Cash payments by business - no receipts

jokerini

Registered User
Messages
91
A business pays an employee cash on hand ("under the table"). It also pays a few suppliers in cash without getting a receipt. Can the business claim these expenses in its accounts?
 
not legally under the tax law as if u have an inspection/audit then all material expenses must be supported by paperwork.
The suppliers one is quite common in businesses that have a lot of cash, they run a cash business along side an invoiced business.
 
Thanks. It would appear that the businessman is a mug if he pays cash and doesn't get a receipt from the supplier. Unless he's getting a huge discount (50% or more). If the business is a sole trader, he's paying top-rate tax of 52% (40% PAYE, 7% USC, 4% PRSI). He can claim legitimate expenses to reduce tax paid at 52%. He has no such option if he's paying cash without getting a receipt.

For the same reason, why would a sole trader be crazy enough to pay wages "under the table" if he can't claim the expense in his accounts? Leaving aside the dubious morality, it doesn't make commercial sense. Am I missing something here?
 
A cash business is a cash business so no tax paid anywhere
Take a simple example
cash
buy goods for 500, sell for 1,100, wages 100, cash in back pocket 500
delared
buy goods for 500, sell for 1,100, wages 100, taxable profits 500, after tax cash in pocket by sole trader .c. 250
 
Is it a registered business in first place?...maybe it's purely black market!

Obviously advantages for employee also. Alot small businesses Iv used are hungry for cash, I'm currently looking for a builder for a €500 approx job and have only found one who could/would offer a receipt!
 
My example concerns a registered sole trader business. Its sales are invoiced to other businesses that pay the sole trader by credit transfer or cheque. Therefore there is no opportunity to hide sales. On the other hand, the sole trader makes the odd cash payment to suppliers who don't provide receipts.

Such a sole trader would be losing out if he can't include cash payments to a supplier (no receipt/invoice) as an expense. That's why I'm saying that he would need to be getting a huge discount compared to a legitimate supplier to make it worthwhile.

If Builder A does a €500 job for a private customer, the customer doesn't really care about getting as receipt/invoice because he can't claim it as an expense anyway (whether the builder is legitimate or not). However, if Builder A quotes €500 (cash/no receipt) to a business e.g sole trader, I would expect the business to refuse unless it would cost €1,000 from Builder B (legitimate supplier who issues a proper invoice). This is because the sole trader couldn't include Builder A expense in his accounts whereas he could include Builder B expenses in his accounts and use it to reduce his taxable profits.
 
If I'm reading your question correctly, your asking if a sole trader pays an employee under the table(no employee or employer tax) and buys supplies for his business for cash (no receipt/under the table) can he claim these costs as expenses then the answer is most definitely No as what he is doing is both illegal and morally wrong.
 
This reminds me of the old Richard Nixon adage..."if two wrongs don't make a right, try three".

The "under the table" payments to employees and suppliers constitute tax evasion. Trying to claim a deduction for them compounds the offence.

Morally and legally wrong. Thankfully when Revenue find out, they hammer people who do this. The original tax, 100% penalty, 8% interest per annum going back to the preliminary tax payment date, and the public shaming that is publication.
 
I can't wait until the Employee needs to prove his earnings and shops in the Employer. And of course, when that happens - the gross wages paid directly to the Employee become the new Net, and are grossed up to account for the underpaid tax.

It really is a mugs-game paying cash-in-hand.
 
Interesting comments. Cash in hand is indeed a mug's game. Of course, the employee is often not entirely innocent either because he's probably claiming the dole at the same time.
 
I admire the zeal of many of the posters here, if only everyone had such moral fortitude we'd need less revenue auditors..!

I should point out though, that the statutory test for a deduction for computing the profits of a trade for tax purposes, is that the amount was laid out wholly and exclusively for the purpose of the trade.

The standard of proof required is in effect the civil burden of "balance of probabilities".

So - unfortunately, or equitably, depending on your personal stance - if someone is caught for having operated a trade within a trade, they will be allowed deduction for expenses paid out of the undeclared receipts, be they wages, materials, stock or whatever.
 
I admire the zeal of many of the posters here, if only everyone had such moral fortitude we'd need less revenue auditors..!
I agree but I don't think the exclamation mark is necessary. People who don't break the law and crap all over their fellow citizens by stealing from them through tax evasion shouldn't have to feel holier than thou. They are just doing one of their very basic duties as a citizen; paying their taxes.
 
I agree but I don't think the exclamation mark is necessary. People who don't break the law and crap all over their fellow citizens by stealing from them through tax evasion shouldn't have to feel holier than thou. They are just doing one of their very basic duties as a citizen; paying their taxes.

What are you, the Punctuation Police?!?!?!:::,,,

But seriously, you're preaching to the converted, I suppose the exclamation mark is more due to my own perspective on it, as someone who might be redundant in that event... ;)
 
Back
Top