Tag: the law

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Following Tuesday’s announcement that a phased reduction of Building and Planning Regulations is underway as part of the government’s Red Tape Challenge, I breathed a small sigh of relief.

I have had enough close encounters with Building Regulations to make me wary of them – and like me, there are few homeowners or sole traders who can claim to know their way around them…

..but ignorance is no excuse for non-compliance, Gary O’Neill, Chartered Building Surveyor and Lecturer at Coventry University tells us, writing in a recent blog post about Statutory Approvals (in relation to Building Regulations and Planning).

No excuse perhaps but in my view, understandable. Building Regulations run to hundreds of pages and they can be a nightmare for an ordinary homeowner to navigate!

O’Neill points out that “…there is a general lack of awareness (amongst members of the public), sometimes complete ignorance of which statutory approvals (permissions) may apply to any works they are proposing to undertake.”

With serious implications for failure to comply, there is a burden of responsibility that property owners cannot afford to ignore. With such high stakes, you would imagine a robust framework exists to help property owners meet their responsibilities. You should be so lucky!

There are several ways to ensure works comply with Building Regulations: have local Building Control or a private sector Approved Inspector sign off the works, or have work carried out by a tradesman who belongs to one of the Competent Person schemes – organisations authorised to self-certify and notify low-risk work to Local Authority Building Control.

O’Neill points out that many Local Authority websites provide good levels of information and guidance. In my opinion, Local Authority websites at best offer a short list of FAQs peppered with links to the Planning Portal – but all too often, useful content is given over to veiled threats about what might happen should you fail to comply. Solihull Council adopt a positively hostile approach on their website:

“We do not fulfil the role of a ‘Clerk of Works’ as is often assumed, quite inappropriately and furthermore, have no responsibility for dealing with poor workmanship and issues of quality, unless they impact on compliance with building standards.”

My personal experience of working with Local Authority Building Control reflects this standoffish attitude. When I refurbished my house, I submitted a building notice because I planned to replace a window and the builder did not employ a FENSA installer. Building Control wrote to me, explaining that the window should meet current energy efficiency standards and use toughened glass. The timber frame and glazing units were supplied by a reputable company who manufactured all of their products to meet Building Regulations standards (it would be crazy not to). The Building Control officer agreed that the windows appeared to be well made but wanted to see proof that the windows were compliant. Building work resumed a week later after suitable written evidence had been gathered.

Now, Local Authorities are legally obliged to provide a building control service under the Building Act, whereas Approved Inspectors are engaged in a commercial contract with their clients. Both organisations are obliged to ensure works are compliant with Regulations. The key difference is motivation. In my case, an Approved Inspector would have possessed or had access to meters capable of confirming that the glazing was toughened and had a Low-E coating to meet energy efficiency regulations.

The Building Regulation Matrix

The Building Regulations themselves comprise fourteen highly technical documents. Even the Planning Portal cautions casual visitors, for which read ordinary homeowners, who happen upon their section regarding Building Regulations:

“This part of the Portal contains information aimed at users with a degree of familiarity with the Building Regulations and the Building Control system.”

The Planning Portal actually does a much better job of explaining the ins and outs of the planning process. As do many Local Authority websites and their staff, who are able to offer better planning guidance and support to the general public. By contrast, Building Control are the clip-board wielding administrators. Often unwilling or unable to advise, yet quick to point to the rule book when a violation is suspected.

Even after providing the documentation I was asked for, my Building Control Officer then insisted that trickle vents should be installed in the windows to meet ventilation requirements. I had to point out that the window was situated in a through-sitting room with two open fireplaces, two doors, a large draughty bay sash window and floorboards with gaps in them. My challenge would be keeping my fuel bills down in winter, not adding more ventilation. His response was that fireplaces are designated as flues and are not considered ventilation.

It’s been an eductaion and you can be sure that next time I won’t go it alone. I’ll use a tradesman registered with one of the Competent Person Schemes or I’ll go private and use an Approved Inspector. It will be less of a headache, which is more than I can say for my current encounter with Local Building Control. I have yet to receive my completion certificate from Building Control but I have high hopes for 2014!

 

One man's junk is another man's treasure

So you’re looking into getting some work done on your home. It’s only a small job; taking out that fitted wardrobe that you regretted putting in last summer; repointing that old wall out the front that’s seen better days. But when the job is done and everyone’s happy, have you thought about how to get rid of waste material afterwards?

With the rise in fly tipping in the past several years, we would chance a guess that the answer is ‘no’.

Many tradesmen whose work produces waste will carry a waste carrier’s licence, and with registration fees for second tier licenses costing as little as £154 for 3 years (and first tier licences being free), this is a small price to pay to avoid finding yourself in a tight spot. Not having the correct licence is a costly business, with fines reaching £50,000 or even imprisonment! But there are always those willing to chance it. According to the Environment Agency nearly 2,800 prosecutions were made in 2010/2011 for fly tipping.

Tradesmen know the risk they take if they are not properly licenced, but the size of their business may not justify paying out for a waste carrier’s licence. What many homeowners may be unaware of is the fact that it’s not the tradesman who is responsible for any waste made at a property where they have carried out work – it’s you! The sole responsibility for the removal of the waste falls to the owner of the property.

