A BUILDING industry chief has called on the government to cut VAT for home repair, maintenance and improvement work and counter the damaging effect of cash-in-hand cowboy operators.
Brian Berry, a director of the Federation of Master Builders, made the plea after the countrys most senior taxman criticised people who pay builders cash for work on their properties.
Dave Hartnett, permanent secretary for tax at HM Revenue & Customs, said by avoiding paying VAT, they were reducing the tax take and hitting public spending on areas like schools and hospitals.
Mr Berry said: We are pleased HMRC is becoming more vocal about the damaging effect cash-in-hand payments have on individual businesses and the economy at large.
Businesses that avoid paying VAT have a 20% head start, but all too often this cheap deal comes without a proper written contract or any kind of paperwork meaning the enforcement of consumer rights is almost impossible if something goes wrong.
Said Mr Berry: The Government can reduce the competitive advantage of these rogue traders and help protect consumers by cutting VAT to 5% for all home repair, maintenance and improvement work.
This simple, single action would help reduce the size of the informal economy in the home improvement market, which is now estimated to be worth an astonishing £9.3bn year.
He added: Over 5,000 construction businesses have gone into insolvency since 2010. At a time when the economy is on the brink of tipping back into recession, the Government should be doing everything it can to support legitimate businesses, not adding to the total number of unemployed.
According to research by the analysts at Experian, last years rise in the standard rate of VAT to 20% resulted in nearly 4,000 job losses in the home improvement market in 2011 alone.
