The taxman should crack down on ‘cowboy builders’ the Federation of Master Builders has urged.
HM Revenue & Customs this week released a report into the hidden economy, which found that two million people are working in the informal economy and are costing the Treasury £2 billion a year in lost revenue.
The report said the chances of being caught are “minimal”.
A statement from the FMB said: “As legitimate builders, members of the FMB charge 17.5 per cent VAT (15 per cent for the next 13 months) on all work that they carry out. Cowboy builders do work for cash and do not charge VAT; this gives them a commercial advantage.
“Cowboy builders flourish by evading VAT and offering the customer a cheap deal as a result. But all too often, these rogues disappear with deposits, perform shoddy work and cannot be found when there are complaints. Without a proper written contract, the enforcement of consumers’ rights becomes almost impossible. Getting the job put right by a replacement builder can cost thousands of pounds extra.”
Director of External Affairs FMB director of external affairs Brian Berry said: "Reducing the rate of VAT on domestic building work to five per cent will significantly reduce the commercial advantage of the VAT evading trader.
"The financial incentive to choose a cowboy builder will diminish and a level playing field will emerge instead. In time, this will drive the cowboy builders out of the market as customers focus on quality and value not just price."