No Harriet, it’s not illegal

Mr Balls’ intervention came less than 48 hours after Harriet Harman was asked whether she paid tradesmen in cash on Any Questions.

Labour’s deputy leader said she paid her window cleaner in cash before asking “that’s not illegal is it?”

Paying people in cash ain’t illegal, no. It’s whether the other person then declares the income that’s the grey area.

32 thoughts on “No Harriet, it’s not illegal”

  1. So Much for Subtlety

    She can pontificate on morality for the rest of us. Gracing us with her moral judgement on so many subjects.

    As she doesn’t even know if paying a worker with cash is illegal?

    Thank God the quality of our leaders is so high. Note that she was open to the idea that paying in cash might be illegal. No concept of what a free society should look like.

  2. So she didn’t ask “That isn’t wrong is it?”

    I think Ed has a.term for people who engage in legal tax.planning like this.

  3. Re: Paying cash.

    New gearbox for car £480, offer cash and the VAT disappears. If I can help it, I will avoid any taxes I can!

  4. Am I missing something about the “cheaper for cash” deal – what’s in it for the tradesman?
    @Lfb_uk seems to be implying (and it’s always been my anecdotal understanding) that they basically don’t add any VAT if you pay cash – but what’s the upside for them?
    They get the same end amount of money surely (as these offers always seem to be about ignoring it rather than splitting the difference) but now run a risk of getting caught.
    It can’t be to avoid the VAT threshold as they must presumably already be registered. Maybe to keep them under the flat rat scheme threshold? Or is it just to secure the business?

  5. If you’re not declaring it for cash you’re also probably not declaring it for income tax reasons. And if you do declare it for VAT then you must be declaring it for income tax reasons.

  6. I get the general point but is there a degree of conspiracy to fraud here ? Is it not almost a given that most time tradesmen and other ask for cash in hand then it isn’t going to be declared. Can you just claim “I didn’t know” here ?

  7. I’ve never paid a window cleaner in anything other than cash. Or the shop I buy my cup of tea from on a weekday morning.

    Somehow I don’t feel that I’m taking part in a huge VAT exclusion ring.

  8. I see it as my moral duty to pay as little tax as possible. Mainly for the reasons set out in Milton Friedman’s “Four ways to spend money”.

    So I am quite happy to pay tradesmen in cash, whether or not it gets me a better deal.

    Starve the beast, avoid tax wherever and whenever possible!

  9. “declares the income” – would have expected you to have spotted – tax on turnover is called VAT – its is most unlikely that the cash economy would trouble the VAT man (as he used to be called!). The issue here is profits, assuming there are any to tax; or actually record keeping, since its the records that would be moot in challenging any assessment. Actually, even having watertight records will not help too much if you get an assessment. Best bet would be to register a business in Luxembourg. Probably the only defence that actually works!

  10. I often pay cash when i am buying things in Tesco.

    I have no idea if they declare it.

    But it really isn’t my issue to worry over.

  11. VAT actually isn’t a tax on turnover but on value added. I would echo Tim’s comment that cash only is more likely to be Income Tax/NIC evasion than anything to do with VAT – the cash – in – hand trader is quite likely to be under the VAT threshold in any case.

    I also wonder if people are truly aware of the difference between avoidance and evasion. Simply not declaring your income is tax evasion- common cheat.

  12. Truth be told, even if you do ask for a receipt, if the tradesman is dodging taxes then that receipt won’t be entering the books anyway. Not all receipt books are carbon copied, sequentially numbered. And even if they were, there is nothing stopping the tradesman from putting half the sales in one book and losing it, and only recording the second book.

    In fact, if you go down the route of requesting a receipt and knowing or strongly believing that some of those things are going on, you’re arguably more complicit in tax evasion than if you’d never asked for the slip of paper in the first place.

  13. There is a valid and fairly common reason for paying small amounts in cash – mosty banks charge business account holders for every cheque paid into their account. So if I wrote the bin-cleaner a cheque, 10% of it would be swallowed up by bank charges when he paid it in.
    [Less important for amounts larger than I carry in my purse but a couple of years ago one guy did ask for cash and gave me a receipt when he was having trouble with his bank manager – the only one to offer me a discount for cash got a cheque.]

  14. I doubt there are many window cleaners trading above the VAT threshold, and someone in that line of work probably doesn’t have much scope for reclaiming input tax either. So I think it’s all rather moot.

