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The Federation of Master Builders is again asking the Government to reduce VAT on home improvements after a comment was published in the Telegraph by the HMRC Permanent Secretary. A cut in Vat from 20%  to 5% would help protect homeowners and legitimate businesses by reducing the advantage that cowboy traders have when offering cash-in-hand deals.

Brian Berry from the FMB said “We are pleased HMRC is becoming more vocal about the damaging effect cash in hand payments have on individual businesses and the economy at large. Businesses that avoid paying VAT have a 20% head start, but all too often this cheap deal comes without a proper written contract or any kind of paperwork meaning the enforcement of consumer rights is almost impossible if something goes wrong.”

Berry continued:
“The Government can reduce the competitive advantage of these rogue traders and help protect consumers by cutting VAT to 5% for all home repair, maintenance and improvement work. This simple, single action would help reduce the size of the ‘informal economy’ in the home improvement market, which is now estimated to be worth an astonishing £9.3 billion per year.”

Berry concluded:
“Over 5,000 construction businesses have gone into insolvency since 2010. At a time when the economy is on the brink of tipping back into recession, the Government should be doing everything it can to support legitimate businesses, not adding to the total number of unemployed.  According to research by the analysts at Experian, last year’s rise in the standard rate of VAT to 20% resulted in nearly 4,000 job losses in the home improvement market in 2011 alone.”

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