Builder not VAT registered

Socrat

As others have explained, VAT isn't really an issue. Personally I'd be concerned about the cash in hand for any serious work. DIYer no problem, but builder - not so sure.
Check a trade as far as I know is a paid advert.
I would check their reviews on as many pages as possible.

oxfordmark

Cheers guys, i have looked at the reviews and they seem very good. Plus i have been told i can visit customers.

Money is paid in sections as the work progresses. With any builder, i would not pay until i know each part of work has been complete.

Doozergirl

oxfordmark wrote: »

Cheers guys, i have looked at the reviews and they seem very good. Plus i have been told i can visit customers.

Money is paid in sections as the work progresses. With any builder, i would not pay until i know each part of work has been complete.

You must take them up and go and see those customers.

Ensure the work is similar to, or greater than, yours.

snowcat75

Doozergirl wrote: »

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.

TBH I hadn't fully read the OPs post about paying cash when I replied.

It is why I would always say to get everything in writing and at the risk of sounding like a broken record do a simple contract. It makes everything clear...


Different business I know but we always have quote, followed by contract....then Risk assessment plus anything else like Hot works permits etc..... without we could be either taken to the cleaners or put in the dock if something badly goes wrong.... May all seam a bit OTT for a building job but judging by the disputes on here it would be a good idea for all concerned to have a bit of prudence.

snowcat75

oxfordmark wrote: »

Cheers guys, i have looked at the reviews and they seem very good. Plus i have been told i can visit customers.

Money is paid in sections as the work progresses. With any builder, i would not pay until i know each part of work has been complete.

Make sure the quote has as much detail as possible, and what points stages will be paid at, and of course don't pay until, also builders often leave off retention 5% for a month then 2.5% until snagging completed work.

Visit and get as much info as possible before committing.... Even then be prudent a good builder or employee can sometimes be one step or divorce or messy personal life from being a bad one.

oxfordmark

This has actually made me think of some more questions.

If any builder doesn't pay VAT or tax on his earnings when they should, can the customer be in trouble for this as well or does sole responsibility lie with the builder? Especially when paying cash and the customer knowing there is no VAT because the builder says he is not VAT registered.

snowcat75

oxfordmark wrote: »

This has actually made me think of some more questions.

If any builder doesn't pay VAT or tax on his earnings when they should, can the customer be in trouble for this as well or does sole responsibility lie with the builder? Especially when paying cash and the customer knowing there is no VAT because the builder says he is not VAT registered.

VAT and tax are not the same, Self assessment is paid regardless of registration (or not), VAT registration allows you to reclaim the VAT on capital expenditure ie Vans diggers etc and materials (although on materials you have to add it back on for the customer), the sting is for everything you earn you also need to pay the government. If your working for joe public VAT registered makes you either 20% worse off or having to charge 20% more than someone not registered.


Basically the reasonability lies with the contractor, However personally I also think that HMRC should hit the customer also, as much of the fraud is because the customer knowingly wants to pay them in cash to avoid paying the VAT...…


The job in building trade is very messy on certain areas and accounting is one of the main ones.

Mistral001

If you are worried that the reason the builder wants to be paid in cash is because he wants to evade income tax, then tell him that you will only pay him direct into his bank or by cheque. If he refuses, then it is likely (not certain just likely) that he is dodging tax. The VAT registration is irrelevant in this situation. It is the evasion of income tax that could be a problem depending on your ethics.

oxfordmark

snowcat75 wrote: »

VAT and tax are not the same, Self assessment is paid regardless of registration (or not), VAT registration allows you to reclaim the VAT on capital expenditure ie Vans diggers etc and materials (although on materials you have to add it back on for the customer), the sting is for everything you earn you also need to pay the government. If your working for joe public VAT registered makes you either 20% worse off or having to charge 20% more than someone not registered.


Basically the reasonability lies with the contractor, However personally I also think that HMRC should hit the customer also, as much of the fraud is because the customer knowingly wants to pay them in cash to avoid paying the VAT...…


The job in building trade is very messy on certain areas and accounting is one of the main ones.

It sounds a grey area. I have just read that some builders add VAT to an invoice but do not actually pay the VAT so pocket it!

Doozergirl

oxfordmark wrote: »

It sounds a grey area. I have just read that some builders add VAT to an invoice but do not actually pay the VAT so pocket it!

Any invoice with VAT needs to have a VAT number on it, by law. You can check the VAT number belongs to your builder online.

Any VAT registered builder that doesn't declare and pay the VAT they owe is going to get a bill estimated by HMRC anyway. There's literally no point.

Payments to anyone VAT registered should be by bank transfer just for the sake that it's far easier to account for it.

Fact is, if your builder is asking you for stage payments, then the job is probably large enough to justify paying it into their account. This is the 21st century after all. Not many people taking hundreds or thousands of pounds in one transaction genuinely operate in cash.

Improving the reliability and general reputation of builders lies with the consumer too. If they didn't ask for cheap jobs and insisted on invoices and clear paper trails, they wouldn't get cheap, rubbish work.