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Dilemma- using a builder who is offering a cash in hand deal?

36 replies

stoviesfortea · 23/04/2010 22:19

We are planning on getting an extension to our house this year and have started looking about for quotes. One of the builders has come back with a price and he said that he could do it for cash ie, we don't need to pay any VAT (therefore saving ourselves about £10k) but I know this is dodgy from his side. My DH is an accountant and said there is nothing wrong from our end by paying him cash as it's up to the builder to declare his VAT.

Normally I would run a mile from a guy like this but DH knows this builder well, he went to school with him, was best mates with his brother at primary school, the builder has a great reputation for his work, he has completed several projects nearby and they have given him great references, he lives locally so is fully traceable, and he isn't asking for any cash up front so we would only pay him once stages of the work are completed. I think the builder has only suggested this cos he knows DH.

We are really tempted about the VAT saving but the only downside is that we aren't going to have an official formal contract as such, but the builder said he will still put in writing what is included / excluded and sign it. But it still feels a bit dodgy!

What would you do????

OP posts:
hf128219 · 23/04/2010 22:21

I think you're dh is treading on dodgy ground as an accountant.

LemonDifficult · 23/04/2010 22:29

As someone in a grim legal wrangle with the building company owned and run by a long-term close friend of mine - please stop!

You need to be protected by a proper contract and a clear, dated programme of works before you start. An extension sounds like this will be a sizeable amount of money, and therefore an utter headache if it doesn't work out. Don't do anything without all the correct paperwork and ideally get your architect to administrate the contract/work.

The money you'll save may seem like a big chunk but you could put yourself at risk of all sorts of expensive bother instead. Can you ask him just to give you mates rates and see what he comes back with?

rebl · 24/04/2010 07:28

I wouldn't do it. We're going to use a good friend to build our extension and we're getting mates rates. Basically he's going to project manage for us for free so effectivly saving the equivalent of the VAT but he's doing it all above board with a contract, a schedule of works and payments etc.

PuppyMonkey · 24/04/2010 07:34

Aaaaagh. Don't get a friend to do the work.... big mistake, as Sarah Beeny would say.

mjinhiding · 24/04/2010 07:37

This reply has been deleted

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vonnyh · 24/04/2010 20:38

I would do it.

MadameCastafiore · 24/04/2010 20:41

Would you be so happy to go along with someone who is literally committing fraud if it were not going to save you money?

What he is doing is wrong and unethical and is against the law and by condoning it you are also party to this IMO.

nickytwotimes · 24/04/2010 20:44

I wouldn't.

DOesn't matter who it is or how good the reputation, etc. We used a 'fantastic' local builder. We knew most of the guys personally, etc, etc.
It was a disaster and we spent years sorting it out. Had we paid cash off the books, we'd have been stuffed.

Don't do it.

jeanjeannie · 25/04/2010 21:08

I'd run a mile! Cash in hand will mean no paper work. No paper work means no trade accounts...MMmm, that'll mean the materials will cost more. Also - probably no contract. I'm imagining it's going to be a large sum of money (even minus the cash discount) and I think you'd be bonkers to risk all that without a saftely net. What is it with builders? I mean - would you do it with a solicitor? or an accountant? or any other profession?

Also can I just mention that you should worry about this offer. It may mean that he can't get trade accounts - and this offer is actually the only way he can get the work. Seriously there is a MNetter currently going through court with a builder (horrendous case we all watched unfold) and this is what happened to her

catinthehat2 · 25/04/2010 21:20

"we aren't going to have an official formal contract as such"

For this reason I am out.

LemonDifficult · 25/04/2010 22:53

Stovies - where are you in the UK? Your nickname sounds quite Scottish? I have good builders I can recommend (and crap ones to avoid!) if you are around Edinburgh and down to the Borders.

Pavlov · 25/04/2010 22:55


Pavlov · 25/04/2010 23:00

You know that person jeanjeanie is talking is me .

You must get a proper contract, and you must have it fully above board. You must do it properly, because if you do not, it could cost you thousands. If it feels dodgy, it most likely is. Go with your gut instinct.

Pavlov · 25/04/2010 23:10


and here

and here

and here!!!

And there are more.

I bet, by the end, you will change your mind about considering it.

