Reply With QuoteAs someone about to hand over a considerable chuck of cash for a new driveway, I would choose cash. But I’m confident in the workman involved, and it was significantly cheaper to pay cash
We're looking to get a new garage door fitted in the next week or so and the guy I'm dealing with has offered a cash deal for £1300, but £1400 + VAT if we pay by card. He muttered something about the extra £100 being corporation tax.
I'm not against paying cash but then wondered if it would leave us with no back up if things go wrong. Not even sure whether a CC would be any use in this instance anyway? Does CC protection cover shoddy services?
The company has been around for over 30 years and their name was given to us by the manufacturer of the old garage door as an approved trader, so no immediate alarm bells. But, weirdly I can't find any reviews of them, apart from 5 google reviews from the past 5 years.
So, cash or card?
As someone about to hand over a considerable chuck of cash for a new driveway, I would choose cash. But I’m confident in the workman involved, and it was significantly cheaper to pay cash
Yep, £1300 or £1680?Originally Posted by demonloop
Weird that I can't find any reviews though. Maybe because they're a small firm?
As long as you don’t pay him anything upfront, I don’t see cash as being a problem.
Cash with tradesman is pretty common. I wouldn't assume that a VAT invoice and a receipt gave me any practical protection.
Presumably you will not get an invoice or receipt if you pay him cash
If the garage door falls off the next day or faults occur it may be difficult to enforce a claim if he denied that he fitted it or indeed you had paid him
I think that I would want an invoice of some sort
If the company has been around for 30 years you might expect some feedback somewhere. Is it cheaper for cash because he's VAT registered but not going to declare it?
Started out with nothing. Still have most of it left.
Would it not be a worry that by paying with cash the government was not getting any tax due ?
Well I guess it depends if you are happy to benefit from facilitating the tradesmen evading tax.
You can put it on the tradesman evading tax but it's the customer that's making the saving, even if it is the responsibility of the tradesman. The +VAT element gets paid to HMRC when his VAT return is due so the tradesman doesn't benefit.
Ultimately the Tradesman spends the cash on fuel, shopping, tools etc. and the Tax man gets his cut in VAT further down the line anyway. I wouldn't lose any sleep over it.
A bit here about the potential downsides https://www.kt5construction.com/shou...ilder-in-cash/ (though probably written by someone with an interest in non-cash payments)
Whilst some traders prefer cash for legitimate reasons, ime many do so to enable them to understate their tax liability, be it CT, IT and/or VAT.
If they don't provide you with a reason for the reduction then you could assume they might declare the full amount in due course but if they specifically reference a reason, as the OP's tradesman has done, then it seems likely they don't intend to do that so you must decide whether your social/moral conscience is comfortable facilitating (potential) tax fraud.
I'd concur that the tradesman is taking a risk in being so open about his intentions but the risk sits entirely with them.
As an aside, the tax take for the Exchequer is likely significantly reduced if no direct tax is paid.
Given the moderate sum involved, if you paid the price plus VAT and something went wrong, you could still have a load of hassle getting them to fix things.
Trust your gut. If they seem ok and you’re not paying upfront, pay cash. Keep an eye on them as work progresses and is carried out. Always easier to get things fixed at the time, than getting them back.
It’s up to the tradesman to pay tax etc.
I wonder how many mostly 'cash' businesses are 'only just breaking even guv'?
Started out with nothing. Still have most of it left.
We had a managing builder who subbed all his work out to independent tradesman who earned below the VAT threshold. I paid the tradesmen with a large cut for him. Legitimately saved a lot of VAT on our extension. No tax evasion and within the rules.
Maybe it is an arrangement like this?
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So chris, do you think the trader will be declaring the Turnover in his SchD or CT return? Do you also think it possible that he will claim input tax on his materials?
His business is registered at companies house as a Private Limited Company and at a residential address. He filed accounts last month. Maybe he subs out to the fitters?
I honestly have no idea and I'm not going to grill him on it.
Evading CT or income tax as it won't be going through the books
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Works well, but not sure it's what's going on here with a simple 'reduced price for cash"?
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Last edited by xxnick1975; Yesterday at 18:13.
"Disaggregation"
Not a VAT expert but think that only applies where a single entity is artificially separating income streams, rather than independent tradesmen contracting directly to the customer.
All comes down to who your contract is with. If the contractor is arranging and managing subcontractors, that doesn’t help an analysis that the customer is separately engaging individual trades. There’s CIS tax to consider too, of course.
Think that’s correct but a big if. There may be no documentary evidence one way or the other. Might save some tax but then if the project has issues, you’re rather stuffed as everyone will say it’s not their responsibility.
Looking at the OP seems both parties are benefiting assuming the job doesn’t go through the books.
Straight forward tax evasion from the looks of it.
If he's prepared to cheat the tax man how can you be sure he isn't going to cheat you?
Best Regards - Peter
I'd hate to be with you when you're on your own.
Cash used to be nice, back when it was easy to spend.I liked it, i took it, i did deals to get it and it was for the tax saving. The warranty was the same, its quite easy to ruin a good name or create a bad one.
The VAT element on the door will be collected along the way. VAT element on the labour will not be collected, also the labour charge will go in his back pocket and not reach his book keeping.
Last edited by hilly10; Yesterday at 19:04.
Hope you don't have any snagging/guarantee issues as I imagine in this situation they'd all start claiming "not me guv"
I'd agreed that the customer needs to recognise the potential downside of not having one main contractor and who they'd hold responsible for what in the event of any issues, especially when the attraction of an immediate saving is so appealing.