Now, don’t let this put you off having smaller jobs done by a tradesman who does not have a waste carrier’s license. There are plenty of ways  you or your tradesman can dispose of waste and avoid being at risk of breaking the law. For one, you can register your property with the local authority, which allows the tradesman to remove the waste from your site as long as the final location of the waste is also a registered dumping ground.

Then there’s the D.I.Y option! If you own a vehicle big enough to carry the waste then an easy, and inexpensive way of clearing the debris would be to dispose of it yourself. By doing this, the amount of materials you dispose of in one go does not have as many limitations as it would if you left it to your tradesman. Contact your local council, they will point you in the direction of the dump nearest to your home.

Finally, given the rise in demand for furniture with ‘character’ and DIY home decoration, re-using old materials has become popular and it’s amazing what goes. With recycling websites like Gumtree, Freecycle and even their more practical sister Recipro on the up, you’ll be amazed at some of the stuff that gets picked up – as they say, one man’s junk is another man’s treasure! So before you consider taking that lump of wood or those unwanted bricks to the dump, why not advertise them on one of these sites and get rid of your waste by giving it a new lease of life…

For more information on waste disposal, head to the Environment Agency website: http://www.environment-agency.gov.uk

Roll of 50 pound notes

When the news came in that Treasury Minister David Gauke had been slating tradesmen who accept cash for work as well as the homeowners who pay them it was not a huge surprise to me. I had been preparing a blog post on the subject of why builders ask for cash in hand. I was a tradesman myself before I started this business and many of the thousands of builders who use our service often engage me on this topic. It came up again just the other day when we had some roofing work done (by one of the excellent roofers on MyBuilder). After coming back from the cash machine, my wife asked rhetorically: “Why do builders always want to be paid in cash?”. Rhetorically, because she already knew the answer. Or at least she thought she did.

I asked her if she knew why, and she said: “Of course! Taxes.”.

She was partly right. Taxes is the answer, but not the sort most people assume. An employed person thinks about income tax, which at somewhere between 20 and 45 percent, is the big and noticeable tax for most people. For tradesmen however, the bogeyman is VAT.

But VAT is only 20% you say… and don’t you just pass that on to your customers? Yes and yes. But still, the bogeyman is indeed VAT.

Firstly, for a jobbing builder or tradesman, effective tax rates can be lower than for an average employee. Tradesmen can either set up as self employed or as a Limited Company. Being self employed gives you expense deductions and as a Limited Company you can pay yourself in dividends at a lower rate. But it is far from unusual for a tradesman to have annual revenue in excess of £77,000, which is the threshold at which a business needs to be VAT registered.

This may sound like a lot, but you have to remember that £77,000 is revenue, not profit. If I supply and fit a new boiler, I might charge £2,500 and have to turn around and spend £2,000 to buy the boiler. Let’s say I manage to do about one of those a week – 50 a year. My revenue would be £125,000 for the year, but I’m really only making £25,000 from that £125,000. And then I have to pay for my van, diesel, tools etc. Imagine I have £10,000 of expenses for the year. I’m pulling in a paltry £15,000 of profit, but at least I only have to pay income tax on that £15,000, not the £125,000.

VAT however, is a very different story. With £125,000 in revenue, I’m well over the VAT threshold. This means that I have to charge my customers an extra 20% on every job. I’m walking through the door to quote on a job and I might as well be wearing a T-shirt that says ‘Don’t hire me, I’m 20% more expensive’. I can’t drop my prices to compensate for the VAT. Remember, I already only have £15,000 of profit per year. So the end result is that I lose business to heating engineers who are not VAT registered. What can I do? The only obvious thing I can do is to avoid VAT registration.

You can’t be VAT registered and avoid paying VAT. HMRC will hang, draw and quarter you. Getting paid in cash does not solve the problem when you’re VAT registered. You can’t insist that customers pay you in cash. Your quote has to include VAT because you don’t want to get stuck in a situation where you’ve omitted VAT and the customer doesn’t pay cash at the end.

So the key to survival is ducking under the VAT threshold by doing some cash in hand work. The reduction in income taxes is an added bonus, but this is not the prime reason for working cash in hand. Asking to be paid in cash becomes the modus operandi, because some customers will simply say no to paying an extra 20% on their bill just to be seen as morally correct by a Government minister.

Is this wrong? Yes. Is it tax dodging? Yes. Whose fault is is? HMRC and, at the end of the day, the Government who allow this to persist in these difficult economic times. VAT should be zero-rated on building work, just the same as it is on new builds. Tradesmen are well-known for ensuring that their income circulates back into the economy, whether this is by paying other tradesmen to do work for them, buying new cars or family holidays. Sure,  many tradesmen will have savings and even investments in property, but they will not be squirreling money away in tax havens.

The current VAT system is stopping money from circulating in the economy, is reducing the amount of building work being done and is, however inadvertently, making tax dodgers of otherwise honest workers. It is time for a change.

Picture by Images of Money.


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