Tax and employer's liability insurance
As you will qualify as a private employer, you will not be deemed
responsible for your contractors income tax under normal building employer's
terms. However, to avoid liability for PAYE or involvement with the Employment
Acts, ensure that you are employing contractors who are working on a
self-employed basis.
Although individual trades people should all have their own personal accident
insurance, it is also vital that you take out insurance to cover your own
liability.
Structural guarantee
For New Build If you are self-managing individual trades people to build a
complete new house, then you need to make arrangements for some form of
structural guarantee insurance. Lenders will almost certainly insist on this and
will want you to either provide architects' progress certificates for each stage
of the build or for you to arrange a Custom Build Warranty. The details of
Custom Build are available from Zurich Municipal Insurance.
Buying materials
If you are employing some of the trades on a labour-only basis, you will need to
provide all their materials. It is a good idea to o pen up a credit account at a
local builder's merchant. They will be able to advise you on your selection of
materials and will also be a useful prompt for ordering materials that need a
lead time for delivery. Merchants can also be a useful source of information o n
local tradespeople. An alternative is to buy all of your building materials
together from a self-build package supplier.
Reclaiming VAT
On new build and conversion, all VAT on fixed building materials is reclaimable
through Customs and Excise Notice 719 VAT Returns for DIY Home Builders. Work
carried out by tradespeople on new build on a supply and fix basis is zero
rated, so you will not pay VAT at all on these costs. Any materials you provide
for tradespeople employed on a labour-only basis for a new house will also be
VAT exempt, so make sure you keep all your VAT receipts.
With refurbishment or extensions all labour and materials is subject to VAT
at 17.5% and is not reclaimable. This is another advantage that building a new
home from scratch has over building a large extension.
Drawing up a contract
Once you have selected which trades you are going to require and the terms on
which you intend to employ them, it is time to draw up individual contracts.
Some tradespeople will have their own contract which they will want to use. If
so, check it carefully and cross out anything you are not happy with. The
contract should specify all the points that could be disputed later, such as:
fixed price, start date, completion date, description of the task to be carried
out, terms of employment - including details of who is responsible for providing
materials, tools, plant and machinery. The simplest way to organise this is to
ask the tradesman to write you a simple signed letter detailing what you have
agreed and including all of the above points.
Your rights if things go wrong
Even with a contract, things can go wrong, but you will at least be able to be
specific about what was expected. If you are unhappy with the standard of work
undertaken by a contractor, you should let them know immediately, either by
speaking to them or writing to them. Let them know in detail what you are
unhappy about and what you want them to do about it. If you hear nothing back,
then write to them recorded delivery (and charge them for this). If they
disagree about your complaint, you can refer your claim to the relevant
arbitration department of the trade association of which they are a member. This
may enable you to settle the matter out of court which will be simpler and
cheaper.
If this fails, or if the contractor is not a member of any trade association
or body, then you may have to take them to court. Whatever your course of
action, if they dispute your claim, you will have to prove that the job they
have done was inadequate. The best way to do this is to get another contractor
to estimate how much it will cost to put right. Get them to give you a fixed
price for the job and a report explaining the work that needs to be done. If the
work is put right before your case is settled, then be sure to take photographs
as evidence of the job before it was corrected. If the fault is a major one, it
may be a good idea to get an independent surveyor's report to estimate the
likely cost of repair work and any other damage incurred.
If your claim is under £3,000 you can go through the small claims court, (£750
in Scotland). For larger sums, consult a solicitor who will advise whether your
case is worth pursuing.
Don't worry too much about things going wrong - thousands of people employ
subcontractors every day of the year and experience no problems whatsoever. The
majority of tradesmen are highly professional and will carry out their trade to
high standards of proficiency. At the end of the day, good tradesmen rely on
recommendation for their livelihood, so it is in their interest to keep you
happy!
Trades Usually Employed on a 'Supply and Fix' Basis
- Ground-worker or Excavator,
- Concretor and Drain-layer
- Scaffolder
- Roofer/Tiler
- Electrician
- Plumber
- Central Heating Engineer
- Gas Fitter
- Plasterer
- Glazier
- Floor-layer
- Decorator.
Trades usually employed on a 'Labour Only' basis
- Bricklayers
- Jobbing Builder (may also lay concrete and drains and perhaps provide
scaffold.)
- Carpenters
- General builders and labourers,