# VAT on labour, is it always passed on to taxman



## LouisCribben (13 Jul 2009)

I was wondering about VAT on labour, i.e. a plumber or an electrician comes around, fixes something, and then charges €100 + VAT for his time.

You pay in cash (because you don't have a cheque book, and because €120 is not a huge amount.

How do you know the plumber will submit the VAT to the taxman ?
Would it be common that some tradesmen just take the VAT as profit ? Very illegal of course, but probably very hard to trace.

I know if there are materials involved, its not so straightforward, but does VAT charged to people on labour for small jobs alway make its way to the taxman ?


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## callybags (13 Jul 2009)

If a tradesman charges you VAt then he must be registered and give you a VAT invoice showing the breakdown.

In my experience it is highly likely that every VAT registered person or company will have a VAT inspection by the revenue at some stage.

Having said that, I have no doubt that would be quite a bit of VAt that never sees the inside of the revenue's bank.


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## jaycen (13 Jul 2009)

Ifm they charge you VAT they will be ready to write a receipt for it, if they're prepared to write a receipt then they're more than likely going to pay the VAT on that job.

It sounds like you really don't trust the tradesperson that carried out the job for you.


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## DavyJones (13 Jul 2009)

every invoice we write gets filed and processed for our VAT return, thats not to say the cash is ever lodged. The VAT on a ton is more than likely €13.5.


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## Graham_07 (13 Jul 2009)

callybags said:


> In my experience it is highly likely that every VAT registered person or company will have a VAT inspection by the revenue at some stage.


 
"At some stage" is the thing. I've seen some tradespeople who have been registered for 20 years and have had 1 VAT audit. That leaves an awful lot of years for things to errr ...go missing.


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## LouisCribben (13 Jul 2009)

OK, I'm naive in many ways, so I need to ask the odd basic question

If a VAT registered tradesman charges VAT and gets paid cash, and then issues a receipt, how is the taxman going to know about it, even if there is an audit.

The tradesman may use the cash to pay for his groceries in Tesco, no taxman could ever know the transaction took place.....audit or no audit

The fact that I have a piece of paper (a receipt) isn't going to make any difference, the auditor isn't going to see the piece of paper, the auditor doesn't know or care who I am.


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## DavyJones (13 Jul 2009)

True, you have to trust that the tradesperson puts his copy of the invoice in his VAT/tax return file.

The same could be said for any business that you hand cash over to. Tesco, petrol station etc etc.


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