Paying Tradesmen
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DavyJones, is the tradesman defrauding or is the customer? Is there a legal obligation on the customer, surely if one pays what is asked , it is not the duty of the customer to see that vat etc is paid? When I pay cash in a shop for goods, I don't know whether or not they are tax compliant so surely if I pay for a service it's the same?
It's a bit much if we not only have to pay our own taxes, but now have to see that others are paying their's.I'm very interested in knowing this.
It's a bit much if we not only have to pay our own taxes, but now have to see that others are paying their's.I'm very interested in knowing this.
WaterSprite
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I'd agree with Brianne here - just because you pay someone in cash doesn't mean you have to assume that they are evading taxes and doesn't mean that you have to take on responsibility for that (morally or legally).
Having said that, if someone asks for cash and the implication is that it's under the table, that triggers a judgment call on the payer's behalf whether to turn a blind eye based on an assumption based on that implication.
But there are other reasons that someone might want to be paid in cash (not trusting a cheque, not wanting to wait for a credit card payment to go through etc.) so I don't think that the person paying the labourer in cash needs to give them the third degree about their own tax affairs. I pay my doctor in cash when I go for a check-up - I don't assume he's taking that cash to fiddle his taxes - and if he does, it's not cool, but not my banana.
Sprite
p.s. and on the VAT thing - the customer has no idea whether the tradesman earns enough to be obliged to register for VAT so not being charged VAT in and of itself should not be cause for suspicion
Having said that, if someone asks for cash and the implication is that it's under the table, that triggers a judgment call on the payer's behalf whether to turn a blind eye based on an assumption based on that implication.
But there are other reasons that someone might want to be paid in cash (not trusting a cheque, not wanting to wait for a credit card payment to go through etc.) so I don't think that the person paying the labourer in cash needs to give them the third degree about their own tax affairs. I pay my doctor in cash when I go for a check-up - I don't assume he's taking that cash to fiddle his taxes - and if he does, it's not cool, but not my banana.
Sprite
p.s. and on the VAT thing - the customer has no idea whether the tradesman earns enough to be obliged to register for VAT so not being charged VAT in and of itself should not be cause for suspicion
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Interesting question.- and mine is the legal angle.
So is the solution, pay by cash, but get a receipt ?
If a request for a receipt offends, do we assume tax evasion?
What you are saying makes sense but lets not fool ourselves, the OP knows exactly what the cash offer involves just as I am sure ye both do. I have been paid cash before but I always give a receipt, Not only does it state what works where done and what VAT is payable , it is also my guarantee,written proof of an exchange. When somebody says "cash" to me it's nearly always to avoid paying tax. People think they are doing me a favour buy not wanting to pay VAT or tax. Where in reality they are trying to do them selves a favour.
Lets not play all coy here, Everybody knows what it means if a service provider will only take cah and offer no receipt. In my opinion if you accept that, you are facilitating fraud.
Lets not play all coy here, Everybody knows what it means if a service provider will only take cah and offer no receipt. In my opinion if you accept that, you are facilitating fraud.
WaterSprite
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I hear you DavyJones but, in fairness, there was no mention of a receipt. My car mechanic also prefers cash (I ask him whether he'd like a cheque or cash and he differs on the answer) so it may easily be a cash-flow issue (no time to get to the bank, not knowing a customer and if their cheque will bounce or not...) He gives me a receipt every time as I need it for my car service history.
It's a suspicious thing to ask to be paid in cash, granted. Personally, I wouldn't do it with someone I didn't know and with whom I didn't have previous dealings. But I don't think that the purchaser needs to always assume that the person asking for cash is out to diddle the revenue. I don't condone tax evasion by any measure but the responsibility ultimately lies with the tax payer (the tradesman in this case), no? How much do you have to ask to ensure that someone is compliant?
Sprite
It's a suspicious thing to ask to be paid in cash, granted. Personally, I wouldn't do it with someone I didn't know and with whom I didn't have previous dealings. But I don't think that the purchaser needs to always assume that the person asking for cash is out to diddle the revenue. I don't condone tax evasion by any measure but the responsibility ultimately lies with the tax payer (the tradesman in this case), no? How much do you have to ask to ensure that someone is compliant?
Sprite
So why give a receipt if it exposes you?
Yes, we all know what paying cash means, and I guess a lot of us have been there. But if I pay cash - for work I know is not being taxed properly, I wouldn't ask for a receipt. To me that would be a bit like having my cake and eating eat it. But if it's for something big...I'm not a risk taker.
From my legal (who hasn't a clue about litigation) perspective, I think agreeing for services/works to be done, and avoiding tax, is an illegal contract = so for example if I engage a builder to build a kitchen extension for 2k and he does and it's a disaster, I have no legal remedy as the contract is illegal....
seriously open correction here....
J
BTW Where ever I am offered cash or cheque with reciept, I always say cash. Cheques are great but you can't beat the real thing.
I hear you, when I go into a shop and buy something with cash and get no reciept I don't think of tax evasion, but when a tradesman says we will do the job but will only accept cash, I know I am avoiding paying tax on the job and so is the other party.
I see it all the time so I know exactly what it means when "cash" is mentioned by either client or tradesperson.
I hear you, when I go into a shop and buy something with cash and get no reciept I don't think of tax evasion, but when a tradesman says we will do the job but will only accept cash, I know I am avoiding paying tax on the job and so is the other party.
I see it all the time so I know exactly what it means when "cash" is mentioned by either client or tradesperson.
When i get paid cash, it includes all tax and VAT, hence the reciept.
