I have engaged a local building company to quote for works in my home. He provided a quote of £12k, which included VAT. I called him to haggle the price, and he said that if I paid him in cash, he could reduce the price to £10k “if I didn’t want to pay VAT”. I said that I would be happy to accept a discount, but that the VAT remains his responsibility. We then argued a bit about whose responsibility the payment of VAT is. I took the view that in discounting from £12k to £10k, the price of the underlying job went from £10k to ~£8.3k. He argued that it was up to me whether or not to pay the VAT. We have not agreed on the final price as I am still gathering quotes.

Tangentially i also realise with cash payments, the builder is probably avoiding/evading employers NI also.

It’s frustrating that this is so rife within this industry! I work in financial crime compliance/fraud and would not willingly enter into any sort of tax evasion.

Questions: Am I correct that the responsibility to apply the correct amount of VAT is with the VAT registered company, in the case of an end customer that is an individual/domestic (ie not another VAT registered company)?

Would I have any liability for evasion in this instance?

Do I have any responsibility to maintain that I paid VAT on this kind of arrangement?

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    Also, check the legality of paying the amount in cash. Many countries have laws that limit the amount that can be paid in cash, to make fraud detection easier. And partitioning the payments in several installments would not make it legal; if anything, it would be evidence that it was an attempt to break the law.
    – SJuan76
    Dec 17, 2023 at 22:22
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    If I was paying someone; especially a builder who does very large "cash-in-hand jobs"; then I would want a solid money trail and proof of purchase. And I certainly wouldn't pay until the job was completely finished. So even excluding the legality aspect of it, there are still other risks that should be considered.
    – Kimbi
    Dec 18, 2023 at 3:05
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    Is paying cash for such services for such amounts actually legal in the UK? In some countries it isn't (Italy, Sweden).
    – gerrit
    Dec 18, 2023 at 9:18
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    @gerrit, yes it's legal to pay cash, and it may be the only option for some people. But paying cash in order to facilitate fraud is abetting the crime (sorry, no reference to hand, hence comment rather than answer). Having a VAT receipt would help defend such a charge. Dec 18, 2023 at 9:24
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    Your bank will ask questions when you try to with draw large amounts (over £1K). They are checking that you aren't doing it 'under duress', and if you mention builders, they will ask that you have actually had the work done. This is just to protect you from fraudsters, and doesn't mean anything, if you reply that it's all OK.
    – Neil
    Dec 18, 2023 at 11:02

2 Answers 2


The vendor is required to charge and pay VAT, unless exempt for the particular goods or services. Here is what is exempt: there are a few services exempted, for instance alterations made to a disabled person’s home. The builder must report the full price and report it, if they are registered. They must register if total VAT taxable turnover for the last 12 months was over £85,000 (total charges minus VAT). A business with less turnover may voluntarily register. The buyer pays what they are charged, it is the responsibility of the vendor to charge the applicable amount.

If the business is required to collect VAT and lies about the transaction, that is fraud, which can be prosecuted. The law (§72) says that it is an offense "if any person is knowingly concerned in, or in the taking of steps with a view to, the fraudulent evasion of VAT by him or any other person", and it does not limit fraud prosecution to the vendor. That does not mean that the government will necessarily prosecute you, but it sounds like you are aware that this is a fraudulent plan, unless there is some detail missing in the description that makes non-payment (collection) of VAT legal. You basically have an obligation to not maintain that you paid VAT.

  • Thank you for a very comprehensive response. I’m not sure I follow your last point about “to not maintain VAT” - I realise in my question I missed the word “records” after the word “maintain”, rather than “maintain” in the sense of “argue”. If I were to accept the lower quote, I intend to formalise a statement of work with the builder that includes the price of the job (possibly even stating ‘including VAT’) and on completion request a receipt for payment. Do you think that would be reasonable as a defence against evasion? Dec 18, 2023 at 7:50
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    @confidenthour The guy is proposing you either pay 12k legally, or 10k as part of a conspiracy to commit tax fraud. If you pick the conspiracy, he's not going to be happy when you then start documenting the fraud and asking for receipts. You can report him to the authorities if you want, but trying to trick him into doing the work at the conspiracy price without abiding by the unwritten rules of the conspiracy (cash only and leave no documentation) is not going to work out well for you. Dec 18, 2023 at 9:11
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    @confidenthour You won't get a receipt in the deal they propose.
    – gerrit
    Dec 18, 2023 at 9:15
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    @confidenthour I would argue you are currently talking past each other. You want a discount, and you are taking their willingness to do the job under the table as a sign that they are in fact open to giving you a straight-up discount. Nothing in your question indicates that they are.
    – xLeitix
    Dec 18, 2023 at 10:06
  • From my understanding, a difference between the UK and US is that in many circumstances where a purchase would be exempt from VAT (e.g. a purchase for purposes of export), the seller would be required to collect VAT, but give the buyer paperwork which could be filed to receive a refund of the taxes paid. If the seller gives the buyer the appropriate paperwork but the buyer never files a refund, the taxes would simply remain paid as required, so the seller wouldn't need to know or care if the buyer was exempt from VAT.
    – supercat
    Dec 18, 2023 at 17:08

Why would it be up to the buyer to decide whether to pay taxes on the purchase? As far as I can tell, sales tax and VAT are both the seller's responsibility. The buyer just hands a wad of money to the seller, and doesn't have any particular input into where the money goes after they hand it over.

I mean, if you go into a shop and buy something that has VAT on it, you don't know and can't know whether the shop owner actually turns over the correct amount of money to the government, right? Surely the same thing applies here.

  • While that logically makes sense what is there to back that up? Also would it change if the buyer knows they are not paying VAT when they should?
    – Joe W
    Dec 18, 2023 at 1:31
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    @JoeW: When was the last time you paid VAT in a way that it was not lumped into the payment to the seller? Or, when lumped into said payment, when and how did you verify that the seller correctly paid the VAT they're legally required to?
    – Flater
    Dec 18, 2023 at 3:55
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    @Flater The question states that the seller mentions a discount for not paying VAT which means that they would know that it was not properly paid.
    – Joe W
    Dec 18, 2023 at 4:00
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    @JoeW: OP's point is that their knowledge of what the seller may or may not do w.r.t. paying VAT does not somehow transfer the culpability of failing to pay VAT correctly to them (the buyer). The seller is the one who is responsible for paying the correct amount of VAT. In practice, the same would be true even if no discount was discussed: a buyer can never truly confirm if a seller has pocketed their VAT or correctly paid it. It's not the buyer's responsibility to do so and the buyer cannot just take the blame for tax evasion merely by agreeing to a discount.
    – Flater
    Dec 18, 2023 at 4:07
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    @JoeW: That's your question, but you're not the OP's. The concrete answer here is that the burden of paying the VAT on time does not transfer to the buyer merely by being aware of it. It's possible that they can become an accomplice if they willingly aid and abet the actual process (e.g. paying in Krugerrands in a park at night time, to take an extreme example), but merely by receiving a discount and paying in a legal way is not enough to warrant criminal activity (I'm assuming here that they're not going to participate in avoiding any cash transfer limits that need to be reported)
    – Flater
    Dec 18, 2023 at 22:27

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