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VAT by house owner.

My Client, a private individual, paid for work to be done on his house by various tradesmen and did not ask for, or receive, invoices for the work. He mainly paid in cash. One of the tradesmen is now being investigated for VAT related irregularities. Does my client have any liability?


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Presumably, the work was being done for your client in his private capacity as a homeowner and not for any business purpose of his.  As far as I am aware, there is no obligation for the tradesman to issue a VAT receipt to a private individual, although he should do so if requested by the individual - the same as having to ask for a VAT receipt when filling up with petrol.  It is not the individual's responsibility to know how the supplier accounts for VAT or even if he is registered for VAT.

It looks like the tradesman might have offered to do a job for an HMRC officer "for cash"!

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It isn't your clients liability. It isn't his VAT to declare and it is his prerogative to pay by cash cheque or bank transfer.....providing the cash is from a legitimate source and declared where relevant :)

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As Vat is only due on the consideration received, HMRC will look to assess the tradesman for any underdeclared VAT and your client will have no liability unless they entered into a contract stating the amount payable was exclusive of any VAT cgargeable (unlikely)

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Third Party Notice

The only grief your client may get is that HMRC may serve a third party notice on him to furnish HMRC with information. If your client refuses then he could be liable to a standard penalty of £300.00, and then a further penalty of £60.00 per day once the standard penalty has been issued. The only right of appeal your client has  -is if the requirement to furnish information is unduly onerous.

HMRC may want your client to assist in showing how much cash was paid to the tradesman and if this could be shown by cash withdrawals from your client's bank account.


Malcolm McFarlin

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There could be a problem if you client colluded with the tradesman to avoid VAT.

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