The attitude of some AAM contributors to tax evasion

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-- ClubMan

This website exasperates me sometimes. Some people are obsessed with the Revenue and how they might catch you and want everyone to be whiter than white. It's a pity they couldn't focus their attention and their ire on those people who legally evade tax through clever schemes such as pension funds thanks to their ready access to politicians and contributions made to the Fianna Fail party. I wouldn't mind if the taxpayers money was being well spent but you only have to think of issues such as E voting, PPARS etc.

What I'm saying is buy now because they will probably be 10% higher in 9 months time. You are taking a chance albeit a very small one - revenue are not going to be worried about small fry like you. And if it comes to it keep a room in the house as your own for the first 9 months!!!!!!

Art said:

Some people are obsessed with the Revenue and how they might catch you and want everyone to be whiter than white.

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If whiter than white means tax compliant then I can't see how anybody can reasonably object to that. Tax evasion is one of the few real rip-offs in this country and is perpetrated by some individuals on all other tax compliant citizens.

It's a pity they couldn't focus their attention and their ire on those people who legally evade tax

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Legally avoid tax surely?

So Art,

Are we to assume from your post that you think it is OK to evade tax because some wealthy people legitimately avoid tax through judicious use of the reliefs / rules that exist in Ireland?

While it may not be fair or even equitable it is certainly not illegal to legitimately avoid paying tax.

Do you also think it is ok to evade tax because the government that was democratically elected doesn't spend money well or the way you want it?

(I know that this is unfair to Art as he doesn't have access to LoS and so does not have the chance to rebut - Art if you wish you can PM me and I will post your response for others to see)

Often the reaction here to any suggested tax planning (i.e. legal avoidance) is that its treasonous.

Sometimes people suggest things that arent quite legit, and I wouldnt endorse or encourage such behaviour. But it doesnt automatically make them an axe murderer either. Theres a bit of hysterics indulged in here at times.

Like the time when a builder wants cash and tells you its VAT free if you can do it. Bottom line is that its not illegal to pay cash, and its not illegal to get a discount, you the payer are doing nothing wrong. Anything that happens after that is the builders problem, end of story.

He should account for VAT out of the cash receipt and declare the net income, but do you, the payer, have a responsibility to check this or even enforce this?? No.

Some contributors here would have you ringing revenue, the gardai ... the ERU??

Betsy Og said:

Often the reaction here to any suggested tax planning (i.e. legal avoidance) is that its treasonous.

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I don't believe that to be true. Most posters understand the difference between legal avoidance, avoidance schems that might fall foul of Revenue's anti-avoidance rules and and definitely illegal evasion. Most people will not recommend the latter two as prudent approaches to financial planning for obvious reasons. Many people have strong views on (against) evasion and object strenuously to it and those who condone, encourage or facilitate it.

Sometimes people suggest things that arent quite legit, and I wouldnt endorse or encourage such behaviour. But it doesnt automatically make them an axe murderer either. Theres a bit of hysterics indulged in here at times.

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Again I would disagree. I would consider your comparison hysterical though.

Like the time when a builder wants cash and tells you its VAT free if you can do it. Bottom line is that its not illegal to pay cash, and its not illegal to get a discount, you the payer are doing nothing wrong. Anything that happens after that is the builders problem, end of story.

He should account for VAT out of the cash receipt and declare the net income, but do you, the payer, have a responsibility to check this or even enforce this?? No.

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Surely it is dodgy if somebody offers you a "VAT free" deal for cash - i.e. facilitating tax evasion? In any case people are entitled to point out the potential problems with this sort of approach if they feel that it is facilitating or encouraging evasion.

Some contributors here would have you ringing revenue, the gardai ... the ERU??

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I don't remember anybody recommending that people ring the Gardaí never mind the ERU. Perhaps that is another hysterical reaction to something that never actually happened?

Bottom line is that its not illegal to pay cash, and its not illegal to get a discount, you the payer are doing nothing wrong. Anything that happens after that is the builders problem, end of story.

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Many people on here would also look at the whole tax avoidance/evasion thing from an ethics point of view - i.e. if you know deep down you are effectively helping the builder avoid paying VAT (and really its you doing the avoiding as you are liable to pay VAT on his services) then from a purely ethical pov, what you are doing is wrong, and many people here view such a breach of ethics as undesirable/intolerable.

ClubMan said:

I don't believe that to be true. Most posters understand the difference between legal avoidance, avoidance schems that might fall foul of Revenue's anti-avoidance rules and and definitely illegal evasion. Most people will not recommend the latter two as prudent approaches to financial planning for obvious reasons. Many people have strong views on (against) evasion and object strenuously to it and those who condone, encourage or facilitate it.
Again I would disagree. I would consider your comparison hysterical though.
Surely it is dodgy if somebody offers you a "VAT free" deal for cash - i.e. facilitating tax evasion? In any case people are entitled to point out the potential problems with this sort of approach if they feel that it is facilitating or encouraging evasion.
I don't remember anybody recommending that people ring the Gardaí never mind the ERU. Perhaps that is another hysterical reaction to something that never actually happened?

