Paying the builder cash...

[dotdashdashdash]

...and not paying VAT is dodgy, right?

Does the £90k include materials that you could buy yourself?

Some of them. We could buy them directly, though we wouldn't have a trade account so would have to pay vat on them at the supplier.

I'm not against paying VAT by the way. Just wanted to confirm its dodgy as I suspected.

It's just one of the quotes we've had.

[quote AWhisperWillDoIfThatsAllYouCan]@NoMackerelInSwindon

What are you talking about? I've done masses of building work on my homes and, if at all possible, I always buy the materials direct from suppliers and have them delivered to me, because I want to own the materials if anything goes wrong with the builders I'm using. It is normal practice. Totally normal go order your own materials. You're talking nonsense.[/quote]
I am talking about the services not the materials @AWhisperWillDoIfThatsAllYouCan

That may make a difference to how you now read my post.

Of course you shouldn't. It's plain wrong.

And as a parting ticket what will you do if the workmanship is poor with no evidence to back it up?

not every builder pays vat nor does every business. This is aimed at those wrongly assuming all business pays vat, they don't its subject to the turnover.

To be honest, I'm not sure what extra protection we'll get paying by bank transfer. We paid our last builder by bank transfer and he did a shit job (paid in installments and we never paid the last installment) but he disappeared without a trace and we had to pay for stuff to be put right.

So I don't really care how I pay. I do care about tax evasion though!

I suspect he's said it bacause this (financial) year he isn't subject to VAT, but next year he will be.

@dotdashdashdash

*Did the builder specifically say they are giving you a cheaper price for cash?"

Well, it's without the vat, so it's cheaper.

They've suggested it. Cash in installments so no VAT is payable. Reputable company (seen several examples of their work). Quote said excluding vat, so I'm assuming they're vat registered.

Assuming they're registered for VAT, if they are doing a job cash in hand to save VAT then they really aren't a reputable company. We're all in the building trade and yes lots of jobs are cash, but they should be paid on receipt of invoice. No invoice, no comeback. I wouldn't touch them with a bargepole.

£90k is a lot of money not to pay vat on.

When we did our extension we used mates and paid a lot in cash for this and that. But Bigger bills we got invoices and paid the vat -grudgingly as it went from 17.5 to 29% when we started 😡.

No way id pay £90k in cash

@dotdashdashdash

To be honest, I'm not sure what extra protection we'll get paying by bank transfer. We paid our last builder by bank transfer and he did a shit job (paid in installments and we never paid the last installment) but he disappeared without a trace and we had to pay for stuff to be put right.

So I don't really care how I pay. I do care about tax evasion though!

I suspect he's said it bacause this (financial) year he isn't subject to VAT, but next year he will be.

If this one job is worth 90k, it's INCREDIBLY unlikely that he shouldn't be paying VAT.

www.gov.uk/vat-registration

The link above says that you have to register when you know your turnover is going over the amount, he clearly knows the from the quote even if he literally does no ther work so his reason doesn't make sense.

I run a business so thought i'd chime in

If you are paying 90k then he will hit the VAT threshold straightaway and by law must be VAT registered.

Asking to be paid in cash isn't a bad thing normally, paying by card or bank transfer incurs fees (around 2% for us plus a transaction fee). Please don't turn your nose up at tradesmen asking to be paid in cash, just request an invoice (Yes even if they aren't VAT registered they should still give you an invoice)

That our of the way I would never dream of asking for 90K in cash! Nor can I think of any reason to justify why that would be the case. That stinks of under reporting turnover to HMRC or planning to liquidate / not finish the job.

A bank transfer won't cost him anything and there is a record of the transaction for you, and in any case you want an invoice. With cash there is no record of what you have paid.

If you pay him cash knowing it avoids the VAT you may be complicit in the fraud too.

If a tradesperson asked me for cash only I would not use them. If he is like that he may skip building regs. too...

We have paid builders mix of cash and bank transfers.

One lot did a shit job.

