Paying a builder in cash

[stirling]

Hi
Quick question - if paying cash, do you physically count out the cash in front of the workman? I have to pay £1100 today and I dont want to stand there looking like a plonker counting out every note, but nor do I want him to take the wad and miscount it.

What do you do if you have to pay cash?
Thanks

I honestly despair.
Yes there will be people who evade tax, in all professions, but simply paying in cash or asking to be paid in cash does not mean they are. Plenty offer discounts to avoid having to chase for the money when people say they'll pay by bank transfer. They don't exactly have their own credit control departments!
Cash is a valid form of payment, I'm sure people don't bat an eyelash at paying in the corner shop in cash, or the ice cream man, or drinks in a pub, or going to get their eyebrows waxed.
Businesses (most, not all) pay bank fees which can be linked to how many deposits they've made or a flat fee per transaction. Sometimes they just want cash on hand to pay smaller suppliers rather than pay bank fees for every transaction, those small suppliers in turn are also not necessarily evading tax.
As an accountant I see this all the time and genuinely think tarring every tradesperson who gets paid in cash with the same brush is disgusting which is what plenty of you seem to be doing. Nobody seems to accuse hairdressers, tattooists, nail techs etc but they're predominantly cash businesses too, yet we all hear about how dodgy the builder is because he wants cash. They're usually the same people more than happy to go to Starbucks or order from Amazon. As long as you get a receipt from the tradesman then you have nothing to worry about. Let HMRC, accountants etc and other authorities worry about whether their clients are evading tax, which as a proportion is a hell of a lot lower than the big boys like Amazon (or celebs!) using legal tax avoidance.

Yes, some people evade tax. No, paying someone in cash doesn't mean they're evading their tax responsibilities.

Whilst I agree for the reasons to accept cash, a huge "discount" of 20% or more is totally out of proportion, so is a huge red flag towards tax evasion. Early payment discounts etc are usually far lower, usually in the 1-5% range.

@user1497207191

Whilst I agree for the reasons to accept cash, a huge "discount" of 20% or more is totally out of proportion, so is a huge red flag towards tax evasion. Early payment discounts etc are usually far lower, usually in the 1-5% range.

I agree with this. A discount of around 20% for cash is a bit suspicious.

My partner has a business that is traditionally very cash heavy but he now is probably 60% card and 40% cash. His problem is a balancing act as he pays fees for the card machines but he also has to pay the bank for change.
He is most definitely not evading tax, his prices are the same irrespective of payment method although his business is small value/high volumes. It irritates me on here that people assume cash = evading.

There are so many good points mentioned on this thread that have never, ever entered my naive mind... Eg him claiming one of the notes is fake, or paper trail concept...
Thank you all

Spending a week doing someone's painting and decorating and then them saying "Ooh yes the money is on the way" and then you spend 2 weeks chasing them for it when they don't answer their phone and don't text back is why some people just want cash.

@UserEleventyNine

Seperate notes in their denominations and label them seperately with amounts. Then ask for an invoice

A receipt, not an invoice. An invoice tells you how much you owe, a receipt says it's paid.

Anyone that doesn’t want to be totally screwed over by a handwritten receipt should ask for a settled invoice. It’s so important many merchant services providers now force businesses to issue them. I know I work for one.

@stirling

He's a registered electrician and will be signing off with certificates. He didn't ask for cash, I chose to because my lodger had paid me twice in cash and I want to get rid.

If you are unhappy with the work and want to take him to small claims down the line it will be a lot harder. If you pay electronically at least there’s an audit trail. You could take the lodger’s cash to the bank and have it put into your account?

Cash isn't traceable, never pay cash.

Cash is a valid form of payment, I'm sure people don't bat an eyelash at paying in the corner shop in cash, or the ice cream man, or drinks in a pub, or going to get their eyebrows waxed.

No one is saying that cash isn't valid, but its madness to equate paying for an ice cream in cash with paying thousands of pounds to a builder in cash.

I think if people are transacting large amounts of money as cited by the OP then its madness to get involved in cash negotiations. As others have said, no audit trail leaves you in a precarious position.

I can't actually remember the last time I used cash. I pay for everything by card or bank transfer. That includes my window cleaner, hairdresser and builder. They are professionals running a business, and as such have business bank accounts. I used occasionally to pay cash in our village shop but since Covid the owner has asked people to pay contactlessly wherever possible.

Its not "thousands" though, its just over one thousand. Plenty of people may more in cash for a car deposit at a dealership.

I'm not sure what precarious position you think they're going to be left in. You hand over cash and get a receipt or an invoice marked as "paid" at the same time. I'm talking an actual receipt with a company logo on, or from a proper receipt book, not a scrap of paper with some squiggles on it. What possible scenario can you envisage where this wouldn't be OK? It would be acceptable to both HMRC and to a court.

