Open Association of Landscape Industries
levelling the uneven playing field
Good Companies cost money to run as they invest in correct image, marketing,insurance, training,staff, tools etc. The most disappointing aspect of landscape construction is the ability of the unskilled/unqualified individual/firm to under price the market rate, looking for and achieving a quick buck. I had hoped by now that a government would have addressed the uneven business playing field. In my opinion, it should be no trade body membership or Company registration - no trading. The onus on the customer to make sure they are employing suitable firms or they are breaking the law. What would this cost to set up, not alot & everyones a winner except the rogues. A stipuation would be joining the register, and a qualifying point could be that each firm takes on a young apprentice each year, or is able to keep the same one for a maximum of 3 years until they gain experience. This would help young people enter the market & would be a vote winner amongst the young.
I can prove how uneven the playing field is. I used to be a member of a national paving scheme, infact one of the founding members. I gave it up 3 years ago as the credibility I was looking for by being a member was not there any more in my opinion. They recently recognised the way the scheme had become less professional & decided to make it a qualifying criteria that you had to be VAT registered to be a member. The result in my county - everyone was removed from the scheme. I do not believe you can be an established business and not be VAT registered, the turnover is too small.Think of all those "firms" that have been competing against you, taking work off you on the basis that they are automatically 20% cheaper. It angers me that you are penalised by the system while trying to do the right thing. Its about time governments protected the consumer & businesses by putting correct legislation in place. Anything these forum sites can do to assist this is a good thing in my book.
Duncan Ross www.gardendesignco.com twitter gardendesigncom
Replies to This Discussion
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PRO MemberPermalink Reply by David Cox on -
On the subject of VAT - many people with large properties can spend quite large amounts on maintenance and as such are unlikely to want a Maintanance contractor who is Vat Registered - This could easily amount to £500 over the course of a year on all all in contract (litter, grounds, Gritting etc). I have turned up to quote to be asked this as the first question, "your not Vat registered are you" and once a guy said "If you do Vat register, you would hold the price right?" and I can fully appreciate this when the saving is £500 over a year.
For landscaping I would imagine this situation is far more common as the value of the jobs is much higher on the whole.
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PRO MemberPermalink Reply by Adam Pilgrim on -
I run a small business, providing a high level of service to both domestic and commercial customers. I have MANY satisfied, repeat customers. My turnover is not high enough to qualify for VAT though.
GOOD businesses can and WILL always exist below the VAT threshold, to say otherwise is as Gary RK said, totally unacceptable and can I add potentially offensive to that?
To infer that anyone that is NOT VAT registered or belonging to an 'association' is a rogue or second rate trader is totally incorrect - I am sure that there are unfortunately some VAT registered companies and rouges out there that produce second rate or shoddy work.
Compulsory apprenticeship schemes would never work, sorry. I HAVE been a trade apprentice, so I know exactly how the system works, the employer having to pay the staffs wages before getting paid from the government on completion of the course etc... this is partly the reason that there has been a downturn in businesses taking on apprentices, the potential outlay involved, in conjunction with the reams of necessary health and safety inspections among other things mean that most are now unwilling to take the risk.
Gary RK said:The inference by some on here that by being a small business under the vat threshold is illegal/rogue/second rate is TOTALLY unacceptable.
The fact they can quote cheaper than a vat reg company should never infer anything like that. If you as a vat reg company, can not complete within the existing rules I would suggest you look at your costs and your market segment.
We will always have a black/grey market where an element of our society will decide to work
outside the rules, but a small business should never be penalised or have their image tarnished by 'bigger' boys.
It's strange that those that complain are those that have made the transition to being vat reg & conveniently forget their beginnings...
Poor show guys. As to the closed shop/association stance, that's a whole different argument-of which I yet to see a compelling case for without it reeking of protectionism.
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Permalink Reply by Select Gardens on -
I agree with you but our industry does suffer from a cash in-hand black-market problem I'm afraid. That affects us all in regards to an unlevel playing field and taxes not being paid.
The Gardening / landscaping industry along with some other trades has always suffered from this. If your are an accountant or architect for example, you don’t have that same problem.
I think it’s a sensible debate and one that affects us all.
