Paying tradesmen cash in hand morally wrong, says minister

[Jon the Hat]

If you knowingly pay someone in cash without an invoice for a discount then you are morally party to them not paying VAT, which is tax fraud. The tradesman will be the one prosecuted though, becuase they make the declaration.

Tips earned for waiting tables, or hairdressing or whatever else are earned income just like your paypacket and hence taxable. Not declaring them is tax fraud.

It really is that simple. If you owe tax and you don't pay it then you are a criminal.

[Daggers]

It really is that simple. If you owe tax and you don't pay it then you are a criminal.

Unless you are rich enough to pay people to "mitigate" your obligations, eh?

[Jon the Hat]

Unless you are rich enough to pay people to "mitigate" your obligations, eh?

Plenty of criminals at the top too, but your implication that the rich not paying enough means others should or could break the law is clearly a crap argument. Millions of people who owe a bit not paying may well be just as significant (or significant is not equally so) as a few thousand not paying a lot, and it is certainly just as much of an insult the rest of us who pay their tax in full.

[breadandcheese]

Gauke is factually correct. Huge amounts of people will pay cash to a tradesman in an attempt to get VAT off. I'm sure the majority of tradesmen feel under pressure because they know that if they put the VAT on, they will lose the job. Of course, if the tradesman doesn't pay the VAT to the Treasury, it is tax evasion, it is illegal, thus it is immoral of the customer to put the tradesperson under pressure to get the job in that manner.

However, the MP is, in my view, morally wrong. The numbers involved in "cash in hand" jobs dwarfs the tax avoidance by the major corporations, which indicates huge swathes of society do this. The question is why? The answer is simply that society feels 20% is too high for VAT on these service jobs. Let's be honest, plumbers, builders, electricians, are not cheap, so to stick 20% VAT on is a large figure. The incentive is there to evade the VAT. Why pay £6,000 for building work when you can get a cash price of £5,000?

If huge swathes of society are disobeying the law, or encouraging the disobeying of the law, then it's the law that's wrong, not the people. Just as the poll tax created many refuseniks (were they immoral?), so we see the same (albeit a different approach), with cash in hand jobs and the evasion of VAT.

Maybe we should move to a similar taxation approach to the French, whereby home improvements are taxed at a reduced 7% VAT rate (was 5.5%). I'm pretty certain that if this tax rule was applied here, far more money would be paid over to the treasury as there would be far less incentive to pay cash in hand. So that 5 grand building work in the paragraph above becomes£5,350. Not as many people are going to bother paying cash for that amount, and not many tradespeople are going to risk doing cash in hand jobs for their customer to save that amount (that is unless the tradesperson is attempting to evade income tax which is a whole different story).

[Saxondale]

1) Minor cash-in-hand tax avoidance is wrong (strictly speaking), but most of us don't mind getting away with little bits and bobs here and there. We're not all totally moral all of the time - even if you think you are. I'd do it, but I wouldn't try and justify it morally.

2) If you don't mind getting away with the odd cash scam, you're not really in a place to judge larger scale tax avoidance (eg. Carr et al). The principle is the same and it's not really one's place do say that your need or desire for the extra few quid is greater than anybody else's, just because you're less well off.

3) FVCK THE SYSTEM!

[Steven]

Politicians pontificating about morality.

[Steven]

If huge swathes of society are disobeying the law, or encouraging the disobeying of the law, then it's the law that's wrong, not the people.

You fail to understand that politicians and Civil Servants are always correct. It is the people that are wrong.

[Leicfox]

Looks like a tactic to divert attention away from the £21trillion hoarded to avoid UK tax liability.

[I am Rod Hull]

The word "moral" has been banded about so easily on this thread, I`v puked....

If I get quoted £200 to lay a floor by a legit company and a mates mate can do it for £80, what am I going to do? I`m not thick....

Morals my arse.

[Webbo]

I don't understand how someone can complain about rich people paying accountants to legally avoid tax and then think it's acceptable to evade tax themselves.

[Zingari]

I don't understand how someone can complain about rich people paying accountants to legally avoid tax and then think it's acceptable to evade tax themselves.

You're quite right of course, but it comes down to moral leadership really .

If the politicicians, bankers, movers and shakers are seen to be of a frame of mind that speaks only of greed and self interest , then as sure as night follows day the rest of us will fall into the same pattern .

