Homeowners 'keen to avoid VAT on plumbing work'

More than half of all homeowners having plumbing work carried out in their property prefer to request cash-in-hand payment methods to avoid shelling out on extra VAT charges, according to new research.

The study - carried out by the Federation of Master Builders (FMB) - found 55 per cent of individuals hope to use this approach to ensure they pay less for the jobs the need doing, despite the fact it is an illegal practice.

Furthermore, when a professional tradesperson refuses the request, the report revealed the person commissioning the work would most likely not use them - instead opting to find someone who would be willing to take the job on the basis that no tax will be paid.

FMB chief executive Brian Berry said: "Too many otherwise law-abiding individuals are asking their trader to carry out cash-in-hand construction work at zero per cent VAT, in order to cut costs."

He said the situation is far from ideal, with consumers inevitably being led to rogue traders, who will complete the work, often to an unacceptable standard, with "no or little regard for health and safety".

The organisation also pointed towards figures from Experian, which suggests the "black economy" in general construction is worth around £10 billion per year - although the real figure is likely to be much higher.

In response, the FMB is now calling on the government to reduce the rate of VAT to five per cent on housing renovation and repair work, to encourage more people to take the legally and morally-correct standpoint. 

It argues this move would not only result in the enhanced protection of consumers, but also boost the economy by limiting the amount of work where no VAT is paid at all.

HomeOwners Alliance chief executive Paula Higgins said: "Homeowners shouldn't ask to avoid VAT and builders should neither offer it nor accept it. Having a high rate of VAT on repair work creates a black market."

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