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News Release from: Federation of Master Builders (FMB) | Subject: Cowboy building work
Edited by the Buildingtalk Editorial
Team on 25 April 2005
Homeowners pay cash for cheaper building
job
Homeowners are fuelling the growth in cowboy building work by taking on tradesmen who undercut reputable builders by avoiding VAT.
New government should clamp down on cowboys, warns builders organisation The black market in cowboy builders is burgeoning and the next government needs to clamp down on this multi-million pound annual drain on the economy, warns Britain's biggest building trade association
This article was originally published on Buildingtalk on 27 Jun 2003 at 8.00am (UK)
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Homeowners are fuelling the growth in cowboy building work by taking on tradesmen who undercut reputable builders by avoiding the 17.5% VAT.
Research by the Federation of Master Builders shows that more than a third of homeowners pay builders in cash to get a cheaper job - and almost a half say they do it by not paying VAT.
"If the next government cut the rate of VAT on building work in the home to 5%, then cowboys would no longer be able to undercut reputable builders and homeowners would no longer be tempted by the cowboys' cash deals".
"These tradesman leave shoddy, unfinished work that costs homeowners millions of pounds a year and takes over half a billion pounds from the public purse," according to Andrew Large, public affairs director of the FMB.
Under new EU legislation allowing European countries to cut the rate of VAT on building work, France chose to cut its rate to 5.5% in 2000 and saw a dramatic rise in homeowners switching work to reputable builders.
With such a rate cut, the new government would also see a growth in home improvement work, according to FMB research, which found that the vast majority of homeowners, 81%, would be more likely to carry out repairs or home improvements if 17.5% VAT was not charged on building work.
Instead of cash deals, 64% of homeowners said they would pay by credit card or cheque if the VAT charged on building work were reduced.
Andrew Large said "The difference between a job where VAT is added or not, can stop a homeowner progressing with a job," said Andrew Large.
"Homeowners have to go with a VAT-dodging cowboy who can undercut the reputable builder by offering a cash deal with no added VAT, but they are likely not to see the same craftsmanship or customer service." According to the research, one in ten homeowners who had done a cash deal said it had backfired: 72% of them had to get another builder to redo the work, 80% were not happy with the work and 36% said the work was never completed.
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