Owed money, verbal contract, debtor refusing to settle.

[bazking69]

Long story so I'll keep it short.

FiL did some work for a chap on a cash in hand (less 25% to cover obligations before the tax nazis jump in) basis, working a week in hand.

7 days in, FiL got wind that chap was having cashflow issues and owed people LRandC. Confronted him to be met with a casual 'you'll get paid when I get paid'. FiL cleared tools and left after shared words.

Forward on a month, numerous emails sent chasing payment, numerous vague replies and promises of cheque in post etc, but nothing. Threaten legal action and now the chap has changed approach claiming the work was shoddy, he's had to have it redone etc. Usual guff and I have emails to prove he was happy with the work until things started to turn sour.

Whats the next plan of attack? Its may 'only' be £450, but this guy seems to be a bit of a conman and thinks this is an acceptable way to treat people who have done work for him in good faith. While I don't really want to get involved personally, such people make my blood boil.

Do we have a leg to stand on to persue legally (is it financially worthwhile?) or do I treat the guy like he has treated FiL and send someone considerably less patient and diplomatic than me round to his house to put the frighteners up him?

The issue is that any terms were verbal, so no-one has any proof of what is, or isn't, owed, which may hinder any proof we can put forward if we go down the small claims court to recover.

[HoHoHo]

I don't think you have a leg to stand on personally.

Cash in hand, no contract or terms to me = avoiding HMRC (unless your FiL is self employed and declares all earnings?)

Either way, I understand it's £450 but you'll have to put it down to experience, next time/job have a contract which can be enforced if need be. If you don't want to work by the rules, have a back-handed job and risk the consequences.

[Eric Mc]

Is your father in law registered self employed?

If not, how was he planning on declaring this income for tax purposes?

If the answer to the above was he wasn't planning on notifying HMRC about this income, then his situation is akin to two bank robbers squabbling over the dividing up the proceeds from a hold up i.e. it's unenforceable in law.

[HoHoHo]

3 minutes too late Eric

You are quite right though - it's illegal and tough st basically.

[singlecoil]

I'm going to disagree.

Unless your FIL was an employee, how he intends to meet his tax obligations has nothing to do with the person for whom he was doing the work.

The question here is does the debtor have any money/assets. If he does, then small claims court, start with an online claim. If he doesn't, then write it off.

[Eric Mc]

So are you arguing that unpaid illegal earnings are enforceable by law?

Undeclared cash income is not just a tax offence but also an offence under Money Laundering Regulations and the Proceeds of Crime Act.

[HoHoHo]

singlecoil said:

I'm going to disagree.

Unless your FIL was an employee, how he intends to meet his tax obligations has nothing to do with the person for whom he was doing the work.

The question here is does the debtor have any money/assets. If he does, then small claims court, start with an online claim. If he doesn't, then write it off.

I think the words cash in hand and having no contract speak volumes here!

You can't go to a small claims court if you're working 'cash in hand'

As has been stated - it appears his FiL was trying to work illegally and has suffered the consequences.

[Lurking Lawyer]

Eric Mc said:

So are you arguing that unpaid illegal earnings are enforceable by law?

Undeclared cash income is not just a tax offence but also an offence under Money Laundering Regulations and the Proceeds of Crime Act.

There is no illegality until the income has failed to be declared. A contract is only unenforceable for illegality where the underlying agreement is illegal e.g. a hitman trying to sue for his fee!

A small claims hearing will not be interested in the hypotheticals of how/when tax was to be paid on it - just whether, contractually, the obligation to pay had arisen.

[blindswelledrat]

Eric Mc said:

So are you arguing that unpaid illegal earnings are enforceable by law?

.

I would suggest that the average county court would not busy itself with the finer details of the tax affairs of the parties to whom the dispute relates. Even if it did, the mere fact that a transaction is being settled in cash in no way assumes tax fraud. At least in the eyes of the law, although we all know the reality.

OP, I would definitely pursue it.
It is relatively costless to bring a claim (£50 for that amount IIRC) and will take seconds to do online. You can have an enforceable CCJ within a fortnight or a court date if he disputes the claim.
Is it an individual or a company who owes the money?

[singlecoil]

Lurking Lawyer said:

Eric Mc said:

So are you arguing that unpaid illegal earnings are enforceable by law?

Undeclared cash income is not just a tax offence but also an offence under Money Laundering Regulations and the Proceeds of Crime Act.

There is no illegality until the income has failed to be declared. A contract is only unenforceable for illegality where the underlying agreement is illegal e.g. a hitman trying to sue for his fee!

A small claims hearing will not be interested in the hypotheticals of how/when tax was to be paid on it - just whether, contractually, the obligation to pay had arisen.

I'm obliged to my learned friend.

[HoHoHo]

I think 'cash in hand' is being forgotten here.

i agree the court won't be interested in tax affairs, but equally I would have thought a cash in hand makes it difficult to prove who said what etc., thus making the claim very difficult to enforce?

