Builder asking me to pay for materials cash to 'save VAT'?

Northern_Wanderer

Albermarle said:

Northern_Wanderer said:

Paying for materials at "cost" might give you a discount as the tradesperson might be getting a discount on his account with the supplier. There would still be VAT involved there.

Usually when these people offer to do the work for cash (no invoice) they are trying to avoid tax with HMRC so they give you a discount by claiming not to charge you VAT. I'm quite shocked by the number of white van men that try this out. Personally when I'm contracting someone to do work for me, I want an invoice in case anything goes wrong. It's not a £50 job, we are talking thousands and work on your property. You have zero come back if you pay cash and you're obviously assisting in fraudulant activities since these guys are not declaring the income on their tax or VAT returns. We are all paying for this.

By paying in cash you are doing nothing wrong. You can pay for goods and services how you like.
You have no idea what they are doing with their tax affairs.

Now you may well feel that some tax evasion is going on and on moral grounds decide you prefer not to pay cash, but it is not fraudulent to pay in cash.

I was referring to paying cash without an invoice being dodgy. Obvioulsy you can pay cash when invoiced without issue. To clarify, when tradespeople say they will do a cash in hand job for cheaper without an invoice (ie no VAT), this is clearly not going through their books and is likely to be some sort of tax evasion. If I knowingly accept to pay cash without an invoice then I am assisting the trader to defraud HMRC. I don't see any other explanation for this sort of practice.

Glad the OP is just talking about paying for the materials which have a receipt, sounds to be legit to me.

outtatune

Remember that if he's happy to defraud the HMRC he may well also be happy to defraud his customers.

Hoenir

Northern_Wanderer said:

Albermarle said:

Northern_Wanderer said:

Paying for materials at "cost" might give you a discount as the tradesperson might be getting a discount on his account with the supplier. There would still be VAT involved there.

Usually when these people offer to do the work for cash (no invoice) they are trying to avoid tax with HMRC so they give you a discount by claiming not to charge you VAT. I'm quite shocked by the number of white van men that try this out. Personally when I'm contracting someone to do work for me, I want an invoice in case anything goes wrong. It's not a £50 job, we are talking thousands and work on your property. You have zero come back if you pay cash and you're obviously assisting in fraudulant activities since these guys are not declaring the income on their tax or VAT returns. We are all paying for this.

By paying in cash you are doing nothing wrong. You can pay for goods and services how you like.
You have no idea what they are doing with their tax affairs.

Now you may well feel that some tax evasion is going on and on moral grounds decide you prefer not to pay cash, but it is not fraudulent to pay in cash.

I was referring to paying cash without an invoice being dodgy. Obvioulsy you can pay cash when invoiced without issue. To clarify, when tradespeople say they will do a cash in hand job for cheaper without an invoice (ie no VAT), this is clearly not going through their books and is likely to be some sort of tax evasion. If I knowingly accept to pay cash without an invoice then I am assisting the trader to defraud HMRC. I don't see any other explanation for this sort of practice.

Glad the OP is just talking about paying for the materials which have a receipt, sounds to be legit to me.

Cash isn't declared as income.  Cash receipt gets entered in books. Vat reclaimed. Remainder of cost offset against other work undertaken. 

lb00

Thank you all for your replies.

I am more than happy to pay VAT on materials and that was how we settled at the start of the works. Builder gets materials, pays 1200 (1000 net + Vat), sends me receipts and I pay straight away the 1200. 

 

Now what he said is: "to save you the VAT give me the 1200 in cash instead of through bank transfer". 

I have no objection to paying the full 1200 and it is indeed what I expected and was prepared to pay. 

What I don't like is that he is taking me for a ride when arguing he will save me the VAT by paying cash.

The reason for this I guess is that he is getting the money for my materials in cash, issuing no invoice, and still reclaiming VAT on those materials. So he effectively paid for them the net (1000) whereas I pay 1,200 and he pockets the 200£.

That I am not liking at all as he is breaking the trust relationship.

Northern_Wanderer

Hoenir said:

Northern_Wanderer said:

Albermarle said:

Northern_Wanderer said:

Paying for materials at "cost" might give you a discount as the tradesperson might be getting a discount on his account with the supplier. There would still be VAT involved there.

Usually when these people offer to do the work for cash (no invoice) they are trying to avoid tax with HMRC so they give you a discount by claiming not to charge you VAT. I'm quite shocked by the number of white van men that try this out. Personally when I'm contracting someone to do work for me, I want an invoice in case anything goes wrong. It's not a £50 job, we are talking thousands and work on your property. You have zero come back if you pay cash and you're obviously assisting in fraudulant activities since these guys are not declaring the income on their tax or VAT returns. We are all paying for this.

By paying in cash you are doing nothing wrong. You can pay for goods and services how you like.
You have no idea what they are doing with their tax affairs.

Now you may well feel that some tax evasion is going on and on moral grounds decide you prefer not to pay cash, but it is not fraudulent to pay in cash.

I was referring to paying cash without an invoice being dodgy. Obvioulsy you can pay cash when invoiced without issue. To clarify, when tradespeople say they will do a cash in hand job for cheaper without an invoice (ie no VAT), this is clearly not going through their books and is likely to be some sort of tax evasion. If I knowingly accept to pay cash without an invoice then I am assisting the trader to defraud HMRC. I don't see any other explanation for this sort of practice.

Glad the OP is just talking about paying for the materials which have a receipt, sounds to be legit to me.

Cash isn't declared as income.  Cash receipt gets entered in books. Vat reclaimed. Remainder of cost offset against other work undertaken. 

I think you misunderstood what I was referring to, I wasn't talking about the goods the OP is paying for that tradesperson has puchased and had a receipt for.... I was talking about the tradesperson not issuing an invoice for labour but asking for cash in hand and charging less i.e. their usual excuse is to avoid the VAT, that is income that is doubtful it's being declared to HMRC - why else do they offer this?