I suppose I am unrealitically expecting more from our leaders , not less , but in the same way that I hope the vicar is less of a sinner than me, I suppose I'm doomed to disappointment

[skinnydipper]

Cash for questions

Fiddling expenses

Politicians can fvck right off

[skinnydipper]

i knew you'd try put a gloss over the issue

I think it's time you got your coat.

[ADK]

Its funny how the government has jumped on the new buzzword of "morally wrong". I can think of alot of things that are morally wrong, and yet legally lawful. Likewise there are many things that are morally fine and yet legally unlawful.

[Dr The Singh]

I thought we agreed keep quiet about that dodge Doc !!

you needn't start thinking i'm paying vat on top of the £5

Yeah but this way I can get a reciept and hopefully my money back if it's shit service!!

[Saxondale]

BUILDERS’ cash-in-hand earnings only remain outside the tax system until they arrive at a place that sells beer, it has been claimed.

After Exchequer Secretary David Gauke called small cash payments ‘morally repugnant’, tradesmen were swift to remind the minister that pints are taxed pretty ****ing heavily.

Plasterer Tom Logan said: “Whatever cash I might earn is going back into the system within half an hour, even less if we pass a boozer on the way home.

“I understand the tax on a pint of beer is something like 38%. Also crisps, pub pool tables and Status Quo songs on the jukebox are tax magnets, I’d imagine.â€

Beer raises over £21 billion in taxes annually, most of it from men in overalls who are ‘winding down’ after a hard day’s tea-drinking.

Builder Stephen Malley said: “It’s not like we’re spending this money on cocktails in St Lucia like some non-domicile corporate fat cats.

“I’d like to think our beer duty is going back into the NHS, and will one day help to replace my swollen liver.

“And as far as being ‘morally repugnant’ goes, I even urinate in customers’ sinks when they are out, just to save on the water usage associated with flushing toilets.â€

http://www.thedailymash.co.uk/news/society/tradesmens-earnings-only-untaxed-until-they-get-to-the-pub-2012072435498

[Daggers]

I don't understand how someone can complain about rich people paying accountants to legally avoid tax and then think it's acceptable to evade tax themselves.

It's a non-argument.

The only person going on about it was Gauke. Gauke, whose wife is a tax avoidance lawyer. Gauke, who used to work as a tax avoidance lawyer. Gauke, who fiddled his expenses. Gauke, who avoided paying stamp duty. Gauke, who belongs to a government which is protecting corrupt bankers while trying to stigmatise the poor in order to get votes from the right-wing who feel let down.

Gauke is a total arse, a hypocritical and odious little piece of shit. It's not about whether it is morally correct to pay your babysitter in cash - it's about whether this lying little toad has any moral authority to pontificate on the subject at all.

His claim that cash in hand robs the exchequer as much as tax avoidance is clearly bullshit. There's a list of priorities he should have - making banks pay and ensuring the rich pay their wack should be right at the top of it. Bitching about the low-waged simply demonstrates how the man has no spine.

[Webbo]

His claim that cash in hand robs the exchequer as much as tax avoidance is clearly bullshit. There's a list of priorities he should have - making banks pay and ensuring the rich pay their wack should be right at the top of it. Bitching about the low-waged simply demonstrates how the man has no spine.

Why do you assume these tradesmen or the people who pay in cash are low waged?

[Captain...]

1) Minor cash-in-hand tax avoidance is wrong (strictly speaking), but most of us don't mind getting away with little bits and bobs here and there. We're not all totally moral all of the time - even if you think you are. I'd do it, but I wouldn't try and justify it morally.

2) If you don't mind getting away with the odd cash scam, you're not really in a place to judge larger scale tax avoidance (eg. Carr et al). The principle is the same and it's not really one's place do say that your need or desire for the extra few quid is greater than anybody else's, just because you're less well off.

3) FVCK THE SYSTEM!

2) The difference with Carr and builders working cash in hand not paying tax, is that one was completely legal and one isn't.

It is not about the method of payment, it is about whether or not they pay the correct amount of tax, and it should be clear that all levels of tax evasion regardless of value should not be tolerated, but if you are going to aim this effort at recouping more tax it is surely more efficient to go after 1 or 2 cases of multi million tax evasion than go after thousands of individuals who probably don't keep proper records or books and have probably evaded in total less than what was written off for Vodaphone.

