Well, it will interesting to see what’s in store for the building sector this year. It’s feared that the year ahead of us will be a trying one and a real test for the construction industry. The 20 % VAT rise may very well cripple many builders as there will be clients very reluctant to have to pay this extra cost in taxes.
So what does this mean?
Well for builders who work primarily in the commercial sector, I don’t see this being a major concern as commercial clients will simply claim back any VAT that is added, but for builders dealing in the private or domestic sector, then this is another scenario.
Let’s say a domestic client gets 2 quotes, both for £5000, from different builders. One builder is VAT registered so has to charge the new 20 % rate but the other builder is not VAT registered so does not have any obligation to charge the VAT. Who gets the job?
A client on a very tight budget may very well be tempted to go with the builder who can do it for £1000 less by not adding the VAT. After all, they will not be claiming it back. These are difficult times at present with the economy only just coming out of recession so a saving of £1000 is considerable and for many builders this may very well be the straw that breaks the camel’s back.
Early days perhaps but I guess we’ll soon see the effects!
What say you?