to consider reporting tax fraud

[itsnotfairisit]

A neighbour has boasted to us that he prefers cash and offers incentives for customers to pay cash for his goods and services (he juggles several businesses). Additionally he says he pays cash to casual workers. The cockiness astounds me, and I wonder what would happen if his activities were reported. He seems so open about it!
I know there are bigger problems out there but for some reason this really bugs me.
I should add, that decades ago someone reported my parents for tax fraud. A thorough investigation nearly broke them, but proved them innocent. It was a malicious report. If I reported the neighbour it wouldn't be malicious, simply reporting what he told me (and others).

Don’t go out of your way to cause trouble. It’s none of your business so leave it alone.

HMRC annually estimates that it loses more revenue from tax evasion by sole traders and small businesses than from big businesses and all individuals combined. In some years, small business and sole trader account for an estimated 80% of all lost revenue. This sort of thing really adds up.

I suspect HMRC wouldn't be interested anyway (or have the capacity to chase).

I'm interested though as to why you say it's not my business when I DO pay tax (and you probably do too). I make it my business to pay so why shouldn't he? We are approaching an autumn statement which may well see taxes rise for all of us (who pay). I think that's what's bothering me

I wouldn't report him for tax fraud. I feel much more angry about super-rich people and big business paying too little tax than I do about sole trader-type businesses.

I'd feel more concerned about the cash payments to casual workers, as that suggests he may not be complying with his more general employer responsibilities, which might make his employees vulnerable to exploitation.

I wouldn't report it, though (unless perhaps I had evidence of an employee suffering negative consequences from an illegal practice).

@ProfoundlyPeculiarAndWeirdi hadn’t considered that the cash payments might be worse. I guess I’d just viewed them as a side effect.

It's everyone's business! Tax pays for public services. Every single penny that is lost from our tax system into his greedy pocket is making the hospitals that care for you, the roads that transport you, the schools that educate you, the parks that entertain you, the emergency services that protect you worse. He is literally stealing from you. It is your business and everybody else's.

Considering most people wouldnt think twice for reporting benefit fraud, why wouldnt you report tax fraud? I would. Sick of all these crooks getting away with murder.

Because op lives next door to this individual?
I wouldn’t report him for that reason only.
I would fear the repercussions - which would be right on my doorstep!

Receiving cash for services and paying employees in cash are not tax fraud though. If he’s not declaring that income and the workers are employees (which they probably aren’t) and he isn’t deducting tax from their earnings then that would be tax fraud - but you have no idea whether or not that is happening, do you? Unless he has outright told you he’s committing tax evasion, which seems unlikely. I don’t think you can report someone for using or preferring cash - it’s a perfectly acceptable way to run a business. I agree with you he may well be doing it to evade paying tax, but from what you’ve said there’s no basis to report.

Why can't you be angry about rich people/big businesses AND small businesses. They are all doing the same thing. In fact, most of the big businesses and rich are finding legal loopholes, they are not breaking the law. Whereas small businesses not declaring business, using cash, not paying staff properly is a crime. So ripping off you as a tax payer AND breaking the law. We don't have to pick a side - big or small business - we can and should go after them all!

She clearly states in the op that hes told others. & its nothing to do with living next door to him?

@Falalfni guess this is what worried me most. I have no idea how anonymous the system is.

sure he could guess, but tbh I wouldn’t be worried about that. He can guess away. And if he threatened me I’d respond with a call to the police or a solicitors letter. But if he’s offering cash deals to as many people he claims he is, then it’s quite a wide net of people who could have reported

On MN if you drive at 41 in a 40 zone you should be jailed, but anyone who screws the system and fakes benefits claims or lies about their business incomes etc, should always be left alone and you should never get involved.

In the real world, however, normal tax payers get pissed off at those who won't contribute correctly. I'd 100% report him.

All you have is hearsay.

He may of course still be paying and declaring the tax, but I very much doubt it..

Indeed a tough call to report him, and it may be impossible for HMRC to prove, I probably wouldn't, unless he was a complete cock.

I fear that with tax levels now so high it's become normalised for some people to evade, especially as it's so easy to do. No defence but some business are viable if they pay all the tax that's due.

Do not do this OP. Only on here will you get people goading you on. It’s none of your business and meddling in matters not your concern rarely ends well.

You seriously have too much time on your hands. What a waste of police time that would be- would probably cost more than any tax he might or might not be evading

@Dbank chicken and egg though isn't it? Tax levels might be lower with less evasion.
But you are right - he is a complete c@ck. Former councillor who breaks the conditions of planning permissions with apparent impunity. And his employees (the ones he boasts of paying cash to) are thugs who threatened someone in the village. So I guess part of my motivation is to try to put this ghastly man back in his box. But it's also part of the reason I hesitate - could be dangerous.

@Onlyonmumsne you wouldn't contact the police if someone threatened you? That's exactly what the police are for!

Sorry, but what evidence do you have of tax evasion?

Preferring cash payments and paying workers cash in hand isn't tax evasion. It can be a symptom of it, but in itself it's a legitimate activity.

MN is a strange place, any thread about a trader asking to be paid in cash will be full of posters saying he must be a terrible tax evader yet here posters say mind your own business, it's not that bad

I used to work with someone who'd previously worked for HMRC and she said they got a lot of anonymous reports to investigate, I think you can do it online

You are planning on doing something to wind him up and cause a lot of personal stress to the bloke so depending on their character they may threaten you as a result. Just keep your nose out and any potential threats and phone calls to the police won’t even happen, just like he might not even be tax evading. Seriously how pathetic is this of you, unbelievable. Get a hobby.

With self employment it’s likely that he has formal income that is taxed im addition to the cash (informal). If he is paying tax as self -employed hmrc probably assumes he earns a certain amount of cash and charges him accordingly. It’s a bad as mail gars and car washes that insist on cash payment.

Generally the people who accept cash payments for work are also dodging tax and NI and are quite likely on benefits as well because, poor things, they earn nothing (legitimately), or they are working in the UK illegally, it's all part of the black economy. I would be tempted to report it, it costs us all money in taxes, it just seems to be acceptable and even something to brag about. HMRC do take these things seriously these days.

Re: HMRC not being able to prove it anyway - I used to do some work with tax investigations, and remember one case where an indivdual was suspected of tax evasion via cash payments. They basically insisted he explain how he paid for the Rolex watch on his wrist, his home, his car....If you can't prove it all adequately, they will make an assessmenet based on an estimate, and that never falls in your favour!

But yes, the normalisation of 'just ask your tradesperson for a cash discount' is rife.

As long has he has books that show the cash payments to his business, including VAT if required and his wage bill, and his workers have proper pay slips with tax and NI deducted, he has no need to fear being checked out by HMRC. But there is really only one reason for running a cash business these days, or for working cash in hand, which is why you are now often asked where the money came from if you open savings or investment accounts.