If they are not charging VAT it is because either they do not do enough work to have to pay VAT - or they are evading tax. But, remember, they are the ones evading VAT - not you.

With shoddy builder, we went to small claims and got our money back - judge added 20% for VAT as we'd need to pay it to other builders for re-work. Look on dodgy builder's face was a pic. He started to say, "but, Ma'am, I did not charge VAT.." Judge game him a look, then he shut up and sat down. Bloody hilarious. She awarded us 8% interest, too, served him right!

BTW - also had a shoddy builder who was paid by bank transfer and had amazing builder we paid all cash. Just keep your evidence of cash withdrawals and texts/emails referring to the cash.

For a £90k job I would expect a full legitimate contract with payment stages and after sales warranty. I would pay more for a legitimate company!

Did you do a companies house check to see if they have any debts against them?

@roses2

For a £90k job I would expect a full legitimate contract with payment stages and after sales warranty. I would pay more for a legitimate company!

Did you do a companies house check to see if they have any debts against them?

This - when we did a similar size job we had architects issue certificates at each stage to ensure the work had been completed, then we paid by bank transfer. We held back 10% and they got 5% on completion and another 5% after snagging.

@roses2

For a £90k job I would expect a full legitimate contract with payment stages and after sales warranty. I would pay more for a legitimate company!

Did you do a companies house check to see if they have any debts against them?

Exactly this.

Please go with a legitimate company who does everything by the book. You need to make sure you're protected in case something goes wrong.

@NoMackerelInSwindon

You were talking about suppliers, not contractors. If you meant contractors then that makes more sense.

@TalktotheFoot

Not just dodgy but downright stupid. You will have no comeback if they do a shoddy job for one thing and for another, HMRC could come after you personally.

HMRC will not come after you for paying cash. The builders tax and vat is his responsibility not yours If you deliberately involve yourself in a scheme to help them evade tax then it’s different but simply paying cash is allowed I personally wouldn’t due to having proof of payment etc but not because I was worried about HMRC

Agree with sunflowers, go with a properly run company. I think a job costing the best part of £100,000 ( it’s bound to go over) will have parts of the job that you can’t actually see, like foundations, insulation, block work and other structural work. If they aren’t done well then the whole job will be in jeopardy and frankly I wouldn’t trust a company that were prepared to lie and fiddle their books to do a decent job on things that the client won’t see.

@dotdashdashdash

Sparklfairy

It's a big job. Like £90k

No way then. Dodgy as hell.

The other thing is you may conspire to save the VAT (which he doesn't get anyway but just passes on to HMRC) but what he is really doing is avoiding paying income tax and NI contributions. But maybe if he claps for the NHS it's alright?

I was always told that agreeing to pay cash for a lower price meant the job didn't legally exist and therefore I wouldn't have any guarantees if something went wrong.

Whether this is true I really have no idea but it was enough for me to reconsider my position. I still continue to reject any suggestions of a cash job and choose to pay the extra and have the job on the books. I always want written quotes, receipts and guarantees whenever I need a tradesmen.

@UnpropitiousNightmares

I was always told that agreeing to pay cash for a lower price meant the job didn't legally exist and therefore I wouldn't have any guarantees if something went wrong.

Whether this is true I really have no idea but it was enough for me to reconsider my position. I still continue to reject any suggestions of a cash job and choose to pay the extra and have the job on the books. I always want written quotes, receipts and guarantees whenever I need a tradesmen.

What a strangely niche thing to have had multiple conversations about

There could be reasons other than any kind of tax avoidance that someone might offer a discount cash payment, although I'm not a lawyer I can't imagine how that would make the work legally not exist

Knocking off a fiver on a £105 job for cash is "normal".

Knocking off 20% on a £90k job is VAT fraud (and almost certainly income tax/corporation tax fraud, and probably paying his staff cash in hand (not through the books) fraudulently too to avoid tax and NIC.

Don't touch with a bargepole. If a firm is happy to do illegal things in one area, just think what they'll find acceptable when doing the building work (i.e. substandard materials, corner cutting etc).