[blindswelledrat]

HoHoHo said:

I think 'cash in hand' is being forgotten here.

i agree the court won't be interested in tax affairs, but equally I would have thought a cash in hand makes it difficult to prove who said what etc., thus making the claim very difficult to enforce?

The OP claims to have emails describing the work etc so presumably they mention figures/amounts etc.

[HoHoHo]

blindswelledrat said:

HoHoHo said:

I think 'cash in hand' is being forgotten here.

i agree the court won't be interested in tax affairs, but equally I would have thought a cash in hand makes it difficult to prove who said what etc., thus making the claim very difficult to enforce?

The OP claims to have emails describing the work etc so presumably they mention figures/amounts etc.

No, it he has emails chasing funds - the work, amount to be paid etc. was all verbal.

Now we all know a verbal contract is as legally binding as a written one, but it's very difficult to prove - hence you need to have a contract in writing.....

That is unless it was 'cash in hand'

Tough st, learn from your mistake, try not to be clever and move on.

Edited by HoHoHo on Friday 30th December 14:02

[singlecoil]

HoHoHo said:

blindswelledrat said:

HoHoHo said:

I think 'cash in hand' is being forgotten here.

i agree the court won't be interested in tax affairs, but equally I would have thought a cash in hand makes it difficult to prove who said what etc., thus making the claim very difficult to enforce?

The OP claims to have emails describing the work etc so presumably they mention figures/amounts etc.

No, it he has emails chasing funds - the work, amount to be paid etc. was all verbal.

Now we all know a verbal contract is as legally binding as a written one, but it's very difficult to prove - hence you need to have a contract in writing.....

That is unless is was 'cash in hand'

Tough st, learn from your mistake, try not to be clever and move on.

bks. The work, was done, and now needs to be paid for. If the debtor has the money, sue him, get the money, then pay the tax on it.

[Eric Mc]

Lurking Lawyer said:

Eric Mc said:

So are you arguing that unpaid illegal earnings are enforceable by law?

Undeclared cash income is not just a tax offence but also an offence under Money Laundering Regulations and the Proceeds of Crime Act.

There is no illegality until the income has failed to be declared. A contract is only unenforceable for illegality where the underlying agreement is illegal e.g. a hitman trying to sue for his fee!

A small claims hearing will not be interested in the hypotheticals of how/when tax was to be paid on it - just whether, contractually, the obligation to pay had arisen.

Does not "intention" come into such matters?

If the individual decides from the outset that he isn't going to declare the income for tax purposes, then the crime has been committed straight away.

At least, that is my understanding of the Money Laundering and Proceeds of Crime Rules.

I certainly know that if an accountant gets wind of a client behaving like this, the accountant will have broken the law if he fails to notify what he SUSPECTS his client may be up to - and that may be months or even years before any sort of tax return is due.

[HoHoHo]

singlecoil said:

bks. The work, was done, and now needs to be paid for. If the debtor has the money, sue him, get the money, then pay the tax on it.

If it's all above board then fine - go that route.

But it was a cash in hand job - you can't have it both ways!

[singlecoil]

HoHoHo said:

singlecoil said:

bks. The work, was done, and now needs to be paid for. If the debtor has the money, sue him, get the money, then pay the tax on it.

If it's all above board then fine - go that route.

But it was a cash in hand job - you can't have it both ways!

So the guy was going to be paid in cash, so what? It has no bearing on whether he should be paid or not.

[Eric Mc]

singlecoil said:

So the guy was going to be paid in cash, so what? It has no bearing on whether he should be paid or not.

Absolutely.

[HoHoHo]

singlecoil said:

HoHoHo said:

singlecoil said:

bks. The work, was done, and now needs to be paid for. If the debtor has the money, sue him, get the money, then pay the tax on it.

If it's all above board then fine - go that route.

But it was a cash in hand job - you can't have it both ways!

So the guy was going to be paid in cash, so what? It has no bearing on whether he should be paid or not.

No, I haven't said that - if the work is OK he should be paid, but for reasons that we are not party to the chap owing hasn't now paid him (we are only seeing one side of the story here).

I'm simply suggesting a court of law is not the route to go - it appears he's working CIH yet wants the law to help him when he doesn't get paid.......

[singlecoil]

HoHoHo said:

I'm simply suggesting a court of law is not the route to go - it appears he's working CIH yet wants the law to help him when he doesn't get paid.......

I can only think that you have a different interpretation of the relevant part of the OP post, quoted below.

bazking69 said:

FiL did some work for a chap on a cash in hand (less 25% to cover obligations before the tax nazis jump in) basis, working a week in hand.

But let's consider it from the HMRC's point of view. What do you think they would like to have happen? My guess is they would like the OP's FIL to be paid, and for them to get their share of it.