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or just plain naive in thinking that people should pay tax?

(33 Posts)
Sbeanmum Thu 05-Nov-09 19:06:59

So, it may be naivety on my part, but AIBU to be annoyed by another mum in my antenatal group who laughed at me for assuming that a legitimate business didn't make much money, and then boasted about dodging tax?

Story as follows: we had a random conversation today about how my DD's nursery doesn't make a huge profit. Other mum laughed and said 'of course they make lots of money, sbeanmum, they just don't declare it.' OK, if the nursery has a clever accountant, that's fine by me. What bugged me was that she followed it up with the statement 'I don't pay tax on tons of my earnings, and neither does my DH.' She thought this was hilarious! She is a beauty therapist so presumably does cash-in-hand work, and her DH is in the building trade and has boasted to my DH that his cash-in-hand work pays for all their luxury holidays.

AIBU to want them to pay tax on all their earnings, or am I being naive?

ChasingSquirrels Thu 05-Nov-09 19:10:59

it depends, I think, on whether they are structuring their business and remuneration to reduce their tax burden to the minimum they can within the scope of the law....or whether they are evading tax by not declaring income.

The first I am happy with (given I am an accountant and spent my life ensuring people do this).
The second I'm not happy with.

wicked Thu 05-Nov-09 19:14:14

I strongly believe that we should pay as little tax as is allowed within the law. That means looking for all loopholes etc.

It doesn't mean taking cash and not declaring.

Sbeanmum Thu 05-Nov-09 19:16:34

Thanks, ChasingSquirrels.

The latter, for both of them. I have no problem with clever accountants ensuring people/businesses do not pay more tax than they need to. But it got up my nose when she boasted about her cash in hand work - there is definite injustice about folks earning the minimum wage who pay tax footing the bill for others who clearly can afford to pay tax but deliverately evade it.

Or so I think!

madamearcati Thu 05-Nov-09 19:19:17

You are not wrong to think they ought to be honest , but naive to think they will be !

shockers Thu 05-Nov-09 19:19:51

As long as they educate their DC's privately, have private health insurance, their own land fill site, don't use public spaces and don't call the police out when they're victims of crime, I don't have a problem.

Sbeanmum Thu 05-Nov-09 19:21:11

Hmmm, take your point shockers. Am calling council now to have the street lighting switched off outside their house

gandj Thu 05-Nov-09 19:22:30

If it is the latter then that is tax evasion pure and simple. It is like stealing from honest taxpayers and takes money away from vital services such as schools and hospitals.

YANBU and you should report them to the HM Revenue & Customs Tax Evasion Hotline. The number is 0800 788 877 and it is free and confidential.

Good luck!

gandj Thu 05-Nov-09 19:24:59

Sorry the number for HMRC is 0800 788 887.

Drayford Thu 05-Nov-09 19:35:17

YANBU - I educate my children privately & have private medical cover, but I and DH both run small businesses on a self-employed basis and declare all our income and pay tax when required to do so by law (much as though it pains me!!)

Taxes pay for our welfare state - period.

Shop her.

Sbeanmum Thu 05-Nov-09 19:53:55

But if it's all cash-in-hand, how can HMRC do anything about it? No records?

smokinaces Thu 05-Nov-09 20:09:20

if they're self employed they can demand to see receipts and all books for the last 5 years - and that in itself is enough to worry any self employed!

Iggi999 Thu 05-Nov-09 20:14:06

If you're reallyg going to shop her cheating ar**, don't do it on the day you had the conversation, as she might figure out who gave the HMRC the info!

chickbean Thu 05-Nov-09 20:20:22

If they have a very lavish lifestyle which is at variance with what they say they are earning, HMRC may be able to prove that they are not declaring everything.

Booyhoo Thu 05-Nov-09 20:23:31

my dads friend is self employed and the most law abiding person ever. HMRC decided they wanted to go through his business with a fine toothcomb. they took all the books and computers, even their son's laptop (he was doing gcse's at the time). he and his wife were at their wits end and both lost an incredible amount of weight with worry even though they had done nothing wrong. and all because there are so many people who think its ok not to declare their earnings.

shop them.

ABetaDad Thu 05-Nov-09 20:28:45

Sbeanmum - if they are not declaring cash in hand they are playing a dangerous game. Its only a matter of time. I know a man running a taxi business. Got caught after 20 years. HMRC know all the ways people evade tax and builders and beauticians are just two of the trades very high on their radar.

The HMRC randomly run general tax inquiries into a certain percentage of people's tax and financial affairs every year and they will always ask how luxury holidays and cars are being paid for. If these people cannot show how they are being paid for they will be fined and ordered pay the back taxes.

Legitimate tax planning is fine - not evasion.

cleanandclothed Thu 05-Nov-09 20:39:34

It is now a very dangerous game as to get a mortgage if you are self-employed you should not now be able to 'self-certify' so you will have to show the bank tax returns and accounts. And if you trieed to persuade the bank you were tax dodging you wouldn't get very far. So (hopefully) her karma will catch up with her.

Sbeanmum Thu 05-Nov-09 21:21:04

Thanks everyone! I'll take your responses as a collective IANBU.

Iggi - good tip, still not sure I'm brave enough to make call but certainly will let dust settle first! She knew I was mad with her because she was shocked that I was shocked, IYSWIM. Her justification was that she doesn't think the govt spend tax revenue appropriately, therefore she has right to not pay. If only, I thought to myself!

Booyhoo - I started reading your post and thought you were going to finish with a 'don't shop them' because it's really horrible but I guess the difference here is that they are cheating the taxman, unlike your friend's dad. I agree that it's not fair for law abiding folks to have to go through that. Am sorry your friend's family had all that stress.

My next post will be 'AIBU to shop tax evaders?' as my decision-making gene has clearly been switched off since arrival of DD!! grin

Booyhoo Thu 05-Nov-09 21:53:00

i guess i was sort of saying, shopping the true criminals makes the trouble they went through a bit more understandable. not really explaining myself well am i?

Sbeanmum Thu 05-Nov-09 21:59:54

Booyhoo - you explained v well, understood exactly what you meant.

madamearcati Fri 06-Nov-09 09:17:19

It is still very easy to get a self cert mortgage.We have just changed lenders and self certed

hf128219 Fri 06-Nov-09 09:23:51

If expenditure exceeds income it is very easy for HMRC to identify under-declared income.

Shop them.

madamearcati Fri 06-Nov-09 10:23:52

How do you determine expenditure though? Anyone underdeclaring with half a brain would pay cash for big items like holidays.

hf128219 Fri 06-Nov-09 10:27:28

Well it's pretty easy to find out where and when people went on holiday.

RealityBites Fri 06-Nov-09 10:30:04

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