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!

You don't have to pay VAT, though, Outraged.

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.

Why would anyone worry whether it's right or wrong when all we have seen over the past few years are banks and their employees behaving completely dishonestly and getting away with it.

The moral web holding the country is disintegrating because people such as Fred the Shred hasn't been punished so why would us - the little people care.

I know that's not the right attitude however I think more and more of us are feeling this way. Until we see some people in high places punished we're not going to give a damn are we.

It becomes a problem for the tradesmen when they want to apply for a loan and can't get one because they can't verify their true income.

They then get extremely angry with the Banks for not allowing them to take out a loan.

I remember one winter ordering a load of wood fom a tradesman. Back then I always payed for everything by cheque. It was easier for me for taxation purposes.

He said he would only take cash. I said fine I would get someone who would take a cheque and he had to take his wood away.

On the other hand I paid a tree lopper by cash because it was the easiest way out as I no longer have a cheque account.

"Why would anyone worry whether it's right or wrong when all we have seen over the past few years are banks and their employees behaving completely dishonestly and getting away with it."

Because two wrongs don't make a right. In any situation we should always have the personal integrity to do the right thing, regardless of others' bad behaviour. The cash-in-hand scam relies upon dishonest traders and colluding customers. Most of us aren't dishonest.

I've yet to meet a builder, plumber, window cleaner or cleaner who carries around a credit card thingie.

How much money do we send to Brussels? How much money do we spend on wars or 'not wars' where we basically persecute those pesky brown people? How much money do we spend on MP's expenses?

Do I give a stuff if the tradesman doesn't declare the cash I give him? No, because they are only ever going to raise taxes. Anyone who thinks that taxes for everyone will go down if everyone declares all the money they make is seriously deluded.

So do you not declare your earnings LesleyPumpshaft because you object to money going to Brussels? Will you be giving your payroll team a call and suggest you're paid cash-in-hand from now on and not to bother putting it through the books because 'they are only ever going to raise taxes'? PAYE employees have no choice in the matter of whether they pay tax or not. Off it goes each month, like it or not. Those who are outside the PAYE system because they are self-employed or derive their income from investments are expected to play the game and tip up. I don't see why we should only 'give a stuff' when they are billionaires but regard them as loveable rogues if they work up a ladder.

The really sad and scary thing is that this is precisely the attitude they have in Greece. :(

Yes, governments declare wars we don't approve of (I'd still fuming if I was American for my government joining in the European part of the 2WW), sign up to policies we can't see the benefit to (Gosh, joining Europe was SUCH a big mistake with its crazy modern notions of gender equality... I'd much rather get fired for being pregnant than being allowed to keep my job) but we are part of a democracy... it may be flawed, because you may have to put up with a decade of government you didn't vote for. Colluding to evade paying tax because you don't like what those taxes are spent on is such a hypocritical argument - if you don't like democracy, try living in Syria...

As several people have pointed out, this is not an argument about paying cash for small jobs - its about agreeing to a 15-20% discount for paying cash, knowing that they will not put it through their books. As want2B points out, you can get discount for cash on the basis that there is no credit risk, and that is an entirely separate matter.

You can always ask your tradesmen if they're VAT registered - remember that if they are, they will not be paying VAT on the goods they provide (so that bath that the plumber installs will be 20% cheaper) so you are already, in theory, getting some discount. If they're not paying VAT on the goods then it is immoral to not collect the VAT in return. Part of being registered for VAT is a "contract" with HMRC - you don't pay VAT in recognition of the fact that you're performing a valuable service in return by collecting it from consumers on their behalf. I'm sure some of Mr Gauke's remarks (which were in response to a direct question on the issue) were intended for the plumbers, builders etc who offer "cash in hand" discounts of 20% (as opposed to "cash discounts" of 5%).

The flip side to the argument is that the grey economy does play a vitally important role in the country - by paying your cleaner cash that she doesn't declare, she has a bit more money each month. If you forced her (or him - sorry, didn't mean to be sexist!) to declare her earnings, I'm sure you'd get to a tipping point where she either decided it wasn't worth taking on that job, or putting her prices up to the point where you decided you couldn't afford her, thereby stifling economic activity.

