FMB says government should cut VAT on home improvements!

Consumers should avoid being tempted by a cheap cash deal and protect themselves against paying more in the long term, says the FMB in response to comments by the HMRC Permanent Secretary in the  Telegraph.

Brian Berry, FMB director of external affairs, 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.

“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 £9.3 billion per year.”

According to research by the analysts at Experian, last year’s rise in the standard rate of VAT to 20% resulted in nearly 4,000 job losses in the home improvement market in 2011 alone.

The National Home Improvement Council is a founder of the ‘Cut the VAT’ committee and is active in aiming to achieve a reduction to 5% or, better still, nil! A reduction in VAT will substantially help consumer take-up of the Green Deal – if and when it gets off the ground?