Made agreement with Builder but changed my mind

Section62

the_lunatic_is_in_my_head said:

nofoollikeold said:

The VAT threshold is £85,000 of turnover, not profit.  If your job is £92.5K then, if it is completed within a year, the builder MUST register for VAT.  You need to be very careful that he / she does not register and then charge VAT on top of the estimate / quotation - that's another £18.5 K

Traders must provide the consumer with the total price inclusive of taxes and traders must also register for VAT when they expect to go over the threshold. 

A builder who doesn't need to be registered that is taking on a job over the threshold that they expect to complete within a rolling 12 month period should add 20% to their total price (although probably at this point shouldn't detail it as VAT).

If the quote is accepted and work begins they should register as they would at this point expect the contract to be completed and payment made.

One scenario which happens quite a lot in these situations is the 'builder' will ask the client to pay individual subcontractors directly for elements of the project, bringing the total amount of turnover the 'builder' has from the project down below the registration threshold.

nofoollike old's "MUST register for VAT" may not apply, depending on how the financial arrangements of the project/contract are organised.

(mentioned only to avoid the idea taking root that all projects over £85k have to be done by VAT registered 'builders')

Section62

the_lunatic_is_in_my_head said:

As the trader told you they have other customers lined up I don't see they have a claim for loss of profits.

If the trader has told the other customers he can't do their jobs because he's taken on the OP's project then those customers/projects may no longer be available to him.

Going back to those other customers saying "I've had a cancellation, I'm free now" won't necessarily get him those jobs back.

(see countless MSE threads passim about builders being fully booked, and/or never trusting a builder who messes you around at the quotation stage)

the_lunatic_is_in_my_head

Section62 said:

the_lunatic_is_in_my_head said:

As the trader told you they have other customers lined up I don't see they have a claim for loss of profits.

If the trader has told the other customers he can't do their jobs because he's taken on the OP's project then those customers/projects may no longer be available to him.

Going back to those other customers saying "I've had a cancellation, I'm free now" won't necessarily get him those jobs back.

(see countless MSE threads passim about builders being fully booked, and/or never trusting a builder who messes you around at the quotation stage)

Round here it's very hard to get trades as they are fully booked, there are people desperate to jump the queue who would snap up a cancellation and others desperate to join it. 

If the trader is sitting at home twiddling their thumbs unable to work then they are of course entitled to seek their loss of profit but they have obligation mitigate this and find replacement work plus will need to justify to the claims process why they were unable to do so. 

akorn77

Thanks all for the advice. I spoke to the builder and cancelled the agreement. I just said I was waiting on a bank loan but it got declined, so I dont have the funds. He was fine about it. 

Made an agreement with the 2nd builder. He is bringing the contract tomorrow for signing, including schedule, payment terms, duration etc. He said I can pay part of it via bank transfer. 

Bendy_House

Let us know what happens when the first builder gets wind of what's really happened.

As he will

macman

Doozergirl said:

macman said:

Section62 said:

Auti said:

He requested cash after you agreed ? In my view he then changed the terms of the agreement and to something that could be seen as illegal. Have you the request for cash in writing/email? I would say to him that you could not continue due to the cash request and legalities of it.

There's nothing illegal about asking to be paid in cash, or for cash payments to be made.

The legalities relate to whether the builder will account for the cash correctly, e.g. declaring it for tax and (if appropriate) being registered for VAT and correctly administering VAT payments.

If the OP uses the cash request as an excuse to pull out, what happens if the builder responds that it is Ok to pay by bank transfer instead?  Better to be honest and say a more competitive price has been offered by someone else.

Spot on. Cash is legal tender, and there is nothing in the contract to say that the consideration must be paid by cheque or bank transfer.
But the legality (or otherwise) of the builder's tax returns are not relevant: whether he declares it or not does not affect the potential validity of the contract.
My take on this is that someone who takes on an £85K job without a proper schedule of works and detailed contract is unlikely to pursue any legal remedy for alleged breach of contract.. For starters, there was apparently not even any  agreement as to start date.

There are laws surrounding VAT invoices though.  It has to be detailed correctly number, address etc, with their VAT.  

Anyway, no one has mentioned the 14 day cooling off period you would also have under the law.  When did you agree this, OP?  

Yes. But that does not prevent the payment being made in cash. 

Doozergirl

macman said:

Doozergirl said:

macman said:

Section62 said:

Auti said:

He requested cash after you agreed ? In my view he then changed the terms of the agreement and to something that could be seen as illegal. Have you the request for cash in writing/email? I would say to him that you could not continue due to the cash request and legalities of it.

There's nothing illegal about asking to be paid in cash, or for cash payments to be made.

The legalities relate to whether the builder will account for the cash correctly, e.g. declaring it for tax and (if appropriate) being registered for VAT and correctly administering VAT payments.

If the OP uses the cash request as an excuse to pull out, what happens if the builder responds that it is Ok to pay by bank transfer instead?  Better to be honest and say a more competitive price has been offered by someone else.

Spot on. Cash is legal tender, and there is nothing in the contract to say that the consideration must be paid by cheque or bank transfer.
But the legality (or otherwise) of the builder's tax returns are not relevant: whether he declares it or not does not affect the potential validity of the contract.
My take on this is that someone who takes on an £85K job without a proper schedule of works and detailed contract is unlikely to pursue any legal remedy for alleged breach of contract.. For starters, there was apparently not even any  agreement as to start date.

There are laws surrounding VAT invoices though.  It has to be detailed correctly number, address etc, with their VAT.  

Anyway, no one has mentioned the 14 day cooling off period you would also have under the law.  When did you agree this, OP?  

Yes. But that does not prevent the payment being made in cash. 

I didn't say it did? 

I've run a VAT registered building company for a long time.  I'm slightly beyond the basic rules!

Bendy_House

The OP's tale is the first I've read where someone has options and choice when it comes to hiring builders. Is this a sign...?

Doozergirl

Bendy_House said:

The OP's tale is the first I've read where someone has options and choice when it comes to hiring builders. Is this a sign...?

In a word, no. 

The situation is getting worse, not better. 

Half a million UK born builders will hit retirement age in the next 10-15 years.  That is by far the most heavily populated age group. 

We have not encouraged anyone into the skilled side of construction in decades.  

Soot2006

Bendy_House said:

The OP's tale is the first I've read where someone has options and choice when it comes to hiring builders. Is this a sign...?

I think the only sign here is that customers are cancelling more. But, equally, there seem to be plenty more customers where they came from. We recently were quotes a 16-week leadtime for a project. OK, no choice, so said OK. Then got a message to say they had a cancellation and could do in 3 weeks but needed to know before the end of the day. I unfortunately don't check my voicemails so only called back the next day to say YES PLEASE but they'd already filled the cancellation spot. They did say there was a chance another would come up before the 16 weeks. Basically, seems a bit patchworky out there right now!