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

Does she know the builder really well? My husband does cash in hand for people he knows, but he always pays tax and invoices. He can do cheaper for them because he is able to use a workshop for free several times a year. When not doing for friends, he doesn't get use of the workshop and so needs to charge more to set up a space in their own property and clean up after-which adds time, especially when he's being more careful in their house or garden. He also sometimes needs to charge for additional tools which he would have access to for free in the workshop.

There is misinformation on this thread about VAT - you cannot as a customer buy the materials in order for the tradesperson to keep below the turnover threshold for registering for VAT. This supposed loophole was closed years ago, if ever it existed.

I work as a tax investigations consultant. So I lead clients through the process of an enquiry by hmrc. Cash businesses definitely have the scope for evasion more than others but it doesn't flow that simply by wanting to be paid in cash means that person is evading their taxes at all.

At the level of evasion I deal with overseas bank accounts are used much more frequently than cash as a means of evasion. Overstated expenditure is also a common means of evasion. I have dealt with a number of clients who have been targeted by bled due to the cash nature of their business and get we have been able to show that the accounts are correct and complete.

It's like someone upthread said it's the taxpayers dishonesty or ignorance which leads to evasion not the request for a particular type of payment method. Those who seek to commit fraud will find a way to do it. And will likely be caught at some point down the line.

Unfortunately for the Cash business trades like Chinese restaurants, nail bars, tradesmen, rag traders etc they will continue to have to incur professional fees defending perfectly legitimate business transactions to hmrc.

Hmrc not bled. ?! No idea about that typo.

Very well said, ch1a!!

I do the accounts for my partner's business, but employ a very good accountant to check over the records annually, just to make sure I'm doing everything correctly.

Harbinger suggested earlier that nearly everyone pays by bank transfer nowadays. Not necessarily true! My partner does mainly domestic work, many of his customers are elderly people, many of whom prefer to pay by cheque or cash, because they are mistrustful of online banking (my own parents included). We never ask for cash, some customers simply prefer it and choose it as their method of payment. Better for us in some ways, as cheques often bounce (we are also then charged for bounced cheques and have the hassle of returning the cheque, with all the associated costs). People who promise to pay online often "forget" for several weeks or months, this then causes me extra work and expense (and cashflow problems).

At least cash is an immediate payment. Invoices are issued, thanks are given, all payments are documented, taxes paid. Everyone happy!

As has been already said, not everyone accepting a cash payment is on the fiddle. Not saying no-one does it, but as ch1a points out, if you do, then you will invariably be caught out at some point, one way or another.