Don’t let VAT dodging cowboys steal work from quality contractors, says ECA
The Electrical Contractors’ Association (ECA) has condemned tradespeople who take cash-in-hand payments to avoid paying VAT, saying they are cheating the country out of millions of pounds and undercutting law abiding businesses.However, the ECA believes comments by Treasury Minister David Gauke should reopen the debate on the rate of VAT paid on vital construction work, in an effort to curb the informal economy while sparking genuine growth during tough times.
Steve Bratt, ECA CEO said, ‘Tradespeople seeking to avoid tax through back hand cash payments must be stamped out. Not only does ‘paying under the table’ leave customers with no recourse should something go wrong, it denies the country millions in tax revenue. The Cut the VAT Coalition, of which the ECA is a member, estimates that in 2010, around £9.3bn worth of maintenance and repair work was carried out on homes through the informal economy – a significant loss to the Treasury. However, this demonstrates the huge demand that legitimate businesses could capitalise on. In these tough times, the Treasury needs to take bold action to support that business growth by reducing VAT to five per cent for key sectors – such as repairs and maintenance. This action alone could drive the economy forward substantially.
Bratt continued, ‘A cut in VAT to five per cent could encourage homeowners to undertake repair work, and even upgrade their properties with some of the green technologies that are being incentivised as part of the government’s sustainability agenda. This would help the consumer as well as the thousands of businesses involved in this work. A tax cut would also level the playing field and undermine the growing black economy of cowboy operators who knock off VAT for cash payment, so undercutting bone fide professionals.’