More than half of Scotland’s construction contractors have been asked to waive VAT on building work.
The latest quarterly trade monitor survey by the Scottish Building Federation found that more than 40% of firms had lost out on work by refusing to offer discounts to clients looking for prices for cash.
The SBF said in response to the issue it intended to launch an HM Revenue and Customs-backed campaign to wheedle out the traders who undermined the efforts of legitimate firms by accepting cash-in-hand work.
SBF managing director Vaughan Hart said: “In what remains a difficult economic climate, a growing number of consumers seem willing to ask their builder to ‘lose the VAT’ on a job and to turn to the rogue trade if they don’t oblige.
“I think many fail to realise how risky this is. For one, evading tax is a criminal offence. Second, if you use a rogue trader, you will have very little come-back if they do a poor quality or unsafe job.
“If a builder is willing to evade their tax obligations, they’re more than likely to have cut other corners and almost certainly won’t be properly qualified or accredited.
“Of course, we’ve consistently argued that the Treasury should cut VAT on all building works to 5%. That would stimulate demand and boost the industry.
“Given the growing amount of tax revenue lost to rogue traders, it would also help legitimate building firms compete successfully against the ‘cash in hand’ market and boost Treasury coffers at the same time.”
The monitor found a 10-point uplift in business prospect confidence among contractors, although the measure remains firmly in negative territory overall at -13.