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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

working. a lot. and not declaring income for tax

82 replies

bebbeau · 27/12/2013 21:23

i don't want to give too many details as i have not NC

but a good friend of mine is doing work cash in hand. an awful lot of it, to the extent she has had to rope in another friend to help her. i know she is not declaring it.

her "business" is all over fb, it has a name, a page, and everything...she is snowed under with work and i can't believe how brazen she is being. she has 4 dcs, if she gets caught she will be right in the shit. it would only take one person on her fb friends (and she has about a 1000) to get annoyed with it and make a call to hmrc

i daren't say anything to her, as if she does end up getting dobbed in i would not want her to think its me. but it doesn't sit right with me....i have been self employed for years and have been meticulous from the start about keeping everything above board

anyway just wanted to see what others think. i can't talk about it to anyone in RL for obvious reasons.

OP posts:

lljkk · 28/12/2013 10:32

Have to reach VAT threshold to be registered, I think? And that's like £80k/yr maybe?

Taz1212 · 28/12/2013 10:33

I think Sarah's point is that you can be a sole trader and not need to form a company - I.e. no need for a company number. I'm a sole trader with no company and declare my earnings to HMRC.

If you are going to try to persuade her to file this year she'll need t be fairly quick because it's online filing now and it takes time to get the online ID number etc from HMRC.

Metebelis3 · 28/12/2013 10:33

misspoxietrix Companies do indeed have to be registered at companies house. Sole traders and partnerships do not.

ChatNicknameUnavailable · 28/12/2013 10:33

Sarah you don't think a Company needs to be registered? at say the Companies house. Which is the company number I'm on about! (Registration number in other words!!).

There are thousands of sme's that have nothing to do with Companies house. It's not necessary to be Limited to run your own business.

specialsubject · 28/12/2013 10:35

if her income is less than a certain figure she can opt out of paying NI if she wants. However I think it is a good idea to pay the self-employed NI rate as it is a cheap way to buy more pension years and benefits entitlement (if needed).

Registering as self-employed isn't hard. Being paid in cash is also fine (the people who are paying her will be doing so out of taxed income).

but if she isn't declaring, she's a crook. Do you want a crook as a friend?

niceguy2 · 28/12/2013 10:35

The only question here that needs to be answered is "Has she registered with HMRC?"

I'm registered and it wasn't so hard. They were actually very helpful. I also advertise on Facebook for business and it's incredibly annoying when you see others who are charging prices that mean they clearly are not declaring tax.

So if she hasn't registered then I think you should report it since she's doing something illegal and doing everyone else a disservice.

HMRC are heavily targeting FB traders and making examples of them because frankly there's so many of them! I don't have any issues with anyone working a side job earning extra money. So long as it's done within the law. Even if you don't like the law.

Metebelis3 · 28/12/2013 10:36

lljkk VAT registration is a different thing, you don't have to register for vAT if you are below the VAT registration threshold or if you provide only exempt supplies. But if you don't register for VAT (and charge it) you can't claim it back. So many smaller businesses will register voluntarily in order to be able to claim back the VAT they expend on inputs.

Taz1212 · 28/12/2013 10:38

Oh, and HMRC run really useful free workshops when you first set up where they walk you through the filing process and everything that you can offset against earnings. I highly recommend them for anyone starting out!

Misspixietrix · 28/12/2013 10:41

Indeed niceguy like the ones who buy the 30p cake mixes from Tesco and charge 40quid a time for their cakes. Wonder if they have the relevant food and hygiene certificates too?

Misspixietrix · 28/12/2013 10:47

As far as I'm aware your company has to be registered for HMRC purposes. Apols if I'm wrong it might have changed. I talk as someone with experience from a decade ago when ex dh's family ran a cleaning company (all legit). Client went with competitive company (non legit and Manager only trying to save a few pounds). When the business sent THEIR tax returnsoff iincluding payments to said cleaning company. HMRC chased them up and was fined massively.

ChristmasCareeristBitchNigel · 28/12/2013 10:53

presumabley the people paying her arent paying tax, if this is all Cash in Hand

How do you work this out ? Customer pays for service out of taxed earnings. It is the service provider's duty to pay VAT if necessary and declare their income, not the customer's

ChristmasCareeristBitchNigel · 28/12/2013 10:55

Lucy, she's not having to employ people if she's earning under 2.5k. If she's having to employ other people then she will be earning well over the personal allowance.

notapizzaeater · 28/12/2013 10:59

If she's caught they will come down on her like a ton of bricks, I'd sit her down with a coffee and offer to help,her.

Metebelis3 · 28/12/2013 11:09

misspoxietrixe Look. You need to be registered with HMRC if you are conducting business and earning money (even if you aren't earning money). But you do not need to be registered with companies house (as you falsely said) or have a company number (as you falsely said) to be 'legit' because there are ways in which to do business other than incorporation - sole trader and partnership being the two most obvious.

niceguy2 · 28/12/2013 11:13

It's not being paid in cash that's the issue. Plenty of companies deal with cash all the time. It is purely whether or not OP's friend has registered with the taxman. The only way to find out really is if she asks or her friend has told her either way.

You don't have to VAT register unless your turnover is over £75k(ish). And you don't have to register with Companies House unless you want to be a limited company. For most people running a small business it's not worth registering as a Ltd company. A sole trader is better.

Misspixietrix · 28/12/2013 11:23

Please read my post. It clearly says "apols if I'm wrong". Besides that's not the point anymore as a PP said she's clearly earning a LOT if she's having to employ someone else to help and I'm guessing like the other 90% of the Facebook 'businesses' the Tax man is not aware of her earnings.

TheGinLushMinion · 28/12/2013 11:27

So not only is she not declaring her income for tax she's also potentially committing benefit fraud by not declaring it for TC.

HMRC are going to have a field day when they find out...

Misspixietrix · 28/12/2013 11:28

Re my last post regards non legit. I meant non legit as in they didn't pay tax!

Misspixietrix · 28/12/2013 11:29

Ooh I just thought gin I wonder what the implications of her employing someone are too.

TheGinLushMinion · 28/12/2013 11:42

Yep that's another thing to add to the list, HMRC regularly trawl eBay & FB so she will get found out.

LittleBearPad · 28/12/2013 11:45

If it's cleaning or something like that, she isn't employing someone. She's sharing work with them. She also won't be making a fortune. Yes she should pay tax/NI but some posters are really overcomplicating this.

Retropear · 28/12/2013 11:47

My sil had a cleaning business.She earnt a lot(enough to fly first class) and she did employ people.

Metebelis3 · 28/12/2013 11:50

Oh yeah, cleaners can earn an absolute fortune, or a pittance. It's one of those activities that can cover a very wide spectrum of endeavour and revenue.

whatever5 · 28/12/2013 11:56

She needs to register with HMRC even if she doesn't earn enough to pay tax. I would let her know, ask her if she need any help sorting it out, and then just leave her to it. It's none of your business really.

Cadsuane · 28/12/2013 11:58

DH is ex HMRC and part of his job was to targeted Facebook and EBay looking for unpaid VAT.

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