Report highlights need for VAT cut, FMB says

The Federation of Master Builders (FMB) has called on the government to cut the rate of VAT on domestic building work.

According to the organisation, slashing the rate to five per cent will help to clamp down on the cowboy building trade.

The call came after the House of Commons public accounts committee published a report showing that the Treasury loses £2 billion a year due to people working in the informal economy.

Brian Berry, director of external affairs at the FMB, explained that cowboy builders continue to work because they do not charge VAT and therefore offer what looks like a good price.

Reducing the domestic building work VAT rate "will significantly reduce the commercial advantage of the VAT evading trader" and "the financial incentive to choose a cowboy builder will diminish and a level playing field will emerge instead", he commented.

Meanwhile, more Britons are improving their properties rather than buying because the slowing economy means it is harder for them to sell their homes, according to Jason Orme of Homebuilding & Renovating Magazine.