David Gauke has said that paying tradesmen cash in hand comes at a ‘big cost’ as taxpayers are left to help balance the books.
Treasury Minister, David Gauke, says that paying a plumber or builder cash in hand, in order to get a discount, is morally wrong.
Speaking to the Daily Telegraph, Gauke said: Cash in hand payments are ‘morally wrong’
“Getting a discount with your plumber by paying cash in hand is something that is a big cost to the Revenue and means others have to pay more in tax. I think it is morally wrong. It is illegal for the plumber but it is pretty implicit in those circumstances that there is a reason why there is a discount for cash.”
The Treasury Minister said to BBC Two’s Newsnight that paying in cash was not the problem, but the act of paying cash in hand in order to evade tax was. Seeing deliberate payments ‘off the books’ as defrauding the NHS, Police and other public services of money available from the public purse, Gauke admits that cash in hand payments are nearly impossible to police.
“When a tradesman says, ‘Here’s a 10%, a 20% discount on your bill if you pay me cash in hand’ is facilitate the hidden economy. That’s a big problem in terms of loss to the Exchequer as tax avoidance. Revenue is not being paid as it should be paid,” he added.
Also in the news this week, in a George Orwell Nineteen Eight-Four Esq. operation, HMRC has called on the younger generation to spy for them: asking school children to report tax evasion to their teachers.
So, does coming clean to the taxman pay off?
HMRC introduced The Plumbers Tax Safe Plan in 2011 for those working in the plumbing trade to come clean if they have not been declaring all of their income or paying the right amount of tax. The tax amnesty has prompted 430 plumbers to disclose information of unpaid tax to HMRC, resulting so far in £4million pounds in tax being paid back to the public purse.
For those deciding not to come forward and declare undisclosed earnings to HMRC through The Plumbers Tax Safe Plan, the Plumbers’ tax amnesty instigated one thousand civil tax investigation cases, with completed cases clawing in another £1m in evaded taxes. Not opting to take part in The Plumbers Tax Safe Plan may have been a bad decision; the tax amnesty has seen fourteen plumbers arrested and one convicted of tax evasion, up to June 2012.
On 23 July, HM Revenue and Customs announced that Melvyn Careswell, a 49 year old plumber from Surrey, ‘has been jailed
Arrested on the 5th of August last year, Careswell pleaded guilty to fraudulent tax evasion at Kingston Crown Court on 20 July 2012.
HMRC Assistant Director of Criminal Investigations, Chris Martin, said:
“Careswell stole from UK taxpayers by failing to pay tax due on his earnings and now he must face the consequences of his actions in jail. HMRC is clamping down on plumbers and those in other trades who attempt to commit tax evasion, and the sentence given to Careswell will act as a deterrent.”
Trading as a self-employed plumber through his own company, MPC Heating and Plumbing, Careswell failed to declare any of his earnings to HMRC, which allowed him to evade £50,000 of Income Tax over a five year period.
Have you failed to declare income to HMRC?
You can avoid a lengthy enquiry and hefty tax penalties by coming clean to the taxman.
KinsellaTax can make your voluntary disclosure to HMRC on your behalf.
The team at KinsellaTax consists of ex-HM Inspector of Taxes and ex-HM Custom and Excise Officers, fully trained in all types of HMRC investigations.