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Sure obviously I'm exaggerating for effect - I dont think I was misleading you, nor I dont believe you took me seriously, when I said someone wanted the ERU to be called. But when the above issue came up re paying a builder cash there were people seriously and genuinely demanding that the payer was doing something wrong.

Garages offer "VAT free" cars in radio ads, thats just a discount.

I agree with highlighting to people that they take risks, and on their on head be it if they knowingly transgress - but where is the risk to the payer in the paying a builder cash? There isnt a court in the land that would convict them since all the obligations are on the builder to account for VAT and pay income tax. But that seem to be good enough for some contributors here - we should have a citizens arrest (and I'm exaggerating for effect when I say that).

Sherman said:

(and really its you doing the avoiding as you are liable to pay VAT on his services)

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I wouldnt agree with the above. He charges you the sum agree, he has to account for VAT out of what you pay him. He could just as easily say that the sum is X + VAT. Assuming you are not VAT registered then the + VAT bit makes no odds to you - its simply an extra cost to you.

At the end of it you pay him money - he might have correctly identified the VAT element to you but you still pay him money and he may well decide not to return the VAT element - how are you, the payer, supposed to know what he does - what are you, the payer, supposed to do about it?

Betsy Og said:

Sure obviously I'm exaggerating for effect - I dont think I was misleading you, nor I dont believe you took me seriously, when I said someone wanted the ERU to be called. But when the above issue came up re paying a builder cash there were people seriously and genuinely demanding that the payer was doing something wrong.

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Yes - some people do believe this especially given the track record of many cash business in terms of tax evasion in the past. Do you think that such cash deals are never tax dodges? If not then surely people are correct in pointing out the potential issues?

I agree with highlighting to people that they take risks, and on their on head be it if they knowingly transgress - but where is the risk to the payer in the paying a builder cash? There isnt a court in the land that would convict them since all the obligations are on the builder to account for VAT and pay income tax. But that seem to be good enough for some contributors here - we should have a citizens arrest (and I'm exaggerating for effect when I say that).

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In my personal opinion your repeated exaggerations merely serve to undermine any serious points that you are making and are not really conducive to a balanced discussion of the original issue raised. They are not necessarily misleading - they are very distracting though.

Betsy, that's just getting into semantics.

In the scenario you originally discussed, the fictional person in question would know damn well they were getting a VAT-free price, i.e. if the builder was to charge them VAT the price would be far higher.

As I said, you can spin it any way you like, but deep down the fictional person in your example would know bloody well the price they were getting meant the VAT would not be paid. Like I said, it may be strictly legal, but from a moral pov it is unethical.

the + VAT bit makes no odds to you - its simply an extra cost to you.

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This isn't true - it is the customer who has to pay the VAT - the tradesman is merely acting as an unpaid collection agency for the Revenue - same with shops etc.

I think it is a given that consumers regularly conspire with service providers to jointly facilitate tax and VAT evasion on "cash deal" transactions. Typically this carry-on is most common on domestic repair/maintenance tasks or home improvement works where the consumer does not have any obligation to keep records or accounts of personal expenditure.

Dr Edward de Bono has suggested in the past that this issue (which is a problem in all developed economies) could be resolved by granting private individuals a minor tax credit on personal and domestic services. He reckons such a system, where individuals would need to produce valid receipts to collect the credit) would be self-financing as it would eliminate overnight a major element of the black economy.

ubiquitous said:

Dr Edward de Bono has suggested in the past that this issue (which is a problem in all developed economies) could be resolved by granting private individuals a minor tax credit on personal and domestic services. He reckons such a system, where individuals would need to produce valid receipts to collect the credit) would be self-financing as it would eliminate overnight a major element of the black economy.

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I wonder though if having received this credit some individuals/service providers would then look for more and move onto larger purchases and tax scams? But maybe that's too cynical a view?

Sorry, I don't get you? The personal and domestic services sector is at the moment more or less uniquely vulnerable to tax evasion because of the almost total absence of legal obligations on consumers of such services to account for, and maintain documentary evidence of, such transactions, for systematic or random review later by the State authorities.

In almost every other sector of the economy, there are paper-trails and standards that must be followed with in order to satisfy various compliance obligations specified by law. Of course these paper trails and standards do not totally eliminate tax evasion, but they create practical obstacles and difficulties for those who wish to evade tax.

Sherman said:

Betsy, that's just getting into semantics.

In the scenario you originally discussed, the fictional person in question would know damn well they were getting a VAT-free price, i.e. if the builder was to charge them VAT the price would be far higher.

As I said, you can spin it any way you like, but deep down the fictional person in your example would know bloody well the price they were getting meant the VAT would not be paid. Like I said, it may be strictly legal, but from a moral pov it is unethical.