One issue here is that independent traders will have to compete with big nationwide companies that will benefit from economies of scale and increased buying power and would probably be able to under cut any local businesses. In reality there should be no excuse for not charging VAT, whatever you charge for VAT you give to the gov, simple, if a job is £100 you will still make £100 you charge £120 pay £20 to the gov, except you don't even do that if you are part of the flat rate of VAT scheme, if you are a builder you only pay 9.5% in that of in VAT, so £9.50, so by charging VAT you would actually make an extra £10.50.

The only reason to not pay VAT is either greed or to quote a lower price to win the job, now if it is greed then it is morally wrong (and illegal), but if you have your margins and profits squeezed to death and you still can't compete with the bigger companies (or those exploiting immigrant workers) then it is not morally wrong (but it is still illegal).

Like I said you don't pay VAT you collect VAT and pass it on to the Government (but not all of it) so the only actual excuse is to lower your costs to survive.

[Daggers]

Why do you assume these tradesmen or the people who pay in cash are low waged?

Why do you assume I'm limiting myself to his pronouncement in the Torygraph and the Mail?

[Webbo]

2) The difference with Carr and builders working cash in hand not paying tax, is that one was completely legal and one isn't.

It is not about the method of payment, it is about whether or not they pay the correct amount of tax, and it should be clear that all levels of tax evasion regardless of value should not be tolerated, but if you are going to aim this effort at recouping more tax it is surely more efficient to go after 1 or 2 cases of multi million tax evasion than go after thousands of individuals who probably don't keep proper records or books and have probably evaded in total less than what was written off for Vodaphone.

One issue here is that independent traders will have to compete with big nationwide companies that will benefit from economies of scale and increased buying power and would probably be able to under cut any local businesses. In reality there should be no excuse for not charging VAT, whatever you charge for VAT you give to the gov, simple, if a job is £100 you will still make £100 you charge £120 pay £20 to the gov, except you don't even do that if you are part of the flat rate of VAT scheme, if you are a builder you only pay 9.5% in that of in VAT, so £9.50, so by charging VAT you would actually make an extra £10.50.

The only reason to not pay VAT is either greed or to quote a lower price to win the job, now if it is greed then it is morally wrong (and illegal), but if you have your margins and profits squeezed to death and you still can't compete with the bigger companies (or those exploiting immigrant workers) then it is not morally wrong (but it is still illegal).

Like I said you don't pay VAT you collect VAT and pass it on to the Government (but not all of it) so the only actual excuse is to lower your costs to survive.

It's not just VAT. A lot of sole traders aren't registered for VAT so that is not an issue.

Lets not pretend this is about poor people struggling to pay their bills. Undeclared income cannot be used to pay bills as they are traceable. Money earnt this way is spent on furniture, carpets, holidays or down the pub.

[Webbo]

Why do you assume I'm limiting myself to his pronouncement in the Torygraph and the Mail?

I don't know what you mean. I thought this was about his answer to a question asked on last night's Newsnight. Anyhoo you said;

Bitching about the low-waged simply demonstrates how the man has no spine.

[Captain...]

It's not just VAT. A lot of sole traders aren't registered for VAT so that is not an issue.

Lets not pretend this is about poor people struggling to pay their bills. Undeclared income cannot be used to pay bills as they are traceable. Money earnt this way is spent on furniture, carpets, holidays or down the pub.

Lets not pretend that it is all spent on booze and fags and Sky TV, a lot of people/businesses are struggling to survive and are competing with bigger organisations, of course there are some greedy people out there making enough and skimming some off the top that should be paid in tax, but not all are.

[Webbo]

Lets not pretend that it is all spent on booze and fags and Sky TV, a lot of people/businesses are struggling to survive and are competing with bigger organisations, of course there are some greedy people out there making enough and skimming some off the top that should be paid in tax, but not all are.

Unless you can pay for Sky TV in cash then you can't use that money to pay for it as the tax man, should he choose to investigate you, can trace the payments and will want to know where the money came from.

PS. I'm not condemning anyone for doing this I'm just trying to correct some misconceptions.

[Rincewind]

Just on a side note. I'm considering trying some online selling with that company I mentioned in another thread. I wont start to receive bonuses until I've sold £150 worth of goods. Now if I mention to the job centre that I have signed up for this will they take me off JSA despte not earning anything? I may be classed as self employed ans I wont make enough from selling on Ebay alone - still hoping to get a job. Would it be wrong to give this company another bank account details until I have sold the amount needed? I would not be doing it so to go on a cruise just to survive.