Non-VAT registered builder - is this legit?

flibbetyjibbet

We have been getting quotes for an extension, including from a builder we know personally (although not 'friends' as such). His quote doesn't include VAT as apparently he's not registered for VAT.
My husband is suspicious as this bloke was EXTREMELY keen for the job - virtually begged for it when they were chatting apparently - and I find it odd as his turnover must be pretty high.
Should we steer well clear or is this perfectly normal?

lardlikesdogs

Under £81k you don't have to be

flibbetyjibbet

Cheers, I couldn't work out what the threshold is.
His quote for us is £75,000 pre VAT, of which about half is materials (which presumably are VATable?) which is why I found it odd.
He is waaaayyyy more expensive than the others anyway so I think we will steer clear!

Doozergirl

If you're not VAT registered, you are the end user, so you pay VAT but don't charge it onwards.

At that price, he could only justify it by you being his only client this year and/or you buying all of your own materials and him charging you for labour only.

Being considerably more expensive than other builders with no VAT to be paid on labour (yes, you are paying the VAT element on materials) is a bit odd. Labour forms a high proportion of build costs, so 20% of even just that forms a substantial chunk of money. If you sell a quality product and can justify why you are more expensive, it goes without saying that you would also be VAT registered.

DRP

Doozergirl wrote: »

If you're not VAT registered, you are the end user, so you pay VAT but don't charge it onwards.

At that price, he could only justify it by you being his only client this year and/or you buying all of your own materials and him charging you for labour only.

Being more expensive than other builders with no VAT to be paid on labour (yes, you are paying the VAT element on materials) is a bit odd. Labour forms a high proportion of build costs. If you sell a quality product and can justify why you are more expensive, it goes without saying that you would also be VAT registered.

we're in a similar situation where a 'friend' who is a builder is going to build our extension.

He says it is best to pay his fellas direct as we save VAT. From the posts I read here, that should be legit, right?

Any disadvantages of doing it this way?

Doozergirl

DRP wrote: »

we're in a similar situation where a 'friend' who is a builder is going to build our extension.

He says it is best to pay his fellas direct as we save VAT. From the posts I read here, that should be legit, right?

Any disadvantages of doing it this way?

As you pay for items separately, they belong to you, manufacturing defects are yours to deal with and each labourer is effectively contracted separately by you, not contracted to him and then subcontracted by him. His responsibility and liability to you is the same as anyone else's on site.

If you're satisfied that this is all going to be your responsibility, then it's your responsibilty unless he decides to take it on, regardless.