And it isn't about cash being traceable, yours and everyone else's first concern was that they can't possibly pay in cash because the builder must be participating in tax evasion.

I always pay anybody who does work for me in cash, once the work is done and I’m happy with it then the cash is handed over, what they do with it after that is not my concern. I do normally count it out with them to avoid any doubt on either side.

The window company I use like to be paid by bank transfer , but I’ve also given them cash too.
I’ve never had anyone (tradesman) have any problems with cash.

@Chumleymouse

I always pay anybody who does work for me in cash, once the work is done and I’m happy with it then the cash is handed over, what they do with it after that is not my concern. I do normally count it out with them to avoid any doubt on either side.

The window company I use like to be paid by bank transfer , but I’ve also given them cash too.
I’ve never had anyone (tradesman) have any problems with cash.

But that is money that should be going into taxation , to pay for public services. Including things like furlough, which many tradesmen have depended upon this last year.

Your just assuming they are not paying tax on it ? I don’t know what they do with it , so I’m pretty certain neither do you.

We usually pay by bank transfer for that sort of thing but the gardener prefers cash and has done lots of projects which have seen him here week in week out like landscaping and patios. When it's a lot we just pay him like we normally do - in an envelope which he takes away. In 8 years he's never come back and said it was short.

@Chumleymouse

Your just assuming they are not paying tax on it ? I don’t know what they do with it , so I’m pretty certain neither do you.

No legitimate tax-paying tradesman will give you a whopping 20% discount just for paying in cash. Anyone doing that is 99% indulging in tax evasion.

They have to get rid of the cash too as they can't bank it if it isn't going through their books, so they could well be paying their labourer "cash in hand" without tax/nic so their labourer is also a tax evader.

Who said anything about getting a 20% cash discount ? Not me ? They give me a price and I except it . I prefer to pay people in cash as soon as the job is finished . I know people who have had to wait months to get paid for work they have done ( or worse not paid at all ) Or customers who don’t pay until they have added a few bits on “that you said you would do “.

If someone asked for a bank transfer that would be no problem but not many do , plus I only pay for labour I sort materials myself .

For those who don’t have business bank accounts, you may be interested to know that businesses are charged a % for depositing cash. Hence even law abiding/tax paying businesses may ask for cash and will often give a small discount (ie not the rate of VAT).

Additionally, smaller businesses or those just starting out may not have yet reached the turn over threshold to register for VAT so are not charging VAT.

Asking for a VAT receipt if they’re VAT registered and paying cash is common and totally acceptable.

If I was given a quote with a 20% due count for cash, then I’d query it but not simply jump to conclusions if tax avoidance for a small discount for cash.

Several years ago my dad bought a wreck to do up and died before he started it. I inherited the house and was advised to do the work by the probate valuer. I had the money, as part of my cash inheritance, but due to losing my job two years earlier I had such a bad credit file that I only had a basic bank account, no cheque book, and my bank didn’t provide internet banking to those sort of accounts.

I had to pay the builder in cash - all £25k of it in five tranches. I made sure I had invoices and receipts. Not everyone is on the make - for some people cash is their only option.

I tend to think that if you’ve got someone doing work in your house that you don’t trust, you’ve got bigger issues than them quibbling over a £20 here or there.

We paid our builders in case for their ease (and to save them banking charges). Didn’t get a discount. We paid in ‘drug dealer’ bundles where you fold a note over each ninth note, so they’re in groups of £100. I’d check. Then we’d know we were right and it was easy for them to see we were roughly right straight away.

Well I know for a fact the local drug dealer on my walk only accepts cash , and I’m pretty sure he’s on the make 😃💸💸💸

Pay cash, ask for a receipt before they leave, even if you offer him pen and paper.

The tax element is not your problem.

I sold a motorbike recently, and a scruffy bloke came from Wales to buy it. He gave me 3.5k in bundles of old 20’s , £500 in each . They were damp and they had the awful damp smell to them that you get with rotting wood . He had wrapped them in electrical insulation tape but the notes were that damp it came off easy, they smelt that bad I had to leave them in the garage 🤣. I never asked him if he had paid tax on it 😆

We often get people (usually the older generation) paying in cash. SOme call to the office with the cash.

I count it in front of them then I sign their invoice with Received with thanks and my initials.

OP @stirling take it from me and don’t do it - especially if the estimate/quote has VAT on it.

Currently going through a fucked up sitch where I’m being charged VAT after the fact despite agreeing to pay cash to avoid them paying VAT. It’s not worth it!!!