Is it morally wrong to pay cash in hand?

[Liketochat1]

Should paying tradesmen cash in hand be seen as tax avoidance? According to the Tories it should. What do you think? www.bbc.co.uk/news/magazine-18968679 Hope the link works!

What is really shocking to me is that the media - and other MPs - are trying to play it down, as if a little illegal tax evasion is somehow just fine.

The BBC report at 10:40pm Tuesdayday was appalling: tradesmen interviewed saying punters asking for cash were a menace to the honest ones and the system is rife with dishonest cash traders. The rest of the report basically looked for justifications why it was ok anyway.

Re Mrs Gauke's job, LexisNexis is a comprehensive tax information service. It almost looks as though Mrs Gauke has taken the most uncontroversial job she can in the field!
lexislegalintelligence.co.uk/intelligence/tax
lexisweb.co.uk/users/rachel-gauke

Anyway, there's an easy - and totally legal - way to avoid paying VAT on tradesman's bills. Use someone who trades beneath the VAT limit, which many one-man-bands do.

@want2b I thought you were an accountant? Or studying to be one? If people conduct all their business in cash then the customer can't know, really. It may be to facilitate under declaring but it may equally be to avoid bank charges wherever possible.The issue arises where hefty discounts are offered for cash when the tradesperson would be prepared to take a cheque (or internet banking or whatever) without the discount, or where a customer specifically asks if there is a discount for cash. That is overstepping the bounds and moving into collusion. Most people who ask for a discount for cash know what they are doing.

Nothing wrong at all with cash - up to the person receiving it whether they declare it or not - they are the evader if they don't.

I know various companies who pay their employees a certain amount officially (taxed) and the rest cash in hand and is not declared. Of course that is morally wrong imo.

The above situation is entirely different from paying cash to a self employed person for a job they have undertaken.

@amothersplace No, if you ask what the price is 'for cash' you are colluding in VAT evasion at the least, and possibly in income tax evasion too.

@perception no it isn't, not necessarily. It might be - but it might not be. It depends on context. Sometimes the customer can't know the context so there is no moral dilemma. Sometimes the customer knows the context full well. And there is.

Tax man takes enough off us the odd job slipped through helps all out. Really doubt the occasional cash only job has affected the country.

@imnotmymum you haven't read cinnabar's posts then? Or don't you understand them?

I'm shocked at the levels of dishonesty being expressed in this thread.

I'm with Noddyholder - it is the govt's job to catch tax evaders.

"Nothing wrong at all with cash - up to the person receiving it whether they declare it or not - they are the evader if they don't".

Exactly!

I'm all for any payment method that allows anyone, but particularly a small business, to operate without paying the extortionate fees levied at them by the banks.

I wouldn't be arrogant enough to assume that payment in cash = payee avoids paying tax.

Some of our best local businesses are generations old, accept cash only, and are very reputable.

I imagine their tax contributions are proportionately higher than those of Tory boys with flash, expensive accountants.

I'd like to be with Metabilis3: "I'm shocked at the levels of dishonesty being expressed in this thread."

Only I'm not shocked.

I am a bit surprised, though, given that public attitudes to tax avoidance have changed so much in the last few years, that attitudes to tax evasion (which is actually a criminal offence) haven't followed suit.

Maybe it's the old thing about

• I pay in cash
• You do a job on the side, it's fine [though a crime]
• He is an evil corporate scumbag

I have always hated it when I'm asked to for work pay in cash. I always become suspicious of the intention, and that makes me worry about the work. It makes me feel as though the worker isn't trustworthy, and I'm actually far less likely to employ them.

sitting do you have much luck finding work people with portable card machines?

Internet banking - they give me their bank details, I just send the money across. I pay the cleaner, gardener, window cleaner this way. And the plumber a couple of months ago.

internet banking wouldn't work in my DSs job, he works from a premises and payment has to happen at the time the service is provided.
He would like if they had a card terminal, he doesn't particularly like handling cash, but its not a priority for his boss at the moment

Meta I have had tradesmen ask that I do a bank to bank transfer instead of cash in hand. I see this as good sign if the bank account I am paying money into is a business account. A couple of times it hasn't been and I have asked them to not perform work.

I don't know if most people asking for a cash discount expect taxes to be avoided. I know I certainly don't. I do expect there to be a discount for cash in hand because trade terms are normally 2-3% for payment in the first 10 days. If I pay cash then no credit is required and I would expect a discount of no more than 5%. If someone gave me a 20% discount for paying in cash I wouldn't use them as it would show that they don't have integrity. Dodgy business practices normally equate to dodgy work.

I am also more than happy to let inland revenue do their job and they could easily use the receipts I have to check if tradesmen are reporting the income.

I also ALWAYS pay cash in dodgy looking places and petrol stations (known for card fraud)

paying cash is a really good way to protect yourself from fraud

I disagree Silky. With cash once it's gone, it's gone. If you pay with cheque you can cancel it at a later date (if it hasn't been lodged). If you use a visa or MasterCard then you can claim the money back If it's dodgy. Even with internet baking there's a paper trail. I wouldn't use cash for large amounts especially because Id probably drop it somewhere

you can't pay by cheque or internet banking at a lot of businesses (eg petrol stations)

so its either pay £20 that's "gone", or go through the hassle of getting £500 back from your bank!

Not as morally wrong as those who have the power to stop it telling the little people its up to them

Not as morally wrong as privatising profits and socialising losses

Not as morally wrong as stratospheric bonuses for those who are doing their job, or as huge salaries or as MDs employing remuneration consultants to hike their own wages up, or as the UK not adopting the EU financial transactions tax (if I've got that story right) or the way some financial products were packaged and sold or as insider trading or as so many of the things governments do, oh and how about that MP paying nanny with her expenses cos the nanny sometimes answered the phone or all the other expense stuff

Southwest - what "power to stop it" do you think Government has? I guess they could increase the size of HMRC by 20 times so that they can investigate thousands more people - but is that something the "little people" want?

Good point Cognito.

I think on rof the things that encourages people to want to pay tradesmen cash in hand and get a discount is that quite often, people are paying for essential services, which they can't easily afford.

I think there is a moral difference in paying cash for a job like having your leaking sink plumbing fixed when it's something that you have to have done whether or not you have spare money to pay for it, and paying in cash when you are having your entire house redecorated when you had it done last year.

If people weren't struggling with money, and feeling like they were getting so little value for their money in the taxes they pay, then they might be less likely to try and look for ways that they can avoid paying quite so much for essential services.

Surely paying for goods in cash when you know or suspect that the intention is to avoid tax is essentially the same as receiving stolen goods. You can't just say it's the tradesman's business whether he declares the money or not, because you are also benefitting from the illegal behaviour (by paying less for the job).

Sorry Duke I wondered off to do other things thnks for the " "

Really the power to stop it is just that through tax and legislation up to them whether they want to do it or not!

Southwest - but tax evasion's already illegal. What more legislation do you want?
(am guessing it wouldn't be very popular with some posters though!)

It shouldnt be illegal behaviour though. We shouldn't have to pay VAT on things that we have to pay for in order not to live as if we were in a third world country.