We are have another court hearing coming up this month. It just goes on and on.

jeanjeannie · 26/04/2010 08:15

OMG - THERE you are Sorry Pavlov for pointing the thread in your DP still asks about you and how everything is going. I just get so cross when I sniff a possible wrong 'un! Hope all is OK x

overthemill · 26/04/2010 11:38

we did use someone like this and i wish we hadn't. the work wasn't up to scratch and i always felt we could have done something about it via legal system if we'd not paid in cash - truly advise you not to!

Pavlov · 26/04/2010 11:59

jean I always have an eye out for threads like this too, to warn others! It makes me so so mad too. Sorry for the hijack OP but...bodge the builder is attempting to have his business struck off, but someone (not us, not put or objection in yet) has objected to this formally so it has been suspended. This means he has other creditors. It also means, as we suspected, he has no money. We were at the stage of getting an independent surveyor in at judges recommendation, but we are not prepared to spend up t £400 more on something to prove us right when we will get nothing back. And Building Control have asked us to get the judge to request their reports as they are damning (its long, but builder tried to get them out to inspect the buiding again as he thinks we have made changes, building inspector called us and told us and said nothing changes for him, and bodge wont get him on side that easily. So we have requested a new hearing to see how to proceed on account of the builder putting in a striking off request 2 days after agreeing to get the independent report when we last met with the judge. Also been some attempts at intimidation etc, but we will not back down.

Loft is still standing though!

Sorry again for the long hijack!

MaggieW · 26/04/2010 14:12

Depends. We had our loft done by a "reputable well known" company who, after signing contracts surprisingly asked us to pay cash to the builder every other week, and cheque to them the other weeks, so clearly there was something going on - but frankly that was between the two of them. It didn't mean we got a cheaper deal and we still had a contract, guarantees etc, and when things went wrong, as they did, we had recourse. Don't think I'd do it without any sort of contract though.

jeanjeannie · 26/04/2010 14:17

OMG Pavlov - that is just bonkers. Intimidation??!!! This guy is evil Good luck with it all and I hope life is lovely with your new(ish) little one

noddyholder · 26/04/2010 14:21

If you do this and it is sub standard or issues arise in the months/years following completion you will have no comeback at all unless he is offering to do everything above board wrt planners and building inspectors and is prepared to take the flak re tax if it arises.

BigBadMummy · 26/04/2010 20:14

no no no.

Do not do it.


I have also had a nightmare that resulted in a legal case with building work and it is not pretty.

Pavlov · 26/04/2010 20:45

jean not intimidating us, he wouldn't dare but one of ex-employees, one who left during the job. He came to see us a few times, and has felt so intimidated into being a witness against us he has logged it with the police. He has refused to give evidence other than the truth which would not corroborate his story (he has photos after the builder tried to blame him for some the errors one time, he started taking them) which we now have too.

stoviesfortea · 28/04/2010 12:12

Thanks everyone for your opinions. Pavlov, what a nightmare for you!!! That is what's worrying me, if we end up in some dispute. But the reason I am also not 100% worried is that he is also perfectly willing to just charge VAT too if we want to do that, with proper contract etc, he only suggested the cash route cos he knows DH. So he has trade accounts, good reputation etc. He also said he could put some through as VAT and some as cash but I'm not too sure how that would work?

I have asked him to give us in writing what is / isn't included in his quote and sign this, would that stand up in court if the worst happened???

Can I ask those who have ended up in court wars what happened to get to that stage?

OP posts:
Pavlov · 28/04/2010 21:20

I would think the quote, signed etc would be enough to prove you entered into a contract, and also payments would prove that money was paid so proof you have financial engagement with him, legal advice told me that would probably be enough to demonstrate a contract existed. But what would not be written is what happens if things go wrong, processes, time limits and charges for going over, termination processes if you are not happy etc. I did not have any of this, and it has made the claim much harder to evidence, we had no evidence of, for example the cupboard under the stairs he did not put in, but promised us, as this was agreed as we went along, but was agreed to be included.

the court process is long, and tiring, and potentially costly, and even if it is tied up nicely it is hard to prove either way where fault lies a lot of the time, at least evidentially, so if there are hazy areas it makes it worse. we started the court process in Sept 09. not done yet.

The thing with VAT is, that side is up to him. You are not liable for whether he choses to charge you vat or not, so if he got caught not declaring/charging tax, that is nothing to do with you as far as I know, but its the implications from that which are issues for you.

MrsTicklemouse · 28/04/2010 21:29

I don't understand why paying cash in hand means No Contract, surely they are mutually exclusive.

You must for your own sake have a contract and personally if its going to save 10K I would probably want to pay cash in hand too!

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