Builder not VAT registered

Doozergirl

pelirocco wrote: »

Unless he is asking customers tto pay for the materials at source , £85k for a years labour is pretty good
Tbh I think if I was a one band band this is the route I would go down

I'm not sure what you've said makes sense, but even in just labour, builders employ others to labour for them as well. £85k in labour isn't very much to many of us.

Any builder working on a considerable size of domestic project should be VAT registered.

Calculate the cost of one's own project and the project timescale and work out what the cost would be if they were working for you for a year, then you'll know at least whether your own project should be run by someone registered.

snowcat75

Doozergirl wrote: »

If they are nearing the theshold, that presents an issue to the consumer, though. The consumer is paying the VAT on materials regardless of how it is invoiced.

a) how do you know that they're nearing the threshold and not just running a business purely to avoid paying VAT? And if they're willing to cut corners there, where else are they prepared to do the same?
b) If the consumer buys the materials then there are questions when things go wrong because the contract becomes for labour only. It makes you responsible for the quality of materials even if the builder picked and chose them, and therefore responsible for any labour to rectify issues with them. Under a supply and fit contract, the builder is responsible for everything.

I don't really see the issue, A non registered builder has no facility to reclaim so isn't avoiding paying VAT it will be paid on materials irrespective of VAT status, The only thing that changes for the client is if there paying VAT on the labour or not.

There's nothing illegal in the eyes of HMRC of supplying materials and have someone fit them and the clients statutory rights on the quality of materials will be just the same as if the builder had bought them.


Many builders don't especially like the client paying because of the % of mark up that's added onto the materials.

I run 2 VAT registered business, and have built 2 places under the HMRC DIY self builders scheme, The self builders scheme even allows you to submit paperwork with a trades name and address on it, as long as you can prove by bank statement or CC that the money was paid from your own personal account, and explain why (saying that you got a better deal by using someone's trade account is perfectly acceptable)...… I was even using my own business accounts like the steel stockholders and reclaiming some on my monthly return or quarterly in the case of the ltd company and some items onto my DIY builders return..... again HMRC have no issue with any of this as long as your not attempting to fraud them, and you can prove which account the money was paid from.

The only things HMRC have real issues with is when an individual is running a VAT registered and a non VAT registered business as often its just a front for one buying materials and equipment and then using the non registered side so not to charge VAT on labour...Or having multiple company's that all just sit bellow the threshold.

Mistral001

Nothing very unusual about this as others have said. For small jobs the costs are usually about 50% labour and 50% materials, so if he is a one-man outfit half of the VAT threshold (less something for overheads) is a pretty good income

Doozergirl

snowcat75 wrote: »

I don't really see the issue, A non registered builder has no facility to reclaim so isn't avoiding paying VAT it will be paid on materials irrespective of VAT status, The only thing that changes for the client is if there paying VAT on the labour or not.

There's nothing illegal in the eyes of HMRC of supplying materials and have someone fit them and the clients statutory rights on the quality of materials will be just the same as if the builder had bought them.


Many builders don't especially like the client paying because of the % of mark up that's added onto the materials.

I run 2 VAT registered business, and have built 2 places under the HMRC DIY self builders scheme, The self builders scheme even allows you to submit paperwork with a trades name and address on it, as long as you can prove by bank statement or CC that the money was paid from your own personal account, and explain why (saying that you got a better deal by using someone's trade account is perfectly acceptable)...… I was even using my own business accounts like the steel stockholders and reclaiming some on my monthly return or quarterly in the case of the ltd company and some items onto my DIY builders return..... again HMRC have no issue with any of this as long as your not attempting to fraud them, and you can prove which account the money was paid from.

The only things HMRC have real issues with is when an individual is running a VAT registered and a non VAT registered business as often its just a front for one buying materials and equipment and then using the non registered side so not to charge VAT on labour...Or having multiple company's that all just sit bellow the threshold.

You're right with all that, but you appear to have misread what I am saying in order to post that reply. I haven't talked of anything being illegal, but I have suggested possible corner cutting and a handing of responsibility to the consumer that they may not be aware of.

