Paying a tradesman in cash (no VAT)

[ThatBeachLyfe]

Our floor guy has suggested this as a way of saving some cash. We've used him before so trust him but DH nervous about potential tax evasion. Everything I've read online seems to suggest the onus is on the tradesman to declare the job, not on us but advice welcome.

Thanks for everyone's comments, always interesting to read!

My builders and electricians are not VAT registered, I pay directly for materials to the supplier and I pay them for labour/services so their turnover as a service provider is below the threshold. This is quite common for domestic trades work IME.
My plumbers are VAT registered and I pay them for both materials and services.
I have a tree surgeon who works privately for me (non VATable) but if I employed him through the company which uses his services I would pay VAT.
Everything is invoiced whether I pay in cash or otherwise.

Cash in itself is not suspicious but I’d ask why its cheaper.

One other thing to note if he does this jon "off the books" so to speak of there is later an issue where you need to take him to court you will not be able to win on the basis that the deal is classed as an illegal contract. Legitimate traders can sometimes ask for cash payment which isn't an issue itself if it is put through the books. For a small job this may not be an issue for you but if am expensive one this may be an issue if he does a poor job or if there is an issue with the actual flooring itself.

It staggers me that being asked to pay cash by trades is the norm now. It is an issue because tax rates just keep increasing….and is a recognised issue that in reality there is a tax ceiling over which govt won’t extract more. As a PAYE employee, I make use of salary sacrifice and pay additional to my pension to keep under thresholds. Staff that work for me reduce their hours etc. the whole country is screwed by such exorbitant tax rates

If he specifically said that if you pay in cash it will save the vat, then of course he will not be declaring this income and therefore won't pay tax on it either. He can't not add vat then bank the money because he would have to pay the vat content of it and lose even more. so it is pretty clear that he won't be declaring the income in any way.

There wouldn't be any comeback on you, but also, you won't get an invoice, or any evidence of payment, should the work not be up to standard.

A lot of trades work cash in hand to avoid paying child maintenance. They are dodging vat and tax and I would not help them to do that.

A trades can of course ask to be paid in cash and if they provide an invoice then there is nothing wrong with that.

HMRC are going to be targeting small businesses in their next wave of compliance checks, and will investigate anything that looks odd percentage wise.

As long as they provide an invoice and a receipt for the cash it wouldn't be a problem for me. It's then it's up to them if they don't declare it.

It's not your concern whether or not he pays his taxes. It's nothing to do with you.
If he's going to guarantee the work then I wouldn't care.

Why not if you can save a bit of money But you might not have as many rights if you are not satisfied with the work

I'm fine with paying a small tradesperson in cash but I'm not fine with expecting or receiving a discount for the cash payment. Any kind of discount for cash feels like a 'quid pro quo' for turning a blind eye to non-payment of income tax.

It is unfair on the tradesperson -- if some traders are operating on these terms, that creates competitive pressure for others to do the same, even if they want to be law-abiding. It is also disrespectful to tradespeople to take advantage of this sort of arrangement. It feels like it is denying them the dignity of being contributors to society (via taxes) on the same terms as other workers.

If I pay in cash at the full and fair price it is their business whether they pay their taxes or not, and I wouldn't dream of questioning them. If I pay at a discount, then any tax evasion is on me - not legally but morally.

It’s because HMRC don’t check anymore, so more and more people do it safe in the knowledge the chances of being caught are slim. A few decades ago tax inspectors used to go out checking the paperwork of self employed and small businesses - people expected a visit every few years. All that’s stopped now with HMRC concentrating their efforts on specific task forces.