or just plain naive in thinking that people should pay tax?

[Sbeanmum]

So, it may be naivety on my part, but AIBU to be annoyed by another mum in my antenatal group who laughed at me for assuming that a legitimate business didn't make much money, and then boasted about dodging tax?

Story as follows: we had a random conversation today about how my DD's nursery doesn't make a huge profit. Other mum laughed and said 'of course they make lots of money, sbeanmum, they just don't declare it.' OK, if the nursery has a clever accountant, that's fine by me. What bugged me was that she followed it up with the statement 'I don't pay tax on tons of my earnings, and neither does my DH.' She thought this was hilarious! She is a beauty therapist so presumably does cash-in-hand work, and her DH is in the building trade and has boasted to my DH that his cash-in-hand work pays for all their luxury holidays.

AIBU to want them to pay tax on all their earnings, or am I being naive?

RealityBites - after 2 tax inquiries in 4 years which found nothing (I am scrupulous about paying tax) I'll keep your post on file so I can refer them to it next time.

"HMRC pretty much told me on the phone that they don't have the resources to chase self-employed individuals and they are more interested in companies.

Bit OT but my uncle used to work in a very senior position in what was then the Inland Revenue.One of the reasons he retired early was the corruption.They would get their teeth into a clear case of tax evasion and then the word would come from 'on high' to drop it because the individual concerned was a good Tory contributor (tories were in govt then ) it wasn't just once or twice this happened !}I don't doubt the same thing happens now in the same way with prominant labour party supporters)

I very much doubt a nursery would do much tax in hand because they have to keep records of who attended which session for OFSTED .Nurseries don't make a lot of money- I had to do a feasability study for my employer once. To do everything completely by the book the price was higher than profit-making nurseries were charging so they must have to cut corners to make any sort of profit.
self employed minicab drivers, mobile hairdressers etc very very difficult to spot what they are making because you don't know what hours they are doing and very much cash in hand.

An ex friend/lodger was a mobile hairdresser and only declared half her income. She came unstuck when she divorced and needed a mortgage on her own though and she didnt appear to have enough income

HMRC have the powers to do 'test purchases' and surveillance.

I know someone who was investigated as he was a driving instructor and their income had gone down. So despite that it was all for logical explainable reasons, moved locations, new car, now living with partner etc they still went through it all with a fine toothcomb.

Not fun but there are so many tax evaders.........

Madamearcati - there's no suggestion that the nursery is not above board re: tax, ironically it's the tax dodger who was casting aspertions. 24 hours later and I'm still mad with her...... keeping my phone out of reach so I don't call HMRC right now

My parents were investigated and, despite being scrupulous about record keeping, the HMRC would not believe that they could live on as little as they declared and assumed they must have more undeclared income - so they taxed them on what they believed them to be earning rather than what they actually were earning . They subsequently got an accountant - who advised them to spend more money because no-one would believe they could live as frugally as they do (believe me, they can). Sorry if it's a bit off-post, but it was very frustrating.