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 can get a Post Office account even if you are an undischarged bankrupt. My friend had to.

Tax avoidance is NOT morally right. I reported my OWN employer for not paying tax & NI on my behalf when he was paying cash.

What about the barter system? Is that "morally wrong"?

CM, you are confusing avoidance and evasion. Not paying tax and NI is evastion, a criminal offence I would never condone that.

Organisating your affairs to pay as little tax as lawfully possible such as claiming your single person allowance, putting savings in husband and wife name etc etc is avoidance and it is legally and morally right.

Those things aren't avoidance, Xenia.

I avoid paying tax by living in the Middle east. However, I have tried so hard to keep up my NI contributions, first I was told I didn't need to (which i questioned by going through their complaints route) and by the time they admitted that the twat in their call centre had lied, they said it was too late to contribute.
Now the only way to sort it out is to sue them, what a bloody waste of their money.

Theodorakis - have you tried the adjudicator?

Theodorakis. Come one. Everyone knows about NI contributions and has access to the internet to check these matters.

I spoke to a person, I can give you their name if you want, they emphatically told me I didn't need to pay it. The call was recorded. It is not my problem if they employ idiots. I am taking action because it is quicker.

I am not a pot calling the kettle black I refuse to pay tax to a country that is engaged in an illegal war. I refuse to contribute in any way to a war that is not legal.

that doesn't mean to say i shouldn't be allowed to keep up my NI contributions.

I am not a hypocrite, I didn't like it so I did something legal about it.

Err, okay then

PS You don't pay tax in a country if you don't have any income (but I do like that you think you "refuse" to pay tax).

I earn over 100k tax free a year. I choose not to share that with the UK government thanks.

I pay a tiny amount of income tax on my UK property rentals but not enough to make a difference.

Thanks for the patronising by the way, you must be a very clever person to be able to look down on other people

Well I must be cleverer than you as I knew all about NI contributions being an expat and having done a stint in Dubai too

you make me shudder too clever clogs

Adjudicator's scope.

It was only in my mind because I saw the annual report had been published.

DH, those things are exactly what avoidance is. This is the problem. As soon as you start saying what lawful avoidance which is legal is morally wrong you are get into the sticky mess Cameron is in over this issue.

So those who think they know what is evasion, what is morally repugnant but perfectly legal avoidance and morally find avoidance tell me which category you put these in:

Jane sells a dress a week on Ebay and is employed full time. She does not pay tax on her Ebay earnings.

Jim has always earned all the money in the family. He has £5000 in savings. He puts it all in his wife's name. She's never done a days' work in her life and isn't even much good at the housework. he dose this so that there is no tax on the building society interest.

Mary and Peter decide each will work to earn £9k a year and pay no tax rather than only Peter work and waste Mary's allowance.

Kerry puts the maximum into her ISA and pension as possible each year to save tax.

Jerry is getting on a bit. He does not want his chidlren to pay 40% inheritance tax on his estate worth £600k when he dies so he gives it to them when he turns 60. He dies when he is 72 and on such tax is payable as he lived 7 years after the gift.

Jenny Livingstone sells cushions. She buys them for £10 each and sells them for £11. She pays tax on £1. Jenny also employs her husband in the business and pays him £20000 a year. This ensures neither of them pay 40% tax.

Xenia, you've been reading too much Richard Murphy! Avoidance is not synonymous with the use of tax incentives. Even HMRC say that's ridiculous (2/3 of the way down here)
"This means that legitimate use of specific exemptions and reliefs such as capital allowances or double taxation relief, which reduce the amount of tax payable, are badged [by Murphy] as avoidance. "

HMRC don't want to stop people using ISAs, they want to stop them using the sort of elaborate avoidance schemes helpfully described by CinnabarRed here.

I don't nkow Richrad Murphy. Avoidance is legal even if HMRC hates that. That's the bottom line. They can plug any mistake they made in their laws if they like. They can change the law but lawful avoidance is both legal and also morally sound.

No one wants to give their views on any of my examples above? Certainly puttnig savings in the housewife's name which she never earned is arguably illegal evasion rather than avoidance in my view.

Xenia I don't see what is wrong with the husband putting savings into his wife's name when she is not employed? I thought couples in this situation normally did that? It's just common sense and perfectly legal.

And who's to say they don't regard the savings as 'theirs' rather than his - or he could have given them to her - "with all my earthly goods I thee endow" and all that as it says in the marriage service.

Xenia - there's not much point my saying "oh I think a, b and c and morally ok but d,e, and f are beyond the pale" - or whatever - because everyone's moral standards derive from their own life and beliefs, so while my morals are right for me, yours are right for you and mine aren't better than yours - and vice versa. So, while I don't share your view that it is morally not only justified but positively right to engage in elaborate tax avoidance schemes, you're certainly not the only person who holds it.

What has been so interesting (to me) about this thread is the people who consider certain illegal acts (tax evasion) to be more morally right than legal ones (tax avoidance).

My DDad has a tradesman friend who has admitted to my father that he sometimes asks his regular customers to pay his utility bills or make cheques payable to his wife for work he has done for them

Is that tax avoidance or tax evasion?

To me it seems like tax evasion and I am sure he is not alone in employing these inventive ways of reducing his tax liability.

My DH is an HRT PAYE taxpayer and pays eye-watering amounts of NI and Income Tax which he just cannot avoid. It should be the same for everyone who earns money in whatever way they do it

DH, indeed, that's my piont and one this silly Government is messing up entirely.
I would argue all lawful avoidance is morally right as the state spends money badly. As soon as Cameron starts saying XYA practice is legal but morally bad but ABC one is legal but morally okay (eg avoiding inheritance tax by giving your money away more than 7 years before you die)

Winnie - that is a criminal offence and the friend could go to jail.

This is what we need from the Government - a clear list of examples of what breaks the law and what does not, not opining on moral issues and saying even this is lawful we don't like yo to do it. We want no more muddling of avoidance and evasion by state sources. If there is a lawful loophole, fill it.

Eg if they are fed up with people avoiding IHT lawfully then say any sum given to your children whenever is taxed at 40% (we used to have a capital transfer tax on gifts in the old days). Even better in my view is abolisyh stamp duty, IHT, CGT and have a much small state and flat tax and thenyou avoid anyone's need to spend wasted time on lawful avoidance but no party in the UK is in favour of that. They are both deadly dull middle ground.

Winnie - you could report that if you wanted to but again that's a moral issue. There is no legal requirement to notify evasion which comes to your attention.

Winnie - isn't that just the same as the cash-in-hand thing?
As far as I know it's not illegal to pay the tradesman's phone bill. But if the tradesman is not reporting that as income then the tradesman is committing an offence. And the customers who pay like that are in the same position as the ones paying cash-in-hand knowing (or at least pretty sure) that the money won't be declared.

It's not clearcut though is it - that is why HMRC sometimes wins and sometimes loses cases, and then sometimes they lose on appeal, e.g.

www.taxinsider.co.uk/231-Arctic_Systems_the_Good_News_and_the_Bad_News.html.

( In summary Husband and Wife had equal shares in business and received equal dividends from their company and were taxed accordingly. HMRC argued that husband's contribution to the business was greater than his wife's and he and should be taxed accordingly, but were overruled).

More than that, we may look at small traders and accuse them of being immoral because they they look for ways to avoid paying tax. However, employees of large organisations benefit from the tax efficiency of their finance departments. Salaries are paid out of the money left over after tax.