Pay Handyman £2,000 in cash for a £500 discount?

[OliveSeaTurtle]

We're just in the process of having the damp fixed in one of our rooms, it cost a whopping £2,500 + £500 VAT = £3,000.

The damp proofer has done 1 of 3 days so far & I pay on the third day, he just rang me and said: "If you pay in cash, I'll give you a £500 discount, the 20 year guarantee will still be in place don't worry", I said I'd think about it and get back to him.

Saving £500 would mean a lot at the moment but am I fool to even consider it?

How can the 20 year guarantee (which is crucial incase it comes back immediately), be in place if there's no bank transfer of my money?

Has anyone else ever encountered anything similar? I'm inclined to decline the offer but DP is interested if it means saving £500.

A couple of days before the job was due to start he rang saying he had a cash flow problem and could I ring wicks and pay for the order.

A common ploy to artificially reduce turnover to avoid VAT. We had a landscaping firm who asked us to pay a builders merchants instead of him - the thing was our job didn't use any materials from that builders merchants, so of course we refused. There's a whole black economy out there evading taxes, but somehow Joe Public thinks its acceptable if they're getting something cheap. Then at the same time whinge about so-called austerity and Amazon - lots of hypocrites about these days!

I'm not saying you're wrong badbadmummy but isnt it better for the customer to buy something directly? If I pay wickes I know Im only paying what it actually costs.

If the tradesman buys it and charges me what it cost him he doesn't lose out on the vat, if he adds a mark up he's better off regardless and I've lost out.

How does it help him with his vat?

How does it help him with his vat?

He may be using a VAT scheme like the flat rate scheme where he pays a reduced amount of vat based on sales only.

He may not be registered at all because he's artificially/illegally reducing his sales values to below the registration threshold.

He may not be declaring his time sales for that job at all (no record of the job if he's not putting the material costs through his books).

we had builders putting in new bathroom, cash in hand. turns out when we sold the house, they had overloaded elec circuit, so had to pay another fortune to electrician to fix a crap job. So be careful.

Lots of maybes there badbadmummy, none of which are detrimental to the customer.

Unless I'm the vat police there's still no reason for me not to buy stuff directly imo

Most builders would be stupid to do all those things badbadmummy. It’s an industry where you usually gain from vat registration, not suffer.

Pink princess when I had my kitchen fitted I paid howdens directly. Not unusual at all. I wouldn’t expect my builder to have thousands of pounds free cash to invest in my kitchen until I paid

Most builders would be stupid to do all those things badbadmummy. It’s an industry where you usually gain from vat registration, not suffer.

Depends on whether their customers are domestic as opposed to VAT registered businesses. If their customers are domestic they'll be 20% more expensive on the labour element than smaller non VAT registered competitors. Smaller traders dealing with the public generally do everything they can to avoid breaching the VAT threshold so they can be competitive.

Lots of maybes there badbadmummy, none of which are detrimental to the customer.

That's fine but I hope you're not the kind of hypocrite who boycotts Amazon, Starbuck etc for their alleged tax avoidance but then happily facilitates tax evasion at local level and moans about cuts and so-called austerity.

Caprisunorange- I didn't know this man from Adam there was no way I was ringing up a store to pay for hundreds of Pounds worth of materials that wasn't in my name and I wouldn't be collecting. Whose to say he would even come to my house to complete the job?

I understand what you are saying about a builder not having the money to pay for things first but that is what credit/trade accounts are for.

Badbadmummy - I don't boycott anyone, as far I'm aware Amazon and other large companies comply with tax law as it currently stands.

Are you saying that you have proof they are acting illegally, why aren't the Inland Revenue doing anything about it?

Also, as I'm not getting it, please explain how the customer paying for their own materials is evading any tax. Anyone can buy a kitchen and independently pay someone to fit it, what's wrong with that?

There could be good reasons why he wants to be paid cash, other than the obvious ones.
The VAT thing, just to clear it up, you pay vat on the materials a tradesman supplies even if he is not vat registered as he will have paid vat on them when he bought them. With a non vat registered trader, you don't pay vat on the labour or on any markup on goods.

If he is running an overdraft, the bank could very well take all your payment to pay that off, leaving him short.

It's not just tax avoidance, if he has kids that don't live with him, by reducing the amount he officially earns, he can reduce the amount of child maintenance he pays.

Builders do run trade accounts, but not always with every supplier in town.
Asking a customer to pay Direct has several benefits to the builder:
It keeps his turnover below the vat threshold.
It cuts down the risk of a bad payer leaving him in debt to the supplier.
It keeps his cash flow moving.

OP get a receipt and make sure you get all the paperwork. If he is dodging tax, in the UK at least, that's only a problem for him if he gets caught.

I would definitely do it as long as you get a receipt. His taxes are his issue not yours.

The receipt he gives you would be legitimate, he would just alter costs in his accounts.

please explain how the customer paying for their own materials is evading any tax.

Nothing at all wrong if the customer pays directly for goods they source, on their own account or via a shop/counter. Completely different when the tradesmen has "bought" goods on their trade account but asking the customer to pay directly - the customer is then paying the suppliers liability, won't have an invoice/receipt made out to them, etc. Legally, the tradesman owns the goods and resells them to the customer in the latter scenario, hence why the tradesman should pay, and invoice the customer.

Thanks for all the replies, was really helpful hearing an outsiders opinion and it's interesting to read such contrasting opinions.

We decided to pay in cash on the grounds we have proof of the guarantee and he provided it so we're happy.

So far, the job seems ok and the plaster is drying nicely. But we shall see if it stays that way and I haven't just been ripped off completely with no traceable financial transaction. Fingers crossed! I'll update in a few months to let you know the outcome...

OliveSeaTurtle
Did you get a receipt?