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

You have no idea if he is tax avoiding.

From the website of the Chartered Institute of Taxation (who know their stuff):

People may offer a cash discount to help with cashflow – and of course discounts get offered for other reasons too, such as bulk purchases. However, if someone offers a cash discount to hide the money from the taxman, then that is a different story. Hiding takings from the taxman is tax evasion and it is illegal. If the payer is aware this is the case they could actually be colluding in tax fraud.

OP I'm with you that it's not on if your friend knows this is a tax evasion plan - I have refused to employ a tradesman who offered me a cash discount because it let him do something "clever" with the VAT. Not sure I'd have said anything to her, though.

Paying cash in hand is against the law but not necessarily immoral.

I paid the Plumbers CIH for installing the central heating. Up to him if he declared it or not I didn't care. He did a job for me and got paid, we were both happy.

YABU

My DH before he became a SAHD was a self-employed builder. Everything was declared, including cash, and no illegitimate expenses were claimed. I do his invoices and get his accounts in order before they are signed off by a qualified accountant.

Cash is preferable as it is immediate. So many times clients would take a lot of chasing before a cheque is issued, which then led to us being short for the month.

I do think Bertha was right and there is a class thing going on here. Tradesmen seem to equal tax fiddlers and benefits cheats according to some on this thread. I bet people threatening to shop anyone accepting cash in hand pays the traders at the farmers market in cash.

But do you have any reason so suspect that he isn't paying tax? And how does that make your friend immoral?

Mind your own damn business.

Bonsoir Against which law?

Bonsoir - what makes you think that, for heaven's sake? My DP is a sole trader tradesperson and is often paid cash. It is legally declared, documented, and actually often costs more to the business than a cheque. We have to pay 90p per £100 paid into our business account, whereas for a cheque it costs approx 39p per chq (plus, of course, the 75p for the transaction slip). And we get charged for a bounced cheque, even though it is clearly not our fault. Cash is sensible - not everyone accepting cash is fraudulent. We have our accounts checked by a bona fide accountant, and he compliments me on having nice clean books (his words).

So are you suggesting that every time we pay cash for something in a shop we are all breaking the law? Don't be so ridiculous!

Paying cash is against the law?

OMG, arrest me now. WHSmiths - guilty; Local coffee shop - guilty; greengrocers - guilty. Aaaaaaaaaaargh. I am sat here terrified, waiting for the knock on the door. What have I done??? eeeeeeeeeeeeek!

Or maybe not!

Yab MASSIVELY unreasonable.

The builder is an adult human, not a dog, and your friend isn't responsible for his tax choices. You owe her an apology.

I will ask again OP- if you think that it is your business and you're not unreasonable then WHY ASK?

My understanding on VAT in particular is that if you hire someone for a job and believe that they should be VAT registered then you can be held to account by the HMRC as well as the trader. VAT turnover includes supplies for a job as well as labour costs. So in this case it could be borderline. So OP you may be right to be concerned for your friend but for a different tax!

Plumber came round the other day

Quoted us £200, after he did the job I paid him in cash

He didn't ask for cash, he made no suggestion that I would receive a discount for cash

So does that make me immoral??

I bought a telly in Comet (a while ago!) and asked if they did a discount for cash. They did give me 5% off! does that make me immoral? I have a receipt

I quite fancy being immoral, but I'm a bit too honest

tired

Don't you need to earn over a certain amount to register for tax?

If that's the case how would you know how much the builder was earning

Quite happy to be told I've got the wrong end of the stick, I always doze off when DH starts talking about tax

HMRC say that 'there is no law against paying in cash, or indeed asking for cash, and the onus is on the trader to make the correct earnings declaration. Of course, not all cash deals will be designed to evade income tax and VAT.'

It is possible that the customer could be included in any charge, but a fully itemised receipt would be enough to show no collusion - so that's an invoice with the net amount and the VAT separated out, with a VAT registration number on it, if they are VAT registered.

None of which precludes paying cash.

Rufus You have to register as self employed no matter how much you earn, but there is a threshold for VAT, so if you were personally commissioning a project which would take a trader over the £81k limit on its own then you would have an inkling that they should be registered.

dojo

I'm safe then, no way am I commissioning that sort of building work

If you're self employed and get the chance to be paid in cash now and then, you'd be a mug to declare it to the taxman. One of the few perks of being self employed IMO.

MyballsareSandy - depends how much you care about the law really though and how willing you are to take the risk that can land you in court or worse.

I know a few self employed people. They earn very high salaries and it is all above board with regards the taxman. For them it definitely isn't worth the risk! I certainly don't thing they're mugs.

I only ever pay someone after they produced a detailed invoice. if the builder has it ready when they finish the job, great, I will transfer the money straight away.

Rufus Are you sure you don't want another wing to house the staff?!

MyballsareSandy It's like you aren't even trying not to give us all a bad name! Apart from anything, there are plenty of reasons to declare, including if you want to get a mortgage or similar and want a true representation of your earnings to enable you to borrow more than you would otherwise be able to. There are plenty of ways to reduce your tax bill legally if you are self employed and personally, I would go for any of those over potentially screwing yourself with HMRC for the sake of a few hundred quid.

OP

As you are so convinced that you are in the right, why ask here if you are being unreasonable or not? You don't seem interested in anything anyone who disagrees with you has to say.

For what it's worth, I think YABU- it's not your friends job to ensure the builder pays his tax- it's his responsibility to ensure he complies with the law. All you have is an implication that he might not pay it.

TBH you sound fairly judgemental.

If you are so convinced it's your business and that you have evidence- report the builder. If you don't report him, despite your being convinced by your evidence that he is committing tax evasion, then doesn't that make you a bit of a hypocrit?

Paying cash in hand, in England, is NOT against the law. Even if you know the recipient is probably not going to declare it. However, I believe in France (where I used to live) it is.

But I bet before long it WILL be made against the law to offer cash, knowing the tradesman or whoever is likely not to declare it. Don't see how they can enforce it, though.