By Tony Grew - 24th July 2012
The National Federation of Builders has said a cut in VAT would bring an end to ‘cash in hand’ payments made to rogue traders.
Sameena Thompson, External Affairs Director at the NFB, made the suggestion after Mr Gauke, the Exchequer Secretary to the Treasury, said paying ‘cash in hand’ in order to get a discount is “morally wrong”.
“We would like the government to listen to a solution we have been putting forward,” Ms Thompson told Sky News.
“If you cut VAT from 20% to 5% that would move the temptation for home owners to turn to rogue traders.”
She added: “If you reduced VAT you would remove that temptation to cut corners.”
Ms Thompson said builders cannot join the NFB, which represents more than 1,500 primarily small to medium-sized enterprises, unless they are VAT registered.
“We expect legal businesses to pay their taxes,” she said.
Ms Thompson said consumers should use legitimate businesses “to ensure they are protected”.
In a recent report the Public Accounts Committee said more than two million people make cash-in-hand payments costing the Treasury an estimated £2? billion.
Today Mr Gauke said:
"Getting a discount with your plumber by paying cash in hand is something that is a big cost to the Revenue and means others have to pay more in tax.
"I think it is morally wrong. It is illegal for the plumber but it is pretty implicit in those circumstances that there is a reason why there is a discount for cash. That is a large part of the hidden economy."