how do people get away with taking cash for a boiler swap?

[lordyjordy111]

Hi

i'm a trainee heating engineer and the current chap i'm working for is losing a lot of work as there are a lot of people doing cash jobs.

when he tells them that the price is plus VAT they seem to be deterred, which I can understand as it's bloody expensive

my question is how can they be registering the boilers??? surely there is a paper trail.

and what about the guarantee on the boiler.

 

[GQuigley67]

there are companies out there who are not VAT registered, including myself, doesnt mean i dont declare my jobs

registering is not a requirement where i am(scotland)

alot of guys dont fill in benchmark and sign off boilers, will they get caught ? nope

 

[lordyjordy111]

hi

I understand that a lot of companies aren't VAT registered but even from a tax point of view it's a bit cheeky.

when you say signing it off i'm a bit confused......

signing it off with who?

 

[GQuigley67]

right now not being VAT registered can only be a good thing...

signing off as in signing your name to the benchmark, just the term which is used

 

[lordyjordy111]

ok mate cheers

agreed about the vat it's losing us a lot of work

 

[GQuigley67]

customers dont even ask to see your GS card, they dont care or dont even know, they want the cheapest thing possible and some people even dont bother sending away their warranty card anyway, need to educate the customers

 

[MattWeth]

Automatically assuming that non-VAT installers are on the fiddle is 'a bit cheeky' in itself. What about those who don't have to charge VAT because of their turnover?

There are plenty of heating engineers and plumbers in my neck of the woods who operate below the VAT threshold. As GQuigley67 says, it makes a lot of sense at the moment (in fact one of my heating engineer mates has just de-registered for VAT - he can make more money as he'll get more work not having to +VAT all his quotes). I'm starting up next month and I don't intend to VAT register until I have to (which would be a nice situation to be in but lets be honest it isn't gong to happen that soon anyway...)

 

[secret squirrel]

Lots of people get caught in the long term,

You can get your customer to buy the goods from your supplier and you fit it for cash, you cannot use your gas safe number though OR put anything on account OR produce a receipt at all. You then need to be careful how you spend that cash, if your not and put it through your account later on questions may be asked.

REMEMBER: the data protection act does not apply to HMRC at all. If it is on computer they can get access and you'll never know until it is too late. This includes DVLA data base. Also if your loosing money buying cars for cash anything over (£9K) I think must be reported to the relevant authority for money laundering purposes.

Anything that is registered against your name/your company name or your suppliers is open for investigation.

Ps I'm not registered for vat either

If you install 20 boilers this year, 10 cash and 10 on account if your supplier has your details registered against the 10 cash ones then you may have a problem at some point. Either that or you should have 10 in your garage!

Also you need to be able to justify your lifestyle, how can you be living in a 5 bedroom 3 bathroom house when you only earn £100 pw and your the sole earner.

HMRC can go back 7 years unless they find something then they go back as far as they can or want to........

Not easy to get away with it and if they ever get there claws into you, your in trouble. Yes, they go after the small business man because they can and we haven't the means to fight back. Come the revolution.......

 

[MattWeth]

As above, you can always get your customer to buy the boiler from your supplier and do a perfectly legitimate labour only instal with the money going through your books. You lose out on materials mark up (if it bothers you) but it keeps your turnover lower and potentially out of the VAT man danger area. All depends on what works for you and how you want to run your business in the end...

 

[ADM360]

I'm not VAT as I'm below the threshold, but customer still as for cash discounts etc. I simple state that thats the price as it all goes though the books, even the little ones!! also theres the registration and products to maintain warrenties and benchmarks, as materials booked to the jobs that are invoiced to me!!
And they will get you in the end, one of the plumbing firms round got done because he had no small jobs on the books, he said he couldn't be bothered with small ones a waste of his time!! but the hmrc said you must do them prove you don't, I can't prove I don't do small jobs I just don't. hmrc said we think you do there for 2 jobs at £20 cash every week for 5 years so that £10400 turn over you owe us £2080 payable now!!

Just not worth it!! My old man said Cash is good take the kids out, have a beer, my reply was that I could Pee more cash up the wall than I could earn but that wouldn't get the reant paid!!

Anyway my memory is not good enough to remember that I can pay the rent with the cash but not with that lot!

 

[CES]

I'm VAT registered, I opted in when I started a few years back as I bought a couple of vans and claimed 3 previous years of VAT back. I find it quite easy to account for everything as Im used to putting in quarterly returns, it helps me keep and eye on my business as well. I don't think doing cash jobs is dodgy, a lot of my customers pay in cash but they still get an invoice and pay VAT (although they still ask for discounts). I dont feel I lose out as some of my customers are business and they see it as a legitimate business expense, domestic customers (depending on their attitude) sometimes see it as a sign of a trustworthy trader (btw I'm NOT saying if you're not VAT registered you're dodgy!), or sometimes just see £££ signs and ask for a cash price. Personally cash is the least favourable option as I tend to put it in my back pocket and it disappears quickly.
One thing that should be mentioned, HMRC although a pain in the derriere are not as fearsome as the VAT man, he's the one that puts you in jail if your naughty, taxman you can negotiate with, VAT man you can't.