    Different stories for other tradesmen though. Not all that many will be required to VAT register, but there might be a temptation to register to get the input tax back, and just keep the recorded outputs high enough to avoid suspicion. Dangerous game, though. Better to stay unregistered and get the punter to buy the parts directly (which lots do).

  15. Paul,

    > I get the general point but is there a degree of conspiracy to fraud here ? Is it not almost a given that most time tradesmen and other ask for cash in hand then it isn’t going to be declared. Can you just claim “I didn’t know” here ?

    Who cares whether you knew? What you can claim is that it’s none of your business. It is not my responsibility to ensure you pay your tax. Nor should it be.

    I would not be remotely surprised, in the current climate, if some of our pols were to start campaigning to make cash payments illegal. Or, once the impracticalities of that had been made clear to them, to make declaration of each payment a legal duty of the payer.

    Apparently, prior to the recent abolition of tax discs, the authorities used to get (IIRC) around 100,000 calls a year from people shopping their neighbours. We live in a nation of informants.

  16. “Am I missing something about the “cheaper for cash” deal – what’s in it for the tradesman?”

    Without a receipt you’ve not got much comeback if the work/item is faulty.

  17. I would not be remotely surprised, in the current climate, if some of our pols were to start campaigning to make cash payments illegal.

    I have an old schoolmate who derives his income from somewhat questionable sources (no, he’s not a drug dealer) and he tells me it is almost impossible to buy anything of value in cash these days. Even car showrooms won’t accept cash, so if you have more than a few grand at your disposal you’d better find a way of turning it into electronic money.

  18. I wrote this some time ago on the subject of cash-in-hand payments to traders. The tl;dr version is: if you really think a trader is going to commit tax evasion then hand all the benefit to you, you’re completely bonkers.

  19. Tim Worstall: “If you’re not declaring it for cash you’re also probably not declaring it for income tax reasons. And if you do declare it for VAT then you must be declaring it for income tax reasons.”

    If a trader is running that sort of scam, isn’t there an upper limit to undeclared cash deals? The tax inspector will look at cost of premises, equipment, wages etc and compare turnover with similar businesses. The business has to make enough turnover to appear to be making honest tax returns.

    Another reason for cash in hand deals is to fence stolen goods provided in a service (building materials, car parts etc).

  20. I was in Berlin this weekend and many shops and bars still only take cash or only some cards. So even in the heart of Europe cash is still important. Toynbee is a twerp.

  21. There’s a climate of suspicion out there.

    My business of selling pyramids and carousels for cash is suffering….

  22. I usually prefer to pay cash (and try to) whenever it’s practical, be that shops, restaurants, supermarkets, trades, etc. (but never pyramids)

    Ease, convenience, privacy (data), theft (data) and lots more…

    S2

    Paul,

    I get the general point but is there a degree of conspiracy to fraud here ? Is it not almost a given that most time tradesmen and other ask for cash in hand then it isn’t going to be declared. Can you just claim “I didn’t know” here ?

    Who cares whether you knew? What you can claim is that it’s none of your business. It is not my responsibility to ensure you pay your tax. Nor should it be.

    I would go further – there is no need to claim anything.

    Whatever “I may suspect”, assuming it even crossed my mind and mostly I’ve got far better things to tax my mind with, I wouldn’t actually know until a) the chap wrote his books up and b) he then chose to share that information with me.

    “Conspiracy to fraud” – only in the mad and deranged minds of those control freaks on the extreme left (or right) who believe that all must be guilty – and hence must be cured by the courageous…

  23. And talking of away with the fairies, left wing, mad as a hatter control freakery, in response to this comment from someone called Mark:

    you are insulting to both men and women who are libertarians

    It is a crude attempt to smear anyone with libertarian views as being incapable of being a good parent.

    That is bigoted, unfounded nonsense.

    You have let yourself down badly here, Richard.

    he has this to say:

    I think right wing libertarians let all children down

    But not left wing libertarians!

    Anyway, that’s some of you lot told.

  24. Lfb_uk: “New gearbox for car £480, offer cash and the VAT disappears. If I can help it, I will avoid any taxes I can!”

    There is no fucking reason to buy a a new or recon gearbox on cash terms. Haven’t you considered that you are the *fool *in this criminal enterprise? Are you in the gearbox business?

