This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Can non VAT registered builder prove he is above board?

L
Posts:1
Joined:Sat Sep 02, 2017 3:30 pm
Can non VAT registered builder prove he is above board?

Postby L » Sat Sep 02, 2017 3:32 pm

I am getting quotes for a home extension. One builder says he is not VAT registered which makes him quite a bit cheaper than the others. All quoted approx £52,000 and his is non vat, the others are Plus vat.

If this is legitimate I would like to save the money. If it is not I will avoid it!

Payments are bank transfer not cash, and he does provide an invoice.

Apparently he used to be vat registered but has been so low on work he deregistered.

Is there any way he can prove it is above board for him to not be vat registered?

Lambs
Posts:1611
Joined:Wed Aug 06, 2008 3:15 pm

Re: Can non VAT registered builder prove he is above board?

Postby Lambs » Sat Sep 02, 2017 8:24 pm

His explanation is perfectly reasonable, based on the information provided. The VAT registration threshold is currently £85,000 taxable turnover per year, and a sole trader could make a comfortable living without needing to be VAT registered. The de-registration threshold is currently £83,000 so he could still be making £80,000 turnover a year and legitimately de-register from VAT. Nor is it down to you as a private householder to check his financial bona fides.

However, if you are aware that he is doing significantly more work than just one or one and a half extension projects of the size you refer to in your post, then it may be that he has (or will soon have) breached the annual turnover threshold, and may be required to register for VAT. If he should have registered for VAT already, then he will be asked to account for the VAT he should already have paid.

I am no lawyer but if you have signed a contract to the effect that you will pay VAT if it is chargeable and he finds out he should have been VAT-registered (say) partway through the project, then he may be able to force you to pay the VAT that you didn't think was due, depending on the legalities (on which I am not qualified to advise). Or, if he again finds out he should have been VAT registered but he cannot force you to pay the additional VAT due, then you could still suffer if he goes out of business thanks to a VAT bill that he cannot afford to pay. I realise I might well accused of scaremongering in relation to what is probably a significant majority of 'small' builders who are not bubbling under the annual VAT threshold. Even so, some construction services are zero-rated and, while strictly still taxable, from a VAT registration perspective, you can ask not to be registered in some circumstances (although I think this would be quite rare in mainstream construction for homeowners).

Kind regards,

Lambs


Return to “VAT & Excise Duties”