Building work VAT on quote but subbed out to non-VAT registered business

JD3

Had a quote for recent extension of £39k + VAT but the company who quoted said they couldn't do it until later in the year and they knew another local company who could do the work for us instead but they'd still oversee the process.

Work started and was told to pay the company doing the work - no invoices were given, just asked for cash as went through the work.

Now owe the last £5k and asked for an invoice, which doesn't have VAT on as they're not VAT registered.

I know there is VAT on costs that can't be reclaimed but that will be much less than the sales VAT and it feels like being done out of a few extra grand in profit being kept by them through subbing the work out to a company that's not VAT-registered.

Asked the original builder who quoted and they said sorry but we agreed the total price and I need to pay that. Just feels wrong to me but not sure on any legal position etc. Do I need to pay the full amount?

rob7475

Did they specifically ask for cash rather than bank transfer into their business account? I guess most of their business doesn't go through the books so they can avoid paying tax. I'd drop into conversation how you work for HMRC and you'll need a VAT receipt / invoice before you can pay it.

JD3

rob7475 said:

Did they specifically ask for cash rather than bank transfer into their business account? I guess most of their business doesn't go through the books so they can avoid paying tax. I'd drop into conversation how you work for HMRC and you'll need a VAT receipt / invoice before you can pay it.

I paid most by bank transfer, about £5k he asked for cash. To be honest, not sure how he's not VAT registered as our job alone is nearly half way there. Seems a bit strange.

I know we agreed to pay £x total including the VAT to original builder (who I presume is still taking a cut) but just feels like being duped out of extra cash because of the final arrangement.

Doozergirl

No company that builds extensions should be in a position that they aren't VAT registered. 

The threshold is £90,000, that's two modest extensions in a year and not enough to make a decent living from.  

You paid in cash without invoices until now?  

You can't cheat an honest man.