VAT

[Mike.C]

A little old lady up the road from us who my wife does some shopping for, needs some roofing work done, and a company (who I know are not VAT registered) said that they would forget the VAT if she pays in cash in hand, but surely if they are not VAT registered she would not have to pay VAT anyway, or have I got it wrong?

Cheers

Mike

 

[Chrispy]

Cash in hand = no paperwork = no come back if it goes wrong, unless you have some one to check the work is done properly walk away.
And yes to charge vat when not registered would be illegal.

 

[finneyb]

Mike,

It is my understanding that if you are not VAT registered then you can't charge VAT.
So she is getting precisely nothing in the way of discount.
I'd check on a local Fair Trade Register for the Roofing Contractor - if he is BS-ing before he gets the job it doesn't look good.

Brian

 

[Steve Maskery]

Tell her to walk away. That is not straight trading.

 

[longinthetooth]

It's a sloppy mode of speech often practiced by dodgy traders to persuade cash payment which they they won't (or won't fully) declare for income tax. The term 'VAT' is likely a red herring. So they're on the fiddle. This does not automatically mean that their work is crap, though. Neither can they DEMAND cash. A schedule of work & a quote might be handy.

 

[Mike.C]

Thanks guys, not VAT registered, the customer pays no VAT, I thought so.

The thing is in this area the guy who is retiring has a pretty good name for his work and so the way she sees it is, if they worked for him their work must be good too, which may very well be true, but what puts me off of them is that they lied to a woman they have known all their life, which is not a very good way to start a business.
They say that they are going to give her a warranty in writing, but I am worried that that might not be worth the paper it is written on because there are companies shutting up shop, changing their names and starting again up and down the country everyday. Also because her house opens right onto the pavement/a main road they also said that there old boss who owns his own scaffolding will as a favour to her get a permit and erect it for her job all included in the price. This on a 2 storey 10m long scaffolding will save her about another £1,500, are they that expensive?

She is such a nice old girl who looked after us when we first moved up here so I would hate to see her ripped off. I told the wife to tell her to find a company who gives insurance backed guarantee because at least that way she is covered no matter what. The trouble is being her friends sons I think she feels like she somehow has to accept them now.

Cheers

Mike

 

[Graham Orm]

It stinks. Tell her to go elsewhere.

 

[Kalimna]

I would possibly go further than that and report them to HMRC, though I don't know how interested they would be.

Either way, finding another company sounds like the way to go.

Adam

 

[Lons]

Mike
I've reduced the size of my business looking towards retirement, to keep it under the VAT threshold and the advice given is spot on.
If not VAT registered, it is illegal to add VAT to labour or materials when charging for work. The tradesmen will of course have paid VAT on the materials they buy and are entitled to make a profit on those but cannot add more VAT. (e.g. he bought materials for £100 + 20% = £120. He wants to make £20 profit so...
1). if vat registered he would reclaim the vat paid and bill the customer 100 + 20 profit + vat ( £24) = total £144 and he pays the new vat content to HMRC
2). If not registered he would bill the full 120 he paid + 20 profit = total £140 so the customer pays the original vat content as he can't reclaim it.

Labour is of course a seperate issue so if the labour is £100 that's all he can charge whereas if registered he must add vat of 20% on top of that so HMRC can have their slice.

Just had a couple of largers so forgive me im my maths are a bit shaky tonight. :lol: :lol:

She really should walk away from these guys or at the very least investigate a lot further. They sound very dodgy to me and another word of warning is that they may not have appropriate public liability insurance. With scaffold outside, she could well be liable for any accidents or mishaps as she is responsible for hiring the contractors and therefore culpable. There are incidents of this happening as it is the householders responsibility to ensure the people she employs have the cover in place. She should ask for a copy of the certificate.

Bob

 

[Flynnwood]

The scaffolding (which is quite expensive btw) should be part of the contract for the job between the buyer and the roofer. No need for someones old boss (or his 'permits' LOL) to be involved in that. One job, one contract, with insurance.

Otherwise, it just adds to the potential for things to go wrong.

The VAT sales splurb stinks. Customs and Excise would be more interested than HMRC.

If she has connections with these people that go back a long way and is therefore difficult for her to resist, she could always;

1. Get a proper company in to do the job with an insurance backed guarantee. Then ...

2. Give the friends sons a face saving mechanism ... i.e Brian/Fred/Jack/Distant Nephew etc rang me and we got chatting and he recommended xyz company.

Hope that helps.

 

[Glynne]

Customs & Excise and the Inland Revenue merged way back in 2005 to become HMRC but I doubt they would be interested unless you could prove a non-registered business actually charged VAT.

 

[MIGNAL]

Of course I've no idea if they are good, bad or indifferent. Sounds to me they are wanting cash to lower their own tax liability.
Let's face it, in the building game they won't be the first to do that!! I bet the majority of small building business seek to be paid by cash. It certainly was that way when I worked in that particular industry. If they aren't VAT registered they must be a one or two person outfit. VAT threshold is something like 75 K annual turnover. That's very small beer in the greater scheme of things.