 

[PowerFlusher2]

I'm retired but when it came to VAT I seem to recall that there is an annual threshold amount of TURNOVER which, if you achieve this amount OR ANTICIPATE AT ANY STAGE IN THE YEAR THAT YOU WILL ACHIEVE THIS AMOUNT, you are legally obliged to register - in England and Wales, anyway (just had a quick look, threshold for this year is GBP73000.00p). If you operate, as I did, where the customer buys all the equipment (from a list I gave them) for the job directly (and they never seemed to mind when I kept the odd bit of pipe or PTFE tape which was left over) then the only turnover you have to account for is your labour charge, and in the immortal words of Billy Connolly (for the older of our members) 'you can do an awful lot of plumbing for GBP73,000.00p a year!

 

[Billy Bob Bob]

Not easy to get away with it and if they ever get there claws into you, your in trouble. Yes, they go after the small business man because they can and we haven't the means to fight back. Come the revolution.......
SS you have got me thinking now this revolution you speak off,do tanks and bazookers need calibrating?

 

[PowerFlusher2]

I've just re-read these posts and CES is absolutely right (I have copied the last couple of lines of his post, below). There appears to be confusion between HMRC(Taxman) and the Customs and Excise (VATman). In my previous post where I said that I kept my turnover below the VAT threshold by making sure all my customers purchased all the gear for the jobs, I did not mean, nor did I intend to imply, that there was any misleading of the taxman. I ALWAYS declared EVERY job and the payment I received for that job - even down to the odd couple of quid for bleeding a system for a pensioner. The upside of this is that I was able to maximise mileage and wear and tear claims against the income I was making. And always bear in mind that there is nothing that pleases the taxman more than being presented with a very neat package of accounts (and my bookings diaries and my van mileage logs) for him to deal with. As for the VATman, I can't say, I never had any dealings with him because I never did enough work to be obliged to register.

'One thing that should be mentioned, HMRC although a pain in the derriere are not as fearsome as the VAT man, he's the one that puts you in jail if your naughty, taxman you can negotiate with, VAT man you can't.'

 

[johnnyplumb]

Not easy to get away with it and if they ever get there claws into you, your in trouble. Yes, they go after the small business man because they can and we have,nt the means to fight back. Come the revolution.......
SS you have got me thinking now this revolution you speak off,do tanks and bazookers need calibrating?

when you take out your public liability insurance, you can get an add on policy to cover the cost of I.R investigations. it only costs around £40 extra, if i remember right.

 

[casaco]

MattWeth you are correct, we do a survey, tell the customer what is required, boiler, flue, timer, pipe, fittings etc., then we order the items in the customers name, they pay direct, get our trade discount, (happy customer), install at our day rate. Then you have 5 years annual servicing to qualify for the warranty, no call out for repair, down to boiler manufacturer. I have more work than I can cope with. VAT is a cruel tax, it is destoying this country, 3% would be just about acceptable to everyone, but 20% is too much, and they are talking about increasing it to 27%, probably hoping we will be happy with 25%.

 

[peteheat]

When doing small jobs I found the customer didn't want to pay VAT so cash was fine but they still wanted a receipt, I found it easier to build in the VAT without showing it as a seperate item.

We had a VAT inspection and the inspectors thought they had struck gold when they saw all the copies of receipts marked paid cash without showing the VAT, I referred them to the lodgements book which had a reference to each receipt to show where the lodgement came from, good for us to keep up with our accounts as well.

As VAT was paid on every lodgement the inspectors were happy and agreed it made sense when competing for work where the customer would not be impressed by paying VAT but wanted the registered contractor in case of problems.

Book keeping is just a matter of getting everything to balance and the easy way is keep it straight.

 

[gasmarc]

if you are vat registered you have to charge vat on your jobs . There is no way around this that I am aware of and if you are taking cash and not paying vat on it I would be very wary . It only takes one disgruntled customer to make a phone call, Then you are in serious trouble. I was told by someone in the know that the HMRC have a computer program that gives an average turnover for each trade in different regions,

 

[Kev the gas]

Im vat registered and dont find it to be a problem.

I worked it out with the accountant if I was and wasnt vat registered, the average boiler change came out around 8/ 10 % more expensive ( when vat was 17.5%) The only extra charge is the vat on the labour as the vat has to be charged on the materials any way by the customer.

For me the vat works in my favour, I pay 20% less for my diesel, tools, vans ect i seem to make it work for me, I can even claim back the vat for the accountant :smiley2:.

 

[Plumbcrazy56]

I'm not vat registered either, I am quite willing for customers to purchase the boilers and supply labour only. If they pay cash I still have to pay it in the bank it just means I have access to the money immediately and not have to wait a week for a cheque to clear.

 

[gasmanscotty]

alot of guys dont fill in benchmark and sign off boilers, will they get caught ? nope

Think i'm the only one at my firm who fills in the benchmark. But everytime we install boilers we fill in a CP12 plus a commissioning checklist, where one copy stays on our records, one for the tenant/customer and one for the landlord (as were only contracted to various housing associations).

 

[CES]

That's what really annoys me, If an installer doesn't fill in the benchmark does he/she realise that the manufacturers warranty will more than likely be null & void?