WaterSprite
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Haven't done a search on this but I thought that illegality only applied if the purpose of the contract was illegal - so one buys one's dope over the internet from Amsterdam and it doesn't arrive and then you (not the actual you obviously!) try to enforce the agreement for sale (and then you post to AAM asking what you can do about it
). But, if you have a verbal contract with someone to refit your kitchen for €2k, what makes that contract more or less enforceable if you pay by cheque or by cash? Not expert in this area myself mind you - just thinking out loud, at 2am of a Sat morning!Sprite
p.s I got all mixed up trying to do my hypotheticals there - I am in no way suggesting that you are a dope fiend - but using "one" in all of the above was getting laborious - so assume the impersonal "you" - eeeesh! Sorry!
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Sorry Davy, missed the "no" here
I think most of us are guilty of looking for the better deal sometimes - and often this means asking the service provider to compromise on their tax obligations - so, who pays the price? - you. Guess people should realise this can backfire (eg illegal contracts)
Davy - I will confess - I often assumed service providers like to be paid in cash - until I was asked the same - reality sets in!
What do ye think of this?: www.askaboutmoney.com/showthread.php?t=85328
How sad are we. (Like your posts on employment law, so I forgive you!)
Mission, so, for Monday am - I will post my findings.......... with the bottom falling out of the conveyancing market I find my day not as full as they were... (10 years pqe and redundancy loons. Bleak!)
That was my point earlier - Nice to get the lesser price, but can backfire?
WaterSprite
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The key post there was:
"the law is that if a contract is based on a cash deal to avoid VAT that court wont look at it.
People dont pay VAT for different reasons that are not all ilegal.
Its where the basis of the agreement is for cash to aovid VAT that the court will throw out."
So, if OP knows that they are paying cash in order for the tradesman to avoid VAT (or income tax), then yep, illegality would seem to apply. But, as the other posts mentioned, merely because someone asks for cash doesn't mean they are doing it to diddle the revenue.
Another e.g. I do consultancy on the side (not actually on the side of anything else as it happens but that's another story) - I'll deffo be under the VAT threshold for services in 2008 and so don't charge VAT (although certainly don't ask for cash). I'm completely above board in my revenue dealings but yet still I'm doing something that other people should perhaps be suspicious of (not charging VAT) - which raises the question of how much should they ask me about why I'm not charging VAT? (And by that I mean how much should they feel they have to ask - I'll answer the question no problem). How much should OP ask? Can one base this judgment on a "gut feeling" that someone is evading tax? Or does it have to be that the tradesman has to say "I'd like to be paid in cash because I will not be paying tax on this money and therefore will not charge you VAT"? And there are a million permutations in between.
I'd suggest to OP (sorry I'd forgotten about you there!) that they ask if VAT is chargeable on the job to be done - if the tradesman says something like "well, I can charge you VAT if you want, but it will be cheaper if I don't" then OP knows yer-man is the proverbial diddler.
Sprite
"the law is that if a contract is based on a cash deal to avoid VAT that court wont look at it.
People dont pay VAT for different reasons that are not all ilegal.
Its where the basis of the agreement is for cash to aovid VAT that the court will throw out."
So, if OP knows that they are paying cash in order for the tradesman to avoid VAT (or income tax), then yep, illegality would seem to apply. But, as the other posts mentioned, merely because someone asks for cash doesn't mean they are doing it to diddle the revenue.
Another e.g. I do consultancy on the side (not actually on the side of anything else as it happens but that's another story) - I'll deffo be under the VAT threshold for services in 2008 and so don't charge VAT (although certainly don't ask for cash). I'm completely above board in my revenue dealings but yet still I'm doing something that other people should perhaps be suspicious of (not charging VAT) - which raises the question of how much should they ask me about why I'm not charging VAT? (And by that I mean how much should they feel they have to ask - I'll answer the question no problem). How much should OP ask? Can one base this judgment on a "gut feeling" that someone is evading tax? Or does it have to be that the tradesman has to say "I'd like to be paid in cash because I will not be paying tax on this money and therefore will not charge you VAT"? And there are a million permutations in between.
I'd suggest to OP (sorry I'd forgotten about you there!) that they ask if VAT is chargeable on the job to be done - if the tradesman says something like "well, I can charge you VAT if you want, but it will be cheaper if I don't" then OP knows yer-man is the proverbial diddler.
Sprite
WaterSprite
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How sad are we. (Like your posts on employment law, so I forgive you!)
Thank you! Nice to hear - some of them I put a lot of effort into and got a bit beaten up over so it's really nice to hear (esp at 2.05 of a Sat morning
Sorry for dragging off topic!
Sprite
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S.L.F
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To the OP
The lad you have organised will probably just want to avoid tax paying and it will be cheaper for you to get him to do the job since you are not going to be paying 13.5% extra.
If he does a good job you have nothing to worry about.
But if he does a bad one you are screwed and have no legal recourse.
Does the legal route in this country give satisfaction to anybody other that the legal profession?
The lad you have organised will probably just want to avoid tax paying and it will be cheaper for you to get him to do the job since you are not going to be paying 13.5% extra.
If he does a good job you have nothing to worry about.
But if he does a bad one you are screwed and have no legal recourse.
Does the legal route in this country give satisfaction to anybody other that the legal profession?
He also will probably not pay income tax. "cash" work has been around forever, but I fear it will increase over the next couple of years due to the large amount of construction workers that are let go. This will in no doubt hurt legitimate businesses that pay tax and insurance and all the other over heads that come with doing things correctly.
It's up to customers to decide if they will support a black market or our failing economy.
It's up to customers to decide if they will support a black market or our failing economy.
Complainer
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Where the tradesperson (or the solicitor, as happened to me) seeks to confirm that payment will be in cash before confirming the price, it's a pretty good bet that he/she is planning on not paying income tax on this deal.