My neighbours and I employed a builder to complete work in a communal area of our building. A price was agreed at the beginning of the process, with a further increase agreed halfway through but we have now received a bill with VAT added on. Can they do this?

Whether or not the tradesman is able to add on VAT at the end of the job will depend on the agreement that you made with them previously.

When employing a tradesman to carry out work, it is important to ensure we get an idea of costs in advance of them starting work.

Estimates vs Quotes

Remember, there is a difference between an ‘estimate’ and a ‘quote’.

An estimate is a rough guide to how much the work will cost, whereas a quote is a fixed price for the work.

A formal quote should contain the fixed price total, how long the price is valid for, a breakdown of the work to be carried out and the individual costs, how long the work will take to complete, and whether the price includes VAT.

Additional Costs

Sometimes, there are unexpected additional costs that creep up, but these should have been agreed with you in advance of the additional work or activity that is costing extra taking place. In relation to the addition of VAT, you should check the original estimate or quote and any communication received from the builder in relation to costs.

If any of this documentation has ‘exc. VAT’ or ‘excluding VAT’ printed on it, then the price supplied is prior to VAT being added on, and unfortunately, the builder can add the cost of VAT on after the job is complete.

What About VAT?

VAT is usually charged at 20% but take care to ensure you have not been charged VAT on anything you should not have. If there is no mention of VAT being excluded, then it is safe to assume that the price supplied is inclusive of VAT. The average person would not then expect to have VAT added separately.

What should I do?

If you believed that your original quote was inclusive of VAT, then you should outline this fact to the builder, highlighting the original price and note the changes to costs agreed part way through the job. It is also a good idea to speak to your neighbours to gain an understanding of their thoughts on the matter.

You should indicate to the builder in writing that you were not explicitly advised that VAT was excluded from the cost provided, and that this may constitute an ‘omission’ under the Consumer Protection from Unfair Trading Regulations (2008). If you have evidence that this is the case, you can state this to the builder.

Seeking Additional Advice and Assistance

It is always beneficial to seek specialist advice in these situations, especially if the information is not clear. There are several options available if speaking to the builder and trying to reach an agreement / understanding does not work.

The next step would be to look at Alternative Dispute Resolution (ADR) as a way of resolving the issue out of court. This is generally cheaper and quicker than going through a legal process, and some courts will expect you to attempt this before accepting your claim.

I hope this helps! can provide free, practical, and impartial advice on consumer issues, including home improvements and dealing with disputes with a builder or tradesperson. You can contact one of our specialist advisers for free, practical, and impartial advice on 0808 164 6000 (9am-5pm, Mon-Fri).