Is It Legal to Pay My Builder in Cash?

Not much in this world is more tempting than a big fat stack of cash. Getting paid in cold, hard, paper cuts back on time to the bank, and you’re never left wondering if a check will bounce. At times it may be easier for you to come up with money in cash rather than going to the bank. Whatever the case may be, whether it’s preference or necessity, you might want to pay your building contractor in cash. That’s all well and good, but have you ever wondered if it’s legal? KST Building Services Ltd, a company of builders in London, has helped us explain.

Are There Any Legal Implications for Paying a Contractor in Cash?

Technically, paying a tradesman in cash won’t get you into legal trouble. However, if there is not a distinctive and properly recorded paper trail and you find that you’ve received some shoddy work, it could be quite difficult to prove anything against the contractor or take any legal action on the matter.

If any work is exchanged without a legitimate contract drawn up or is conducted informally, anyone you attempt to seek out for help should something unsavory occur is going to be much more reluctant to get their toes wet.

Though it is not illegal to pay your builder in cash, their failure to register and declare the entirety of their income to the HMRC is considered tax evasion and is most certainly a criminal offense.

Basically, you can pay your friendly neighborhood contractor any way you wish; it ultimately comes down to their responsibility to keep records and accurately report their take. It also depends on what the builder’s needs or demands are as far as payment goes.

So, It’s Not Illegal, But Is There Any Benefit to Paying in Cash?

Some banks have fees or charges they like to levy in exchange for utilizing their administrative or banking services.

If both parties of the work to be done agree to conduct business on a cash-money basis, this is completely legal and can keep a few extra coins in the pocket by skirting around any peripheral deductions.

Generally, it could end up being a better deal for the contractor and not make much of a difference for the buyer, so as the consumer whichever way works best for you will do. If getting paid in cash makes life much easier for the builder, they may offer you a discount, and who doesn’t want that?

It must be noted though that the tradesman is still responsible for reporting to HMRC, so just because they’re able to dodge some docking and fees, they cannot legally escape them all.

Declaration of funds for tax purposes is the sole duty of the craftsman, so if HMRC was to ultimately impose any judicial action, the outcome would fall against the builder alone.

Are There Any Risks to Paying in Cash?

The Consumer Rights Act of 2015 was put in place as a safeguard for the client, and offers a security net for any issues that may arise.

The act lies down a specific set of guidelines to make sure business is conducted in a fair and decent way, and should the contractor choose to ignore these rules, they could be deemed in breach of contract, which could potentially become a whole other mess.

Any goods or services provided by the contractor must meet acceptable standards in order to satisfactorily fulfill a contract. They must also be completed in a timely and skillful fashion under agreed upon cost.

If you highly trust your builder or know them personally, it is not required by law to have a written contract to carry out its actions.  Whether on paper or a verbal accord, the Consumer Rights Act still umbrellas it as a viable legal agreement.

Covering your own rear end is always a good idea regardless, so it is definitely recommended to leave a solid paper trail.  There might be little side terms that you and your builder agreed on at one point, but over time people forget things or remember conversations differently. You never know what might turn up around the bend, so keep on top.

Also make sure to either request a work receipt, VAT receipt, or even just hand record any VAT included in the cost of paying your contractor.

Should you choose to pay in cash rather than by any other means, it is imperative to maintain scrupulous records to keep yourself protected and any arguments at bay.

Leave yourself a Hansel and Gretel trail of little paper breadcrumbs to follow back should get you lost, and make sure you know all the local laws and guidelines to keep yourself well covered and in the know.