PS I was told within a month of setting up my business by one of the biggest property management companies in the south that the gardening sector and my competitors operated in a black market economy and we would find it hard being competitive, I have come to realised that is true
Just to reiterate my earlier point that there are thousands of excellent sole traders / small companies that offer an excellent service who are not VAT registered.
Gary RK said:
Gary I agree, there should be the same tax for everyone and I support that whole heatedly, but as the law stands at the moment you can be a small business, be under threshold and trade legally.
For anyone to suggest otherwise is distasteful and disrepectfl to the 000's of small business that underpin our economy.
That is MY point
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PRO MemberPermalink Reply by Graeme @ BGS on -
Just a few comments.
Duncan mentioned " In my opinion, it should be no trade body membership or Company registration - no trading" - Very true and if you have PL insurance, the insurance company now insists on having your PAYE reference number etc. or they will not issue the policy. So maybe a small step in the right direction?
I think that we all have a role to play in educating the potential clients by highlighting all the insurance, waste license, trade membership, H&S and other policies / procedures that we adopt. So okay you will always have some people who don't give a toss and just want a job done at the cheapest price but then is that the type of type you want? Surely it is the way you sell your services and the clients you hope to attract is key?
I would like to think that most of the VAT reg landscapers don't mind losing out to a small one / two man trader who is more geared towards general maint work than hard landscaping and undertakes one or two patio or fencing jobs a year.
The beef is surely with the traders who actively go out of their way to not pay any taxes and these tend to be the cheap or not so cheap in and out boys of the trade and poor quality?
Select Gardens stated that " the biggest property management companies in the south that the garden sector and my competitors operated in a black market economy and we would find it hard being competitive, I have come to realised that is true" - This is true to a degree and would have to add that back handers etc. are not unheard on some very large contracts. However the smaller non VAT reg trader could be seen to have the advantage as not all of these companies can claim back the VAT.
However, the VAT reg companies can and should be able to offset savings in other areas - whilst I appreciate it doesn't appear fair but it shouldn't stop companies from still completing and winning.
Personally, I think VAT should be applied to everyone or better still get shot of it and introduce a basic sales tax on goods and not services.
The cash in hand / black market shouldn't always be viewed as bad, in fact I am sure that the government turn a blind eye as it is a way of helping keep cash being circulated and services a purpose. It is only when it becomes a major tax dodge or criminal element that it becomes a concern.
Finally, have a peek at http://prolandscapernetwork.ning.com/forum/topics/please-stop-the-m... Very true - good one Gary.
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Permalink Reply by Colin Hunt on -
It is in the Private maintenance side where the VAT element bites us hard, as 90% of turnover will be labour and not recoverable. With the hard landscaping however, a split of 50/50 labour and materials is the norm, so we would be around 10% higher than an unregistered company.
The threshold is way too low and should be around £150K IMO, giving the sole trader a chance to 'up his game' to a 2, 3 or even 4 man gang.............and stay within the law!
It has always been a constant battle to justify the additional cost of VAT, but if your work is good enough and you can sell yourself and your company, being registered should hold no fears.
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PRO MemberPermalink Reply by Paul McNulty on -
This really surprises me, and makes me wonder what sort of company they are. When I work for managing agents my big advantage is that the landlords they represent are usually not VAT registered so can't claim it back.There are small businesses like mine who are suitable for them; professional, insured etc. but small enough to be under the VAT threshold.
Any landlords with a large number of properties, or a commercial contract such as an office block, claim the VAT back anyway, so that's where the larger businesses have no disadvantage.
If you were running a property management business why on earth would you risk going to a black-market supplier?
Select Gardens said:I was told within a month of setting up my business by one of the biggest property management companies in the south that the gardening sector and my competitors operated in a black market economy and we would find it hard being competitive, I have come to realised that is true
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Permalink Reply by Select Gardens on
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Because there cheaper .Property managers only collect the bills for the customer, if the property is residential the Freeholder or Housing Ass are VAT exempt. So, if you are VAT register contractor you are at a disadvantage.
Paul McNulty said:If you were running a property management business why on earth would you risk going to a black-market supplier?
