to tell my friend paying cash in hand for a builder is immoral

[twistedsista]

My friend is having some building work done, was kind of showing off that she gets it for 120 a day rather than 150 as its cash in hand.

I couldn't help but say I thought it was a bit immoral. As he won't be paying any tax on it that's over 40k a year sallary equilivent and being in London with kids it's possible working tax credits and housing benefit could also be tens of thousands a year.

Should I have just shut up? She took it really personally

Yabu and judgy

we will be having building work done when we move house, ive already spoken to the builder and have agreed a cash discount.

its easier for me to pay cash, he has done work for us before and I payed cash, as far as im aware it was all above board and he payed tax on it but he has been stung several times before with people forgetting to pay by bank transfer until several weeks after the works complete, sometimes leaving him out of pocket.

cash does not equate to not taxed

YABVU - your friend gets a discount for paying cash, why wouldn't she take it?

It's the builders responsibility to complete his tax return.

Nancy that is exactly the point I was trying to make!

If someone charges a customer £120 a day, they don't get to keep the whole £120, they keep what is left after legitimate business expenses, so far less than that.

There is a huge difference between what someone charges as a day rate and what they earn for that day.

The OP had worked out someone charging £120-£150 a day would equate to a salary of 40k a year which is simply multiplying the day rate as if none of these expenses or taxes exist.

Incidentally I found your comment that "Of course he isn't paying tax. There's only one reason builders ask for cash in hand" as offensive as it is ignorant.

Three partners of tradesmen on this thread have pointed out that their DP's take cash to avoid long waits for other types of payment....are you suggesting all three of us are lying and fiddling taxes

Meh
Perhaps he is fiddling his books. If so, that's his issue not hers. However he may just want to avoid charges associated with processing a payment through a business bank account. Probably not on the basis of a £30 discount but still. Cash in hand payments have always existed and will always exist. They are hardly going to bring the economy to its knees.

Your friend is not responsible for anyone else's tax affairs. It is up to the builder to declare his income, it is not for your friend to police it on behalf of HMRC.

But nobody keeps their gross salary in its entirety

dont be daft nancy66. do employees have to buy their own computers/pens/desks etc out of their gross salary? its just how self employed works!

paying in cash is not immoral or tax dodging. it is just paying in cash. what a judgy judge pants

As others have pointed out usually cash payments are taken for cash flow reasons (ie you have the money immediately rather than the delay of processing a cheque, etc) or to avoid charges associated with other payments.

I know a few builders. They will also take cash if it's a new customer to ensure that they are paid - cheques can bounce, payments be stopped, etc. At least with cash they are aware they have the money before starting the job. They provide VAT receipts for all payments and everything is legitimate.

So YABU but it sounds as though you don't understand the realities of some small businesses.

op, that is!

I know how being self employed works ta. Those things you describe are tax deductible

Nancy66 you have no idea of the builder's salary!

All the op knows is how much the builder charged for a day. From that she made a massive leap to that amount being the builder's salary. It's not his salary. From that amount, he will pay for materials, vehicles, tools, staff, admin, utilities, etc. Once all those expenses have been deducted then he will take a grosssalary on which he will pay tax. That final step is the equivalent to your gross salary then your net salary.

err...I didn't mention the builders salary just trying to point out the things people keep listing are not losses.

I don't think posters meant they were losses. I thought they were pointing out that the 120 wasn't the builder's salary as other expenses had to be deducted which meant all the other numbers in the op were incorrect.

Something being tax deductible doesn't mean that you don't actually have to pay for it! If I earn £100 and have to spend £10 on materials then I pay tax on the £90 left, but don't get the £10 back. If you're self employed and you spend money on materials and equipment for your business, that money has still come out of your wages so they are expenses - hence the name!

I give up....

If your friend knows that the reason for the cash discount is VAT fraud, then she shouldn't do it. I know several people who have been told by builders that they can have work done - or part of the work done - 'VAT free' for cash. This is illegal and you could get into trouble for it.

As others have said, if you get a VAT receipt or the builder confirms he is VAT exempt, there isn't a problem with getting a discount for cash. It is the builder's responsibility as a self employed person to do his tax return properly.

Just to add he's more or less said the discount is because he has to pay less out, friend assumed this is tax and is happy with this as she pays less.

There are no invoices being produced and the job is now in its third week.

it is up to the builder, not her

i personally boycott starbucks as they dont pay tax, but i dont think people who buy their coffees are immoral, nor are those who shop at boots, vodaphone or amazon

i find all those companies actions immoral, although apparently they operate legally, as their tax returns show. i would guess you dont know what this man's tax returns show. if you are bothered, report him. but nothing to do with your friend

YABU

Keep your own house in order.

I would want a friend like you!!.. If my friends got a job done cheap I'd be happy for them.. Not my business of the ins & outs!!

If the neighbour is paying in cash and not getting paperwork or invoices for work done - what happens if things go wrong with the building work? They will have no proof that the builder did the work and no guarantee.

My tutees pay me in cash but I declare all income and pay my taxes. Cash payments doesn't necessarily mean wrongdoing.

My dad get's paid in cash as his local bank has shut down and the other one is a hassle to get to, would take an hour out of his day and he'd have to pay for parking. So he does a discount for jobs in cash.

In turn the builder will likely get a discount for paying cash for materials.
Cashflow is a big problem for most small businesses.

It is the moral responsiblity of the builder to declare his income - whether paid cash or not, not your friend.

BTW - in the case of an HMRC Investigation it is usually the cash side of things that gives the game away............I can say no more....

So why isn't he issuing an invoice then?