Do self builders have to keep records?

O

overworked

Guest
We are in the process of building a house at the moment and have not engaged a builder.
I heard the other day that the tax people have been sending out letters asking self builders for details of payments, names, addresses, phone numbers, etc! Could this be true?
We have had several jobs done by people who wanted cash not cheques. In one or two cases we only knew them by their first names and didn't get addresses for them. We bought a lovely fireplace from a guy who called in a van and paid him cash. It is becoming apparent that many tradesmen now offer to do jobs for cash. Are the tax people using the self builders to gather information on who is doing cash jobs? I know several people who have built houses and have gone the same direction as ourselves. Is it illegal to pay someone cash? Have we to keep a record of all payemts?
 
Have you noticed that we have a major problem with exchequer finances?

VAT and Income Tax are not optional. It is the job of the Revenue Commissioners to assess and collect taxes due. That includes tackling the black economy, a zone inhabited by many builders.

Were I a Revenue auditor, I would have difficulty believing somebody who claimed to paid out thousands in cash to strangers. How could you pursue a subbie for faults in the quality of work? What if the fireplace was stolen?
 
This is going to have interesting implications.

As a main contractor engaged in construction projects the obligation is on you to ensure tax compliance of all subcontractors through the C2 or RCT deduction system.

In the definition of this tax code the main contractor is responsible for the verification of the individual / company involved, confirmation of their tax numbers, application for tax deduction card, issuance of payments & deduction certificates (where applicable).

The records associated with this must be kept for 6 years.

The interesting point in this tax system is the penalty the main contractor faces for any payment made outside of the guidelines. You will be responsible for the RCT on top of any payment made. So if you pay 'Jim' €1000 for the supply and installation of a fireplace without tax deduction cards, tax clearance etc the main contractor is liable to pay an additional 35% to the revenue and to account for the VAT which is 13.5%.

Revenue are not interested in who is doing the work for cash per se, they will come after the main contractor, which is you, you issue the contracts. It is far easier for the Revenue to hit you for the additional €485 (from the example) than to find Jim with his van, possibly of no fixed abode, especially when they know where you live!!

Who said building was easy?
 
Maybe its a new target area to get Revenue. If they investigated say a few self- builds in same area the same contractors names are bound to come up. Once they have evidence of amount paid to each contractor they could do a stop check on contractor to see whether amount recorded.

I think it would be good practice to have name, address, phone number of every single penny spent on Job.

I would look at it from another perspective as well- How is self build financed- Do you have mortgage, savings, undeclared income etc.

I have heard of an individual who is an employee of a construction Job. All his overtime is payed via materails charged to the company. Here the Revenue is loosing out on paye/prsi, extra deduction in company accounts that should not be their, bascially fraud. This person has an extension build to house and their is very little evidence of how it was financed. If revenue ever investigated him they could value extension and tax him on it. In his case little chance of being caught as he is empoyee and no attention is really being broght to him
 
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