If HMRC were to check then they would want to ensure there's sufficient evidence to support the existence of separate contracts with multiple tradesmen and IME separate invoices from each would usually be sufficient. Any commission they pay to the main contractor would also need to be correctly accounted for but none of that is of concern for the end customer.
Without getting to into the rights wrongs and morals of it, there’s a deep lack of understanding in this thread about how a lot of the construction trade works in the real world, other sectors too for that matter
A friend of mine in hospitality wouldn’t be able to retain staff if there wasn’t a cash element to their pay, just the reality like it or not — paying suppliers is the same, a certain amount of cash is expected.
VATDSAG05150 - Disaggregation: the law
VAT Act 1994 Schedule 1, paragraph 1A (2) requires that, in determining whether any separation is artificial, due regard is had to the extent to which the different persons concerned are closely bound to one another by
financial
economic, and
organisational
links.
Schedule 1, 2(2) lays down three conditions which must be met before we can issue a Notice of Direction to any person:
he is making or has made taxable supplies
those taxable supplies form part of wider activities carried on concurrently or previously (or both) with one or more other persons
the totality of the disaggregated activities gives rise to a liability to be VAT registered.
We are not required to prove that there was an intention to avoid VAT. We are required to prove that the artificial separation resulted in an avoidance of VAT.
Before you can ask the VAT Registration Service (VRS) to issue a Notice of Direction, you will need to be satisfied that all the criteria in the VAT Act 1994, Schedule 1, 1A and 2 are met.
Hope the above quote from VAT manual helps.
I think the previous page at VATDSAG05100 is more helpful in that it clearly suggests that the above circumstances are not the typical arrangements for disaggregation. In the absence of clear evidence to suggest the contract was with the main contractor only or that all parties were really one trading entity then disaggregation wouldn't seem appropriate.
Interesting though this may be to tax nerds, it's not relevant to the OP's query so I'm out as they say.
I think if I can get paperwork, which I'm sure I will, then we're all good.
The company is registered and an approved dealer for a number of big door brands.
I'll have a think about the moral tax question, but the reality of saving £380 can't be sniffed at.
I would feel better about the work contributing to the national tax purse if I thought the present incumbents might use it to help improve the lives of the electorate, rather than line the pockets of their wealthy friends in return for sub-standard goods and services.
But this is the G&D so no more to be said on that.
Thanks for all the advice and opinions.
Am sure you did, but there is no level at which you would not do something to save cash / tax on anything you could, or extract it further like cycle to work, EV etc.
If everyone was like you, there would be even less in the pot for those that need it.
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I’ve paid in cash for renovation works the last couple of years for various trades. It easily over 200k in cash I’ve handed over.
People on this thread claiming it’s VAT fraud need to get in the real world. Every small / medium builder / tradesman does cash jobs to avoid VAT.
Without cash jobs this industry would cease to exist.
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Clear and blatant tax avoidance. If you feel fine supporting that then pay cash and expect no warranty and I suspect less aftercare. For the sake of less than £400 surely do the right thing or never ever moan about a dealer not paying into the fundraiser ever again :)
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Id find someone else.
"Bite my shiny metal ass."
- Bender Bending Rodríguez
Sounds like you’re not sure about the trader in the first place. If you were 100 % confident would you be that bothered about how you paid him?
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Im sorry, but everyones at it. Whether its the public, using tax avoidance by paying cash, or tradesman accepting cash, or hospitality/food places taking cash only. Of course the government declare everything don't they... Contracts get legitimately handed out, like covid PPE where the tax payers money into the coffers disapear, or tax payers money vanishing in Croydon as one example where the councils gone bankrupt. Or may even the mayor of London revenue away on his sly pay per mile schemes he claims to know nothing of. How about contacts handed out for building stadiums for the Olympics back in 2012, The Garden footbridge over the Thames, the pointless HS2 exercise....
No one does tax avoidance like the people at the top and big business.
Providing you get some sort of receipt or proof of works carried out I don't see it as a problem.
It's not that long ago loads of people paid for work with cash.
It does help to know who you are dealing with though.
Why would you need to pay cash with that arrangement?
If they are below VAT threshold you wouldn't be paying Vat whether cash or not.
TBH it's not difficult.
Tradesmen want cash as they are not going to declare full payment on the job.
They will likely declare something as there will be a garage door to account for.
I paid a grand cash last week for tree work in order to get a better price.
Makes no odds to me as it happens all the time and I'm not making a one man stand against it.
Last edited by Hood; Today at 00:24.
If it helps you decide, by the time this transaction finds its way into a tax return there will be a new government.
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There is a big difference between tax avoidance and evasion….
Whatabouttary isn’t helping.
Don’t pay tax expect poor public services….
The famous quote, attributed to a judge, is that the difference is the thickness of a prison wall....
In the real world, deliberately failing to account for VAT that is due is fraud. Whether or not it's widespread, it's still illegal.
It’s illegal to be drunk in a pub but I’m sure you’ve done that.
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I paid the tradesman in cash to avoid VAT. He then went to the boozer and spent it all getting totally bladdered.
I figured sometimes two wrongs make a right...???
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Similar to hooky firesticks, it’s the thin end of the wedge. Without honesty (at least from the moral majority) the entire system would collapse. Your last sentence is absolute nonsense.
I wonder how many advocates of paying cash to evade tax in the next breath moan about financial corruption in high places.
Started out with nothing. Still have most of it left.
Where are you based?
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