VAT can’t be right!

Ahh, the smell of tax in the morning!

The VAT rules are pretty simple (well, not really). If you run a business and you have an income over £82,000 in a twelve month period, you need to register for VAT. You get a VAT number and you have to show your price net of VAT and the VAT on your invoices. It’s a lot of money – if you pay £50,000 on your project, you will need to pay £10,000 of VAT and for most of my customers, that’s a lot of money. 

What if your builder says he is not VAT registered? There are some genuine businesses that don’t need to charge VAT because they just don’t do that much work. A decorator, gardener or a even a jobbing electrician might be under the threshold. But if you are looking at a project over 20k and it’s going to take less than 3 months on site, you need to ask yourself why your builder is not VAT registered. He could work for someone else part of the year, or he might be starting up under a new business name. Or there might be an “arrangement”. This could be two some traders splitting the jobs, or asking you to pay the materials. If you don’t see a VAT number, ask. And make sure you speak to a previous customer and see if they are happy. The construction trade goes up and down, at the moment everyone is busy so you should see less unregistered traders. 

It’s also worth remembering that builders who don’t charge VAT can’t claim it back on their materials. So unregistered traders should be charging a bit more for the bricks and timber – if this isn’t reflected in the prices you get back they might not be charging enough to do the job properly. 

Advertisements

A hole in the ground

It had a perfectly round door like a porthole, painted green, with a shiny yellow brass knob in the exact middle. The door opened on to a tube-shaped hall like a tunnel: a very comfortable tunnel without smoke, with panelled walls, and floors tiled and carpeted, provided with polished chairs. and lots and lots of pegs for hats and coats – the hobbit was fond of visitors. The tunnel wound on and on, going fairly but not quite straight into the hill – The Hill, as all the people for many miles around called it – and many little round doors opened out of it, first on one side and then the on another. No going upstairs for the hobbit: bedrooms, bathrooms, cellars, pantries (lots of these), wardrobes (he had whole rooms devoted to clothes), kitchens, dining-rooms, all were on the same floor, and indeed on the same passage. The best rooms were all on the left-hand side (going in), for these were the only ones to have windows, deep-set round windows looking over his garden, and meadows beyond, sloping down to the river. 

This hobbit was a very well-to-do hobbit, and his name was Baggins. 

J R R Tolkein, The Hobbit