Simple solutions, cut the rate of VAT payable on building repairs and improvements to 5%
UK exchequer secretary David Gauke describes householders paying tradesmen in cash as “morally wrong”.I wholeheartedly condemn the cash-in-hand cowboys who undercut legitimate VAT-registered builders and give our industry such a bad name. But there is a very simple solution to the problem Mr Gauke highlights - namely to cut the rate of VAT payable on building repairs and improvements to 5%.
That would eliminate the competitive advantage of the cash-in-hand cowboys and help drive them out of the industry for good. It would stimulate the construction industry and encourage homeowners and businesses to invest in the measures needed to make our building stock greener and
more energy efficient.
Above all, experience from other jurisdictions shows that it would stimulate activity to such an extent that overall VAT revenue to the Treasury would go up, reducing the £2bn deficit it currently suffers through undeclared cash payments.
With construction languishing in a second recession, we need radical solutions. Cutting VAT on building repairs and maintenance is alreadysupported by the Scottish government but is a power reserved for Westminster. We now need the UK government to act and put this policy into practice.
Michael Levack, chief executive, Scottish Building Federation