How is this builder avoiding VAT registration?

mutley74

do any builders and tradesmen pay/declare VAT? In all my experiences they demand cash or cheque paid in their wife's name.

Doozergirl

mutley74 wrote: »

do any builders and tradesmen pay/declare VAT? In all my experiences they demand cash or cheque paid in their wife's name.

Yes, they do. Don't be so insulting.

Most small trades don't turnover enough to hit near the threshold.

If people didn't entertain the idea of saving themselves money on larger sized builds where it's clear that the builder is turning over large amounts of money in a year and then wondering why their build goes wrong, none of us would be having this coversation.

It takes two sides to create this situation.

Furts

Doozergirl wrote: »

Yes, they do. Don't be so insulting.

Most small trades don't turnover enough to hit near the threshold.

If people didn't entertain the idea of saving themselves money on larger sized builds where it's clear that the builder is turning over large amounts of money in a year and then wondering why their build goes wrong, none of us would be having this coversation.

It takes two sides to create this situation.

Absolutely yes which is why I put the word complicity in my#16. Whilst the thread is about VAT evasion by both the consumer and the builder, I wonder what else may not be present here. A contract with agreed payment terms, site management, site inspection, a Clerk of Works? We do not know but the concept of going to Court as mentioned by OP sounds a dubious concept.

Annie1960

Many consumers will not have any idea what the VAT threshold is, and it is up to the trader to know this.

Doozergirl

Annie1960 wrote: »

Many consumers will not have any idea what the VAT threshold is, and it is up to the trader to know this.

Of course it is up to the trader to know, but let's not even begin to pretend that people don't ask for 'cash' prices.

I think it's fair for anyone to assume that £300k might attract VAT. I think it's also fair to assume that anything that costs the same as a car might as well.

Almost every single thread on this board where the relationship with a builder breaks down is because due diligence has not been done. You can't just take someone's word that they are registered competent people, that a large bill doesn't attract VAT or that they are even any good.

I always invite people to come and look at our previous work. I have had one couple take that offer up!

Aylesbury_Duck

Doozergirl wrote: »

Of course it is up to the trader to know, but let's not even begin to pretend that people don't ask for 'cash' prices.

I think it's fair for anyone to assume that £300k might attract VAT. I think it's also fair to assume that anything that costs the same as a car might as well.

Almost every single thread on this board where the relationship with a builder breaks down is because due diligence has not been done. You can't just take someone's word that they are registered competent people, that a large bill doesn't attract VAT or that they are even any good.

Indeed. Too many people have their price-blinkers on and some, whilst not being actively complicit in VAT avoidance, don't ask questions because it's not their problem. In this case, we've even had:

jrck2 wrote: »

it could be useful ammunition or leverage at a later date - this was my reason for asking.

I find this sort of thing unsavoury - that a customer was happy to accept a low price, perhaps in the knowledge that it was too good to be entirely correct, but is also happy to use that as a stick to beat the builder with if things start to go wrong. Storing up "ammunition" for "leverage" at a later date can't be a good basis on which to engage a contractor - you're entering into a huge financial commitment half expecting failure.

Furts

Annie1960 wrote: »

Many consumers will not have any idea what the VAT threshold is, and it is up to the trader to know this.

I go into Lidl and my receipt is automatically issued with clear itemisation of VAT. I go into Wetherspoons for a drink and a receipt gets issued clearly showing the VAT element of the beer, coffee, or meal. Everybody in the country is conversant with VAT and everybody knows businesses have a likelihood to pay it.

It follows that any consumer claiming ignorance with VAT when it comes to building work - which it all too often occurs, is likely to be stretching the truth. Even if this ignorance is factual a few moments with Google will reveal some info. Unfortunately countless consumers cannot be bothered to do this, which comes back to all the wise words from Doozergirl when commenting on due diligence.

It is not rocket science for a customer to ask about, then seek proof, of VAT with anyone they choose to engage for a business transaction. Yet naive consumers frequently do not even consider engaging a contractor to be a business transaction. Why is this, and it is because they prefer not to know the ramifications?

Aylesbury_Duck

Furts wrote: »

I go into Lidl and my receipt is automatically issued with clear itemisation of VAT. I go into Wetherspoons for a drink and a receipt gets issued clearly showing the VAT element of the beer, coffee, or meal. Everybody in the country is conversant with VAT and everybody knows businesses have a likelihood to pay it.

It follows that any consumer claiming ignorance with VAT when it comes to building work - which it all too often occurs, is likely to be stretching the truth. Even if this ignorance is factual a few moments with Google will reveal some info. Unfortunately countless consumers cannot be bothered to do this, which comes back to all the wise words from Doozergirl when commenting on due diligence.

It is not rocket science for a customer to ask about, then seek proof, of VAT with anyone they choose to engage for a business transaction. Yet naive consumers frequently do not even consider engaging a contractor to be a business transaction. Why is this, and it is because they prefer not to know the ramifications?

Three reasons: Price, price and price. People often talk about recommendations, but how many of those recommendations are from friends/family who've benefitted from unrealistic pricing excluding VAT, so they're really pleased with their "bargain"? Honest, reputable contractors are losing out because they aren't competing on a level playing field.

Doozergirl

Aylesbury_Duck wrote: »

Indeed. Too many people have their price-blinkers on and some, whilst not being actively complicit in VAT avoidance, don't ask questions because it's not their problem. In this case, we've even had:

I find this sort of thing unsavoury - that a customer was happy to accept a low price, perhaps in the knowledge that it was too good to be entirely correct, but is also happy to use that as a stick to beat the builder with if things start to go wrong. Storing up "ammunition" for "leverage" at a later date can't be a good basis on which to engage a contractor - you're entering into a huge financial commitment half expecting failure.

It is unsavoury! In exactly the same way that people should ask questions when a builder does not include VAT, builders have to be very careful of potential clients who ask to work in cash. They are just as likely to be unscrupulous!

People end up deserving each other. Karma is what she is.

macman

To place a £300K building contract on the basis of a single recommendation, and no real research into their structure or finance, does strike me as incredibly cavalier.
If the extension costs £300K, then how big is the existing house?