Paying people cash in hand

[stretchmarkqueenie]

I've been told by the lady I use to do my ironing that she would now like cash payment rather than the usual bank transfer. It's making me feel uneasy, and personal preference I know, I don't like carrying cash on me. Just wondered others views on paying people cash in hand?

@DryHeave Good point about keeping cash in the house. I do have an emergency stash but it’s for Red Alert Emergencies like changing the locks or something- if I dipped into it for regular day-to-day payments I’d forget to replenish it so I never factor it into my “Do I have cash in the house?” thoughts unless it’s absolutely essential.

Anouk- I get your point about bank charges, but surely there that is part and parcel of running any business in 2018 and overheads like that should be factored into the business’ pricing?

I'd guess she's gone overdrawn.
I pay my gardener cash but he gives me a paper and digital receipt.
How about you compromise and say you can do it for a short time providing you get receipts.

I'd happily pay cash as long as she provides a receipt. Otherwise, no evidence you actually paid her.

Why would you need evidence that she'd been paid? She hands over the ironing, you hand over the money, where is the possibility of confusion over whether she'd been paid?

Iamwhoyousayiam im not sure how I am making it hard for her as a small business by wishing to continue to pay by bank transfer instead of cash? These were the payment terms she wanted and has been fine with for all year. How is cash making it easier for her?

I share your anxiety but I'd bet my bottom dollar that it's to do with tax. In July HMRC sought to get easier access to bank accounts of taxpayer's and, I think, that's without any evidence of wrong doing on the part of the taxpayer.

Why would you need evidence that she'd been paid?

Because, there are people who forget they have been paid and ask for it again. Because people don't have the cash ready sometimes but still are given their ironing - it protects both parties from issues arising over payments

@Keratima , as a psychotherapist I started a business account when I had 3 clients, so it’s possible she does.

I can explain, as a small business owner.
Sometimes people don’t do a bank transfer when they promise, and it’s hard to keep track of them.
Other card payments such as Paypal charge a large commission, and the other ones such as sumup and IZettle, take commission too.

So if you’re providing a competitive service this eats into any earnings you make.

This is not a “cash in hand” type of payment your making whereby people pay a much lower cash payment for a service, which isn’t declared by the provider. I assume you are paying the full rate.

And anyway ironing/ cleaning / gardening and the like isn’t usually well paid for the service it is, when all the costs are taken into consideration. ( tools, fuel, insurance, advertising, electricity, minimum) wage

I agree that it's to do with tax. If it's inconvenient to you, then just tell her.

Does anybody know actually if there is risk of me being approached by HMRC if they suspect tax evasion, as a customer?

Iamwhoyousayiam im not sure how I am making it hard for her as a small business by wishing to continue to pay by bank transfer instead of cash? These were the payment terms she wanted and has been fine with for all year. How is cash making it easier for her?

You’re making it hard by not wanting to do it.

I don’t know the reasons why she wants cash. Could be HMRC declaration, could be she’s over drawn and doesn’t want it in the account, could be that she wants the cash to pay for something to do with the business and not through the books or it could be that she’s trying to save money and run off from her abusive husband.

Loads of reasons, both legit and not.

You have two options: you pay by cash, or you don’t and find an ironing person that does accept bank transfer. You may end up paying more though for the benefit

It could be that your transfer takes a few days to go through ? I don’t know. Why don’t you ask her?

I have done work in the past on the promise of payment, and have been given every excuse possible, and still haven’t been paid.

It’s quite disheartening that there are dishonest people out there that you see promoting and prospering in their own business, when you know that they won’t pay you.

I wouldn't do it.

For regular arrangements, I'm happy to pay via bank transfer, as it can save on card reader fees, third party booking fees, etc. That is me being flexible.

I don't pay by cash, because I don't carry cash and I prefer to have a record of where my money goes, and comfort there is a paper trail (well, an electronic one, but you get what I mean). My spidey sense always starts tingling when someone asks for cash in hand - rather than ask questions, it's easier for me to just not pay cash.

(Mind you, I'm an accountant, so I'm bound by higher standards when it comes to low scale tax evasion like sole traders under-declaring - I'm categorically not allowed to suspect it happening and do nothing. Much kinder that I just agree to pay someone via bank transfer than I have to assess whether I think they are evading tax and whether I need to therefore anonymously turn them into HMRC!)

I would prefer to keep paying by bank transfer because of the traceable aspect - I will have proof that I've paid her. As one poster said handing over cash is not traceable. We also don't have a cash machine near us so it would involve me going out of my way.

I used to own my own business a while ago and I can't think of anything worse than trying to allow for cash payments on top of day to day bookkeeping which was all digital, whilst working hard on all other aspects of the business. I know different people have different styles of working though!

I only take bank transfers in advance of the service being provided.
Otherwise its very easy for people to forget and you end up left short and losing track of who has paid etc.

Maybe offer her that?

Really though its up to her how she takes payment and either you pay the way she wants it paying or, you find a new cleaner/ironing lady/etc.

I only take BACS 3 days in advance, Paypal ditto, or cash on the day - no cheques, no electronic payment on the day etc.

Don't like it - find someone else.

What I THINK you are really getting at is you think she may not be declaring what she is earning from you - and that might be true..

But as she is self employed, that is her business, not yours.

There's next to no risk to the person paying in cash, it's the responsibility of the ironing person to declare her earnings.

What a palaver over such a minor issue, move to someone else if you don't want to pay cash.

OP, everyone I know pays cash to their cleaner.

Nobody from HMRC is going to come knocking on your door about this.

I don’t really get the proof of payment aspect. If she’s on the take and trying to pretend you haven’t paid her to get more money you giving her a receipt to prove it isn’t going to change the situation is it?

I never pay for services in cash. and I always require an invoice.
I need the paper trail.

I know that declaration of tax is the matter of the person proving the service, but cash is not fun when you are audited.

We do private tutoring and only take cash.

Cheques were a nightmare as some bounced and it just caused hassle getting to the bank on a Saturday (also have ft day jobs). Don’t really want bank transfers mixed in with the personal current account either and it’s not really enough income to set up a business account.

It’s all recorded and goes on the annual tax return to hmrc, the tax is then taken via the adjusted tax code from the ft employer payslip.

Can’t see a problem with this? Hmrc were happy because we had an additional self employed registration.

cash in the house and in your pocket is not prepping ,it is common bloody sense.

the too cool for school no cash brigade do tend to blubber when their phone dies or their bank has problems, both of which happen a lot with today's crap tech.

Why would you payments to your ironing service be audited redsummershoes?

It’s one thing to keep cash in the house for an emergency, but the OP has a clear preference to continue her current payment arrangement with her cleaner.

The cleaner is changing the arrangement at an inconvenience to the OP. Just as the cleaner might have various reasons to prefer being paid in cash, the OP can have similar reasons to prefer online payments- it doesn’t mean she’s “too cool for school”

Jeez just pay her cash, it's hardly a surprise bill. Stop making it such hard work.

I pay my cleaner cash, and any work done in the house I try to negotiate tax so I can avoid vat.

Shoot me.