Oh yes, and whoever said that taxes never go down, does that mean you're still paying income tax at 90%??

It's morally wrong for ministers to spend billions of taxpayers money on vanity projects that inflate their egos. Some things are more morally wrong than others, and the Olympics beat cash-in-hand by some distance.

Really? The Olympics are more morally reprehensible than commiting fraud? Wow.

Most tradesmen I've dealt with have asked for at least some of their payment in cash with no offer at all of a discount. I hate going to the cashpoint to withdraw £200 and would much rather pay by cheque but they never offer it as an option. They give you the price and then when you go to pay ask for at least some of it in cash. That's not MY fault is it?

isthere the problem for many small businesses is that they pay swingeing bank charges whether paying in money or withdrawing it. The amount in cash is probably used to buy the shopping or put fuel in the tank. Your cheque will take a few days to clear but in the mean time the van still needs fuel and the kids still need to be fed.

Many tradesmen are currently living hand to mouth as there is so little work out there.

Agreed, GnomeDePlume, DH is sometimes paid in cash and uses it to pay his wages/postage rather than pay it into the business account and the bank take its swingeing cash handling charge. It still goes through the books. I am happy to pay a tradesman in cash if it is the amount I agreed with them and it is the amount on the invoice they give me.

I think I must have led a sheltered life, I've never been approached with the 'I can do it for less for cash'.

I don't see how cocking up the olympics makes other wrongs okay?

" I've never been approached with the 'I can do it for less for cash'"

But has your DH been asked 'could you knock off the VAT for cash?'.... takes two to tango.

Cogito, DH is not VAT-registered, turnover is too small. He's been asked for a discount only twice in four years, both times by people who he reckoned would ask for a discount for cash in Tesco.

My extremely left wing Socialist parents pay their cleaner and gardener cash in hand so they don't have to sign off their sickness benefit, housing benefit and free council tax. I think that is wrong on so many levels, not so much because they are on benefits but because my parents would love to see the rich tax avoiders hung drawn and quartered and flatly refuse to see they are just as bad. We are a perpetual embarrassment to them, living in Qatar!

i agree about tradespeople though. I refuse to fund an illegal war and if someone else wants to buy a tank of petrol or pay a bill without faffing about with VAT I don't really care.

I don't see it as morally wrong at all. I think we are more entitled to our earnings than the government are. To compare us to Greece is ridiculous.

So do you not pay tax Denise34?.... Were we all wrong to get annoyed about Jimmy Carr? Should he be held up as a shining example rather than a dire warning?

It's not ridiculous to compare the attitudes expressed in this thread to the attitudes which have caused so many problems in Greece. I do a lot of work in Greece and with Greek businesses. I know what I'm talking about. Anyone who thinks the comparison 'ridiculous' clearly doesn't.

It's not the method of payment that is the problem, it is non-declaration for tax and/or VAT purposes. The onus is on the recipient of the money to notify the appropriate authorities. If he/she doesn't give receipts, doesn't keep written records and thus doesn't declare what monies come in, then he/she is in the wrong. Customers or clients who ask for discounts for cash are exacerbating the problem. In Greece, non-payment of tax is a factor in the economic situation.

In our business (heavy engineering) we do not have the sort of work that people would pay for in cash, yet we are often asked for cash by a sub-contractor as payment on their bill. We do give them cash and ask for a receipt , if they decline a receipt the money still goes through our records as
a cash payment to xxx and a note of their name, address, telephone number
and a note saying cheque no 123456 in the sum of £300 was drawn as cash but paid to.
My bank are also really kind and usually give me a goodly amount of Scottish £20 and £50 notes which we conceal in the middle of the English money. !!!
We pay our taxes, our employees pay their tax and those who do not are theiving frauds.

The problem with Greece was caused by the government spending far more than they had coming in.

Jimmy Carr was a hypocrite, for slagging off tax avoiders when he was one himself. Most people in the media do it.

However, if cash-in-hand, book-fiddling, illegal tax evasion isn't morally wrong according to you Denise34, Carr's little bit of tax avoidance must make him morally right... even if a little hypocritical.