Tax Exempt Builder

blackmadra

I have just got a quote from a builder for some work on my new house. His quote does not include VAT. When I asked him about it he said he was exempt from VAT. He said something about his annual turnover being below a certain threshold and that many building companies (some big ones too) are VAT exempt.

I've never hired a builder before and I want to make sure I do everything above board here.

Is what he is telling me true? I thought all companies had to charge VAT to their customers and pass it on to the government. Should I be warey of this guy?

Thanks in advance for the advice

kieran.

I think the threshold is 37.5k before you have to register for VAT and thats turnover not profit.
Sub -contractors do not charge main contractors VAT, maybe that is what he is referring too?

DOCARCH

Sounds dodgy or the builders does very very little work!

How much was quote for, and, how long did he say work would take?

blackmadra

The quote was just under 20k. Said the work would take about 2 - 3 weeks. Surely his annual turnover couldn't possibly be as low as 37k.

He tells me that he is fully tax compliant too. Is there any way at all that this could be true?

kieran.

ask him for a upto date copy of his tax clearance certificate

DOCARCH

blackmadra wrote: »

The quote was just under 20k. Said the work would take about 2 - 3 weeks. Surely his annual turnover couldn't possibly be as low as 37k.

Only if he just works for 4 to 6 weeks of the year?

Calahonda52

Is it not 70k?
http://www.revenue.ie/en/tax/vat/guide/registration.html
He is NOT exempt
http://www.revenue.ie/en/tax/vat/guide/vat-rates.html#section4

Op his tax affairs are not your concern, you have no responsibility in this area.
You sole concerns are a good job as per specification and ensure that you don't advance any money before work gets done. If he asks for cash to fund material purchases then you have a risk that he is clearing existing debts... Common problem/risk.

Victorian House

My understanding was that VAT should be included when pricing for somebody who would be expected to pay VAT.

So, pricing to a commercial business - okay to price excl. VAT
Pricing to a regular consumer - price should be incl. VAT

Could it be that he is 'exempt' from paying VAT as it is all just passed on to you?

topcatcbr

As already explained. If his turnover is below the threshold he doesn't need to register for VAT.

However he cannot claim VAT back on materials.

B-D-P--

DOCARCH wrote: »

Only if he just works for 4 to 6 weeks of the year?

Job costs 20k, Thats not what he is earning, May be other labors helping, has to pay for materials ect.

looksee

B-D-P-- wrote: »

Job costs 20k, Thats not what he is earning, May be other labors helping, has to pay for materials ect.

Yes, that is the difference between turnover and profit.

Nutser

He is supposed to register for VAT once his monthly turnover would take him over the annual VAT exempt limit. So once he is over approx 3100 turnover per month be should register. If this is a 20k job over 6 weeks it looks like he should be registered.