STAG BUILDERS OF HERTFORDSHIRE LIMITED
If i pay in cash can i avoid paying the VAT?
It is a common sentiment that paying taxes is an unwelcome obligation. This perception has led to a stereotype that builders prefer cash payments, suggesting that such transactions allow them to evade tax responsibilities. While there may be some truth to this notion, many builders are transitioning to cashless systems. Most builders today favour bank transfers, as they provide a clear record of financial transactions. Additionally, this method enables them to reclaim their outgoing VAT and expenses when filing their corporation tax at the end of the year.
The fundamental principle governing VAT obligations for a company is determined by its turnover. If a business's annual turnover surpasses £85,000, it is required to register for VAT and will subsequently charge VAT on its goods and services.
A VAT-registered building company typically indicates a certain level of professionalism and capacity. If you are seeking a quote for a substantial extension costing tens of thousands and the company is not VAT registered, it is advisable to inquire about the reason. This could suggest they are operating under the HMRC radar or may lack experience with large projects, both of which could raise concerns.
Regardless of how you settle your bill, it is advisable to request a receipt for all services rendered, including the amount paid, to maintain a clear paper trail, whether VAT is applicable or not. This practice can safeguard you in the event of any future discrepancies. At a minimum, it serves as evidence that a transaction has occurred, thereby mitigating any disputes regarding the receipt of payment.