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News - 21 May 2014

Cash in hand economy growing

A new survey from a leading price comparison web site has revealed that more than one in seven (14%) Brits would rather pay less money for a service by paying cash, even if they knew their tradesman was avoiding tax. In fact, over a third (36%) of people have specifically asked for a discount in exchange for paying cash.

Stuart Coleman, Manager of the Tax Department of ABDS comments:
“The survey also shows that 16% of people in the UK have paid cash knowing that their tradesman is avoiding tax, with 30% saying that they would rather not know if their tradesman was avoiding paying tax. Infact, 81% have paid cash-in-hand to help resolve expensive household and maintenance issues, and In fact 30% have paid cash-in-hand three times or more in the last year alone. Quite a shocking statistic.”

Minister David Gauke  has said that it was “morally wrong” for homeowners to pay tradesmen cash-in-hand knowing they intended to avoid paying tax on it, yet 51% don’t believe there is anything wrong with doing it if it means saving money.

However, the Government is concerned as these under the table payments are costing the UK economy an estimated £2bn a year. While there is no law against paying someone in cash, tradesmen are under a legal obligation to disclose their earnings to HMRC and say whether they are liable for income tax or VAT. The problem is that, without a paper trail, an opportunity to deceive can be created; and the research highlights that 39% of people have not received an invoice for the work done by their tradesman.

Not everyone feels the same though, with 24% of people believing it is morally wrong to pay cash-in-hand with the knowledge of tax avoidance. However, only 10% say they would report tradesmen to HMRC for tax evasion, even if they knew they were actively avoiding paying tax.

If you need any help and advice with your Tax compliance and planning, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help in all your financial planning and business advice.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

Brilliant with numbers   
Great with people  
Clear and precise with advice
Timely and cost effective 
In touch with issues that face our clients
Mindful of our client’s long term strategic goals

Helping Your Business is Our Business

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