Possible tax dodge - is it legal?

[monkey64]

I got a price for a new conservatory which was 16K.

The conservatory company don't do the groundwork; they get a builder they know to do this. Their Invoice to us will show 12K and we have been asked to pay 4K to the builder in CASH after he has completed the groundwork. It is done this way (so I am told) so that the company don't pay as much tax.

Is this a common occurrance and is it legal? I'd rather not deal in cash if possible. What are your thoughts?

 

[Diyisfun]

Did you get any other quotes.
I have just had new windows fitted, I agreed a price & when the job was finished I paid the 2 hired hands a sum as agreed with the main installer.
I cant see any problem, it was paid by BACS, & they can sort there own tax/NI etc.
I have a record of payment.

 

[monkey64]

You paid by BACS which is much safer for me than cash.
I'm dealing with a recommended local company rather than a giant like Anglian or Everest.

I won't get an Invoice from the builder for his work which worries me slightly. If I pay cash and I have a problem, who would be liable?

 

[rjm2k]

Could be to avoid the builder being an employee who they pay employers PAYE on, sick pay etc. Also removes responsibility for workmanship.

 

[noseall]

I can't quite work out here whether the O.P. is worried about a builders contribution to the HMRC or whether he has potential build quality liability issues.

 

[Doug99]

If you pay £16k for a conservatory and your invoice only shows £12k, when it falls down the builder will only be liable to repay you £12k......bit of a no brainer

 

[Norcon]

The solution is easy.
Hire a mini digger and do the groundwork your self. About £150 quid for the day.
Then pay the £12k only.

 

[WalksWithTurkeys]

Perhaps the builder is not VAT registered so the cost is less. I would not be happy with this situation, you need a full contract/invoice.

 

[AronSearle]

Well, as far as the tax aspect of it is concerned, it may be illigal, but for him and not for you.

Its not your problem if you pay him in cash (just for a tax POV), and HE decides not to declare income.

/Not a tax expert.

 

[doitall]

Sounds like a tax and VAT avoidance scam.

Not so sure the home owner isn't liable anymore, tread very carefully and/or avoid.

At best ask the taxman

 

[Diyisfun]

If you get an Invoice for £100 & at the bottom it says please pay Mr x £10, Mr Y £10 & the balance of £80 to myself & all the people involved have given there bank details & you pay by BACS.
Then how can this ever come back to you.
It is the problem of the people you have paid & how they are tax/vat/employed etc.
The main issue for YOU is a receipt of payment.

 

[kbdiy]

The conservatory company (if a ltd company) will pay less Corporation Tax on their profits by not charging directly for the groundworks.

The builder however, if paid in cash, can chose not to declare any or part of this fee and thus avoid tax/NI. That's his problem.

But not having any receipt/contract or any other record of the works is your problem if something goes wrong with the job. You will not have any redress.

Personally I would avoid.

 

[noseall]

Sounds like a tax and VAT avoidance scam.

Can you elaborate?

 

[Deleted member 63160]

At best ask the taxman

He may want it building this century.

 

[doitall]

Sounds like a tax and VAT avoidance scam.

Can you elaborate?

Nope I'll leave you to figure it out, but of course it could all be above board

Having been married to a tax inspector before her untimely death, this would stand out like a beacon in the dark.

And I still think the custard is liable for cash up front no receipts. quite apart from the builder can claim he hasn't been paid yet and try for another £4k.

And just to make it more interesting the con servatory sharks can claim the full contract price of £16k if there's nothing in writing. that could make it £24k