can pay his labourers direct, and since the individuals aren't VAT registered I would not have to pay vat on it. Or he's happy to pay them himself and give me the bill plus VAT. Everything would be receipted and paid by cheque.

This sounds legal. Can anyone advise please?

Thanks.

crazyguy

You may be able to claim the vat back: http://www.hmrc.gov.uk/vat/sectors/consumers/new-home.htm

pat1976

Thanks for the reply. I'm not sure we'd fit into any of those categories, we're looking to extend an existing house, not build a new one or convert anything. Is there any known success with a standard extension?

McKneff

If they are his labourers and employed by him and not his subcontractors they would be committing an offence if they didnt declare it to the HMRC so you must be careful. You could be liable too as you are aware of it.
Also, if things go wrong, the builder could turn round and say 'nothing to do with me guv, you were employing and paying them direct'

If they are subcontractors who are self employed, then that is a different matter altogether. They can be paid individually.

Its a minefield of ifs and buts.
If you want to keep everything above board then get the bill and pay it.

crazyguy

Vat helpline:
0845 010 9000, they will advise if you are elligable, if not then perhaps offer cash for the whole amount if you are able to get your hands on it and see if your builder will do it vat free barring the materials, just remember only ever pay a builder in stages.Ground work and footings x amount, walls x amount and roof on x amount and try to hold back x amount until the work is completed to a suitable standard.

phill99

crazyguy wrote: »

Vat helpline:
0845 010 9000, they will advise if you are elligable, if not then perhaps offer cash for the whole amount if you are able to get your hands on it and see if your builder will do it vat free barring the materials, just remember only ever pay a builder in stages.Ground work and footings x amount, walls x amount and roof on x amount and try to hold back x amount until the work is completed to a suitable standard.

I think you should read your own signature.

crazyguy

phill99 wrote: »

I think you should read your own signature.

And I think you should get a life but hey thats my opinion,

fluffpot

If they are subcontractors, they can invoice you direct. But they need to have their own insurance - ask to see a copy of their policies

samtheman1k

And of course you'd be employing several different people...so if one decides to go AWOL, has an accident, or has a problem, then you'll have to sort it all out, rather than the builder...I hope the risk of that hassle is worth the saving in VAT!