Most people here are not self building. They are expecting builders to take full responsibility for their projects and that is not what they get when they purchase their own materials.

They are more likely to think that they're simply saving themselves money in the form of VAT on the labour by helping to keep the builder under the threshold. They are in fact taking full responsibility for the materials and whether they are suitable and sound. Again, fine if you understand that but you are laying yourself open to risk.

All is well when things run smoothly, but we've had a post here recently where the client bought materials and expected the builder to pay the labour to find and fix the problem when the problem was a faulty product that the builder did not buy.

The OP wasn't the only one who thought the builder was in the wrong. Most of the replies agreed with the OP in that case, but they were wrong. Saving money in this respect means taking risk away from the builder.

Again, fine if you understand that the risk is yours, not the builders.

Doozergirl

Mistral001 wrote: »

Nothing very unusual about this as others have said. For small jobs the costs are usually about 50% labour and 50% materials, so if he is a one-man outfit half of the VAT threshold (less something for overheads) is a pretty good income

No one has enough information from the OP to know if it's anywhere near normal! This could be an £85k labour bill, plus materials with no invoice, just cash and a signed receipt. We have zero idea.

My materials bill is nowhere near as much as my labour bill. 50-50 is a myth.

oxfordmark

Hey

Done some more digging and can see he is listed on MyBuilder and Checkatrade. With the latter showing as not VAT registered.

So not like he is hiding it?

snowcat75

Doozergirl wrote: »

No one has enough information from the OP to know if it's anywhere near normal! This could be an £85k labour bill, plus materials with no invoice, just cash and a signed receipt. We have zero idea.

My materials bill is nowhere near as much as my labour bill. 50-50 is a myth.

I would add cash should be invoiced and receipted, nothing wrong or illegal with paying or receiving as long as its declared…… Signed for wouldn't be good enough in my book..... Dated invoice WITH, Registered address, Amounts, and details... If they cant provide that then walk.

snowcat75

oxfordmark wrote: »

Hey

Done some more digging and can see he is listed on MyBuilder and Checkatrade. With the latter showing as not VAT registered.

So not like he is hiding it?

As I said VAT registration no problem, sole traders can often run under the threshold, and don't want voluntary….. BUT do get everything in writing…. Iv said a few times on here I would always draw up a short contract, protects both party's 95% of the general public do not and even decent builders are shocking at paperwork that's often why the issues arise.

Doozergirl

oxfordmark wrote: »

Hey

Done some more digging and can see he is listed on MyBuilder and Checkatrade. With the latter showing as not VAT registered.

So not like he is hiding it?

You actively register yourself for VAT, so that doesn't mean much. MyBuilder and Checkatrade come with their own issues - is that where you found the builder? They will just take the builders word for it anyway. You can't check to see if someone is not VAT registered, only use their VAT number to check that they are.

There are threads here about the quality of person that can be found on both of those sites. Those websites are funded by the people that use it to advertise, so there can be a conflict of interest in which reviews they choose to keep up on those sites. Do not let those reciews be your only form if due diligence.

Not being VAT registered for a small jobbing tradesperson isn't an issue. The issue is not issuing invoices which makes it very difficult for you to uphold any consumer rights you have when you have no genuine idea who they are, where they live and no proper paper trail of what was agreed at what price.

Cash directly into their pocket without an invoice is pretty obviously income tax evasion, isn't it. But for you, the main issue is consumer protection. Anyone who takes pride in their work will issue even rudimentary paperwork with no issue.

Get an invoice from them and pay only when you get that invoice. Job done.

oxfordmark

snowcat75 wrote: »

As I said VAT registration no problem, sole traders can often run under the threshold, and don't want voluntary….. BUT do get everything in writing…. Iv said a few times on here I would always draw up a short contract, protects both party's 95% of the general public do not and even decent builders are shocking at paperwork that's often why the issues arise.

We have been given an official quote with business details included (logo, business address).

Will decide in the coming weeks. Might take up the offer of going to see ex customers.