Why do all contractors want to be paid in cash?

[Jaggerdagger]

Yet another contractor today has asked for cash to pay for a service. They are seemingly a legitimate business with a website and plenty of good reviews on Google. I never have cash on me so frankly it's a pain to have to walk 30 minutes to the nearest cash point, when I could do a bank transfer in seconds. If it's more than a couple of hundred pounds, I have to drive miles to go into branch to take the money out. They never advertise that they are cash only when I book their services, so I get caught out unprepared. I'm self employed myself, and have absolutely no problem with people paying me in cash, but equally have nothing to hide with my accounts, so happily accept bank transfers! It's nice to remain flexible with my clients! Just curious, really.

Yeah because you’re not living on the breadline.
A neighbour washes windows he gets paid by cash or bank transfer, his annual income is well below the £83k/yr VAT threshold. I think he’s lucky to clear £15k/yr. Hes not avoiding tax at all and he cannot afford the data packages that are “inexpensive” to you.

My husband is a self employed contractor and has the opposite problem that a lot of people offer cash for cheaper which is not really any good for him as we need his earnings to reflect accurately.

But we have also been in the position where a lot of people give bad cheques or do not pay a 30 day invoice which can be really difficult for cash flow especially if you are just setting up/ lack savings or have already had to pay out for other subcontractors, and are currently in the minus yourself waiting for other payments. So I can see why you would ask for the small £100 Job in cash so at least you can get your shopping in

You're not just avoiding the VAT though, are you? If you're not putting it through the books you're also avoiding the CT on it, and then the income tax when the company pays it out to you (in dividends or salary). You're fundamentally dishonest, and I would cease doing any kind of business with you the minute you made that request.

It's a hell of a lot easier to evade tax on a payment that has no paper trail though.

And HMRC do investigate people.

Our builders offered us a bank transfer price and a cash price. The cash price was a couple thousand less and I had no problem accepting it.

While my DH accepts cash payments, he doesn’t offer a cash discount. Why should he? He has to pay full tax no matter how he is paid. I rather think that the demanding a discount if you pay in cash means you’re only paying cash to the tradespeople that are actually dodging tax.

And cash payment has to be run through the books…otherwise how do you explain all the transactions for materials for a job that then never gets invoiced? Or paid for?

Fuck that, we pay horrific amounts of tax, under no circumstances will our family be paying anyone cash for them to avoid doing so.

All those self employed people who only got 70% of what they declared and were cross about it during lockdown rightly got bitten in the arse.

The thing is, if I ask someone how they want to be paid, and they say 'cash or bank transfer, whichever you would like', the price is the same for each, and it seems to me likely that they fall below the VAT threshold, I am happy to pay by cash or by bank transfer.

If a contractor who should on the face of things be above the VAT threshold, with a sensible sized business doing reasonably sized jobs, demands cash only, that's completely different, and I either don't use them or refuse to pay cash.

Oh come on now, this is reaching. I have a PAYG phone so can tell exactly how much it costs for internet access - i.e. approx 2p to go online and log into my banking app for 30 secs. They'd only have to do it once per job.
Plus if it was really an issue they could ask the homeowner for their wifi password.

This

my husband has to order and chase suppliers sometimes

thry may be out of stock so has to drive elsewhere

all taking his time and diesel

and yes he may charge them the merchants price but buy them at trade and pocket the differnce

coz he is doing the donkey work

those customers who want to pay straight to suppliers are fine but they get them at the cost of the supplier. Not trade

So they don't declare it, a lot of people are trying hard to make undeclared money to cover the cost of living x
Say you can pay in cash but you want a discount.

Yep, this is exactly the point I’m making. The majority of sole traders are below the VAT threshold. So accepting cash isn’t always to dodge tax per the initial posters who were generalising.

VAT isn't the only tax though.

Ah ok
so you don’t want to help them dodge VAT but income tax is fine…. 😆

I take cash a lot and it goes through the books. It’s easier to take cash, there’s no waiting or chasing or awkwardness when the bank transfer doesn’t arrive. I give out a receipt with the payment. I don’t give a discount for cash.
Card payments can be reversed (not happened to me yet thankfully)
Some will be doing it to fiddle but I suspect (based on past experiences) cash is often asked for because they’ve such a huge overdraft/debts if money lands in the account it won’t be there to spend.

I imagined there was less of this now as we are moving to a cashless society. Lots of places are card only (especially large purchases) and transactions are so traceable. Customers think they are somehow doing the trader a favour offering cash and think they should get a discount in return. Times are changing. Being paid cash only works if you declare it really which is all good .

My neighbour is a decorator. Despite working 12 hour days, 7 days a week (and right through lockdowns), his accounts filed at Companies House say he makes just over £10k a year.

PP comments about being dishonest etc.in other areas are accurate, he's a total asshole.

Many aren’t dodging ANY taxes at all. When customers ask for a discount for cash, it’s insulting them because it is implying they don’t declare cash payments on their taxes. Why else ask for a discount? These customers think the traders are “dodging tax” and they want a piece of it.

If he’s filing accounts with Companies House, he has an Ltd company and is not a sole trader. So the figure you see as “what he makes” will be his gross profit. This is after all expenses have been paid including his own wages.

Just want to clarify, that the £10k gross profit isn’t his personal money, it belongs to the LtD company. So after corporation tax is paid on this, dividends could be paid, or company debts paid off or the money invested into the company (buy equipment and tools). It’s not a ten grand bonus that is part of his personal income.

Why would you be checking your neighbours accounts ?

I took that claim to be a joke. If someone can’t afford a tenner a month for data then they’re not someone who can afford to eg buy any materials whatsoever before the customer pays towards the job. Actually I would be very worried that someone who couldn’t afford a tenner a month for data would be so financially stuck that they were on the verge of declaring bankruptcy.

🙄My father in law and his two brothers are legal, honest and reliable tradespeople. They are also very old school, which means they don't do internet banking at all, never mind having it on their phones. One of them doesn't even have a smartphone, he just has some old fashioned Nokia. My father in law does have a smartphone and just about manages to make calls and use WhatsApp - he doesn't even use email, we have to do that for him. I once tried to teach him how to use the internet. Never again 😅.

They take cash because that's the way it's always been, after too many years spent waiting for promised cheques and transfers. An online transfer may well be instant but they have no way of checking that and are frankly pretty suspicious of the whole concept of the internet. They're not trying to rip anyone off or dodge any obligations, they're just old fashioned and there are still many, many like them.

Yea this was how it worked when we had our extension done. We paid nothing in advance. Just regular mainly online payments every week or two as we could see the job process and werr happy with the work done. Some cash payments up front for materials like eg bathroom fittings etc.

Oh my reply was to @BigWoollyJumpers , sorry.