This isn't true - it is the customer who has to pay the VAT - the tradesman is merely acting as an unpaid collection agency for the Revenue - same with shops etc.

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Sherman,

Painful and all as semantics are, they are what the legal system deals in. Words on a page are given their meaning unless other evidence can be produced which show them to be a sham. Therefore, in legal and tax matters it absolutely matters how things are put - semantics are being engaged in but thats just the way it has to be.

I note above that you agree that paying cash is strictly legal - that is the extent of what I am saying.

Re the VAT system - if you can tell me what role the unregistered person plays in the VAT system apart from handing over cash to a VAT registered person then I'll gladly revise my view. The administration of the VAT system is by the VAT registered traders alone, if they get cash in payment then the payer is out of the loop, when did the VAT man ever stop Joe Punter in the street to ask him how were his VAT affairs?

Clubman - re exaggerations, fair enough, I'll try to be good, I promise, I thought I was "introducing a bit of colour"

As regards pointing out risks to people my point is that what the payer is doing is strictly legal. I dont see a risk (or a risk remotely material) to them in this scenario unless they write out "I am now paying you cash in consideration of helping you to facilitate VAT fraud and possibly income tax fraud".

It would be for the court to decide whether, by the payment of cash, you were faciltating fraud. There would be a strong defence against this in that you had no legal obligations under the transaction and you were merely paying your debts with legal tender. Is the State to outlaw its own legal tender? Short of telling the court you thought you were facilitating fraud then I'd be happy enough there will be no conviction.

The moral question re whether you "knew full well" there was going to be VAT and income tax evasion is a totally separate one (again semantics you say but thats the way it is). Once you get into the moral debate then I think that you open to door to excuses for tax evasion, take your pick from: "there all at it", "I paid 60% tax and the politicians were creaming it", "sure they'd only waste it anyway - look at PPARS etc. etc ......", "I get nothing for my tax, I've to pay for everything again anyway - if I got something for my taxes I wouldnt mind paying them". Whether theres any validity in those excuses is not my debate - but once you get into the "morals" of it then I think these may come into play.

To sum up - nothing technically illegal in paying a builder cash, you are at very very low risk by doing this (whether it is unfortunate that this risk is low is your call), moral arguments are fair enough and are for the conscience of the people involved but people tend to introduce moral counterarguments be they truly valid or not.

Given the focus of this site I would guess that Revenue find it useful to ( from time to time ) Act The Troll by posting some border line proposal on a taxation matter and then see what the AAM Poster In The Street can suggest in terms of ways to twist & turn through the taxation system.

Not all of the wee posties on AAM are one dimensional

olddog said:

Given the focus of this site I would guess that Revenue find it useful to ( from time to time ) Act The Troll by posting some border line proposal on a taxation matter and then see what the AAM Poster In The Street can suggest in terms of ways to twist & turn through the taxation system.

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As an administrator/moderator I have no reason to suspect that this actually happens.

Not all of the wee posties on AAM are one dimensional

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I don't understand what you mean.

olddog said:

Given the focus of this site I would guess that Revenue find it useful to ( from time to time ) Act The Troll by posting some border line proposal on a taxation matter and then see what the AAM Poster In The Street can suggest in terms of ways to twist & turn through the taxation system.

Not all of the wee posties on AAM are one dimensional

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I can assure all and sundry that I'm the one dimension presented here, or more particularly, I'm not Revenue in disguise (which seems to be olddogs point).

I'd agree with Clubman that I dont think this is an issue. Nor would I think that they are doing a forensic IT job to root out posters who are wavering on the line of doing the right thing, or that what is posted here could be used as evidence (but I could be wrong on the evidence point). Most of it anyway is clearly theoretical or relates to "a friend" - so nothing incriminating.

Next we'll have to start denying we were the 2nd gunman on the grassy knoll !

There is indeed nothing illegal about paying cash to a tradesman or service provider. In some situations, cash payment may be the only practical means of payment - for example plumbers or electricians who call to householders to carry out emergency repair jobs are well justified in asking for cash payment before they leave. Otherwise if cheque bounces there is little that the tradesman can do to enforce payment, and the amounts involved will rarely be sizeable enough to make formal debt collection a economic proposition.

I would be amazed if the Revenue would be bothered trolling websites such as this for ideas. Don't worry they can afford to employ many experts who can literally spend all day swotting up on the tax system and who therefore have a far more detailed understanding of the ins and outs of the system than any of us here would ever have. No wonder that so many of them eventually bail out of public sector employment to take up senior positions in the private sector as tax consultants...

I raised the issue of tradesmen who ask for cash and don't want to give receipts with a tax consultant recently in relation to investment property I own.

He advised that the onus is on the tradesman to declare the income and that I should just make a note of their details, the date on which the work was carried out and the amount charged in cash, in order to be able to offset the cost of the repair/maintenance against my rental income.

ubiquitous said:

I would be amazed if the Revenue would be bothered trolling websites such as this for ideas.

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Unlike some of our lazier journalists out there.......