In this section:
- VAT basics for consumers
- Reclaiming VAT on your DIY building work
- Paying reduced rate VAT on energy-saving materials
- Contractors who won't charge VAT if paid in cash
- How VAT applies if you import or export a personal vehicle
- Reduced-rate VAT on equipment and vehicles for disabled people
- Reduced-rate VAT on mobility aids for older people
- VAT for temporary visitors to the UK
Contractors who won't charge VAT if paid in cash
If a trader doing work for you offers to accept a cash payment to save you the VAT on a job, then they're probably acting unlawfully. What's more, they're most unlikely to give you a receipt or any other paperwork, so if anything needs putting right you'll have no comeback.
Someone who offers not to charge VAT if paid in cash
VAT requirements
If anyone supplies more than £67,000 of goods or services in a year, and those goods and services are taxable - that is, they should have VAT charged on them - then registering for VAT is compulsory.
Once someone's registered for VAT, they then have to charge VAT where it is due - it's illegal for them not to. Nearly all goods and services are liable for VAT, although in a very few cases the rate is reduced or even zero - and sometimes you may even be able to reclaim it.
When someone charges you VAT - except for some small purchases, like buying a bar of chocolate - they have to give you a valid VAT receipt. This will show the amount of VAT you're paying, and their VAT number.
And finally, once they've charged you VAT and collected the money, they have to pay the VAT over to us.
VAT cheats
Some people deliberately avoid registering for VAT at all, thereby gaining an unfair advantage over their competitors. Others may not provide proper VAT invoices, and/or not pay the VAT over to us after collecting it from you.
You might know that a business isn't declaring all the VAT they're charging, or you they may make you suspicious by doing one or more of these things:
- ask you to pay in cash and are reluctant to provide an invoice
- ask you to make the payment to someone other than the business
- ask you to make several different payments to different names or different businesses
- offer a discount for cash and are reluctant to accept cheques or credit cards
- offer goods for sale at substantially below market value
- put money into an open till drawer without ringing up a sale
If someone openly admits to you that they're deliberately not following the VAT rules, they're actually doing you a big favour - they're letting you know upfront that they're less than honest. You can now think carefully about whether you want to entrust someone like that with your money or with your car, central heating boiler, home extension or whatever else it is that you need to be worked on.
They're also letting you know that they are most unlikely to be planning on giving you any formal paperwork relating to the job, or even to record the job in their own records. If you have a problem and need to go back to them, they can simply deny that they've ever done the work at all - any many do exactly this.
If you suspect a contractor isn't charging or paying VAT you can report this online using the link below, or by calling the Customs Hotline Tel 0800 595 000 open 24 hours, seven days a week. You don't have to give your name.
Find out more about VAT registration requirements
Find out more about different VAT rates
Find out what counts as a valid VAT receipt
Report your suspicions about tax evasion by a trader using our online form