  25. Bloke in North Dorset

    I wonder what snide remark this will illicit:

    I’ve just sent this comment off to my son. Maybe he’ll have time to comment here and tell you how bad it was and how we ruined his life, if he has time between his job managing a charity shop and supporting his partner who’s just been adopted as a Green Party PPC for the General Election.

    If he does I’m sure he’ll tell you about how proud I was that he became the de facto leader of Occupy Bath. Maybe he’ll also tell you about how I insisted that if he wanted his allowance during school holidays he should work in a charity shop. I hope he’ll also have time to tell you about the parental support he got to spend one of his university summers working for an NGO in Cambodia.

    And to save you time looking me up, you’ll find I was involved in trying and failing to keep a UK Libertarian Party functioning.
    – See more at: http://www.taxresearch.org.uk/Blog/2015/02/15/on-libertarianism/comment-page-1/#comment-714815

  26. @ BiND
    So: the less intelligent of my sons actively supports the Green Party. I think their hearts are in the right place: pity about their brains. Since we supply some of his food (I only buy stuff that I am willing to eat or that my wife has specificaly requested me to buy out of her earnings so he eats oranges and carrots that I buy and ridiculous veggy sausages that I do not) I could be accused of indirectly supporting the Greens,
    If you are Libertarian you *should* support the option for children to support the Green party.

  27. Somebody hates me so much to create fake posts in my name. This is an example:

    ‘Charlieman
    February 16, 2015 at 8:50 pm
    Lfb_uk: “New gearbox for car £480, offer cash and the VAT disappears. If I can help it, I will avoid any taxes I can!”

    There is no fucking reason to buy a a new or recon gearbox on cash terms. Haven’t you considered that you are the *fool *in this criminal enterprise? Are you in the gearbox business?’

    My IP address, Charlieman’s real IP address, has been consistent for about fifteen years. I have corresponded with our host, Tim Worstall, using my own name from that IP address a few times.

    So I am mightily pissed off when some tosser presumes to play games.

    Just fuck off and learn not to mess around with grown ups.

  28. Bloke in North Dorset

    John77,

    I’m not sure my son supports the Gren Party, he’s kept a diplomatic silence when I commented that I’d never vote for the Green Party as long as I have a hole in my backside because they hate the poor.

    Even his vegetarianism is based on the principle that we in the west are wealthy enought not to need to do factory farming, but he’ll happily eat meat in poor countries. When they stay with us some of their meals are quite delicious, and to be fair they ae even prepared to coking meat for us.

    As long as his approach to life is genuine I’ll suport him, except if he expects me to vote green!

  29. PF,

    > Whatever “I may suspect”, assuming it even crossed my mind and mostly I’ve got far better things to tax my mind with, I wouldn’t actually know until a) the chap wrote his books up and b) he then chose to share that information with me.

    There are of course some crimes that one has a duty to report — rape, murder, burglary, etc. Crimes that actually indisputably directly harm. I think there used to be a general widespread understanding that the state and its ways are a pain in the arse that we have to put up with, not something to be celebrated: just look at Python’s New Cooker sketch — and Python are hardly a bunch of Tories. What the tax campaigners are trying to do at the moment is to move tax avoidance and tax minimalisation from the category of crimes that are the state’s problem and none of our business into the category of crimes that we must call the police about immediately because someone’s being harmed RIGHT NOW!

    That’s bad enough, but what’s really strange is that they also include simply advocating for taxes to be a bit lower in the first place, so that one could pay less tax without avoidance even coming into it. Still a harmful crime. Hence this:

    I think right wing libertarians let all children down

    Speaking as someone raised by a hard-line capital-S Socialist: what a cunt.

  30. Interesting..

    Yesterday, on “Libertarianism”, I quoted a chap called Mark (see above) – and then Richard’s response. And which was pretty ropey, even by Richard’s standards!

    This morning, Mark’s comment from yesterday has now been retrospectively disappeared / airbrushed – although bizarrely he has left his own response to Mark in place? Looks like deleting his own comments might be a step too far.

    Ah, perhaps now explained! From another thread, it looks like Mark (above) may have been PaulB (whom I guess has been banned for being far too honest!). “[ Ed comment: Deleted: changing names does not change IP addresses and you are PaulB by any other name ]”

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