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PRO MemberPermalink Reply by Dan Frazer Gardening on -
The thread wasn't aimed at the small service provider - it refers to landscape building firms where materials more than double turnover. If I was running such a firm with one employee I would expect to be way above the £71k t/o. A landscaper with an employee who is not VAT reg is definitely not trading properly.
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Permalink Reply by duncan ross on -
Well that stirred up a hornets nest, which it was partially designed to do. It was NOT meant to be offensive to anyone but to have a sensible discussion on "levelling a playing field". I put forward a few ideas, some could have been better phrased, but the whole idea was to stimulate alternative ideas on how to achieve this. Unfortunately, some have taken it as open critiscism without supplying their own opinions on how this idea could be achieved to benefit themselves.
To conclude, VAT threshold has no affect on quality of work what so ever - agreed. However it is a threshold we have to operate with currently. Every business must start somewhere, & I suggested tax/VAT exemptions to allow them to plough profit back into their business. Landscape contractors cannot operate under this limit with cost of materials that maintence people do not have.
My point was not to demonise one man bands. My point was to find ways that all legitamate businesses can prosper in a competitive market place, be they one man bands or larger firms. What I am looking for is a professional market place that provides a good service to the consumer, & they in turn pay promptly for satisfactory work completed, with a come back to the person who supplied the trade should there be any issues.
So, that said, lets discuss ideas that could help us all to achieve our goals of fair pay for a fair days work @ the expense of the chancers who come into the industry to make nothing but a quick buck, leaving others to suffer the consequences.
Any positive ideas ?????
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Permalink Reply by duncan ross on
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thank you Dan, thats my point.
Dan Frazer Gardening said:The thread wasn't aimed at the small service provider - it refers to landscape building firms where materials more than double turnover. If I was running such a firm with one employee I would expect to be way above the £71k t/o. A landscaper with an employee who is not VAT reg is definitely not trading properly.
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Permalink Reply by duncan ross on
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In addition to tonights update Gary, can I add that I was looking at ideas to benefit all legit businesses, surely that is one of the benefits/aims of a forum like this. I do not want protectionism, I am happy to compete in a healthy enviroment. What systems could we have in place that allow business to compete on a level playing field. This may not be what is currently in place, my argument touched on VAT as that is a system we all have to deal with currently.
Its ideas that I was looking for, not preaching a personal mantra that would suit me as opposed to everyone else.
Personally I think that a registration is what should happen, however, we all know that attempts to do this have been poorly thought through & invetsed in. We are Trustmark registered through the APL, and it means nothing to most people. A government registration would be clunky if being on their approved lists is anything to go by.
So what is the answer??????
Gary RK said:The inference by some on here that by being a small business under the vat threshold is illegal/rogue/second rate is TOTALLY unacceptable.
The fact they can quote cheaper than a vat reg company should never infer anything like that. If you as a vat reg company, can not complete within the existing rules I would suggest you look at your costs and your market segment.
We will always have a black/grey market where an element of our society will decide to work
outside the rules, but a small business should never be penalised or have their image tarnished by 'bigger' boys.
It's strange that those that complain are those that have made the transition to being vat reg & conveniently forget their beginnings...
Poor show guys. As to the closed shop/association stance, that's a whole different argument-of which I yet to see a compelling case for without it reeking of protectionism.
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Permalink Reply by duncan ross on
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Thanks Gary,
You are suggesting positive points which is what I was after, I was only trying to stimulate debate.
Gary @ Acer Paving & Landscaping said:I'm afraid I don't agree with your points about forced membership, cumpulsory apprenticeship employment and the like Duncan. I do however think you have a legitimate gripe about VAT.
I think we should all either be VAT registered or not, ( preferably "not" but that's not going to happen ). Having a threshold under which you avoid this burden is not a fair system. The FMB have long campaigned for lowering VAT on home improvement work to 8%, ( I believe ). This would have a massive benefit for the industry and perhaps if everyone were forced to be VAT registered, the Government could do it without loss of revenue.
Again, I believe there is a VAT system for small businesses where they pay VAT as a percentage of turnover without having to do the paperwork that larger companys' do.
I'm not saying this idea would be popular, ( no tax system is ), it's got to be fairer than some paying and some not though.
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