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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

Trades usually employed on a 'Labour Only' basis