Paying in cash

[Cogcog]

My father in law has just been watching one of the cowboy builder programmes and is convinced that they said that if a householder pays in cash and the builder then fails to declare that cash as earnings to HMRC, that the householder may be liable.

Is that right?

Seems unfair that the householder is liable for tax on earnings , the declaration of which he has no influence over (beyond asking for a receipt I suppose)

[Bebop Beru]

Well if it was on TV it must be right!

The main danger with paying in cash will be a lack of recourse if it's a botched job and you've no receipt. HMRC won't be chasing down homeowners to pay the VAT of errant builders.

[Cogcog]

Bebop Beru said:

Well if it was on TV it must be right!

The main danger with paying in cash will be a lack of recourse if it's a botched job and you've no receipt. HMRC won't be chasing down homeowners to pay the VAT of errant builders.

I won't have a problem with the quality, he gets lots of work from the business. I no doubt can get a receipt because as far as I am concerned he is charging VAT, there has been no discussion only that he would prefer cash so that he can pay the ground works without having to wait for it to clear.

[Eric Mc]

It's the traders respnsibility to report his income correctly - not the responsibility of those who pay him.

[TheEnd]

It sounds like they are trying to dissuade people from paying cash by making them think they are party to something.

Similar to the "be booked, be insured" taxi stuff.
No one cares about it, they want a cheap taxi and they want one now.

[Cogcog]

Thanks folks

[The Ferret]

Eric Mc said:

It's the traders respnsibility to report his income correctly - not the responsibility of those who pay him.

Except in the Construction Industry. If you fall within the scope of the CIS you must report all payments made to the builder, and deduct tax at source from their payment if they carry a net payment status. If you don't report the payment and deduct the tax you become liable for the tax that should have been deducted.

Didn't see the program, but I wonder whether there is a mix up here. It seems to be catching out a few property developers now as opposed to contractors, as they don't see themselves as contractors but are caught by the scheme due to the nature of the work involved.

[Eric Mc]

The Ferret said:

Eric Mc said:

It's the traders respnsibility to report his income correctly - not the responsibility of those who pay him.

Except in the Construction Industry. If you fall within the scope of the CIS you must report all payments made to the builder, and deduct tax at source from their payment if they carry a net payment status. If you don't report the payment and deduct the tax you become liable for the tax that should have been deducted.

Didn't see the program, but I wonder whether there is a mix up here. It seems to be catching out a few property developers now as opposed to contractors, as they don't see themselves as contractors but are caught by the scheme due to the nature of the work involved.

There are some exceptions in certain industries - but an ordinary individual ppaying a tradesman (for instance) wuill have no such worries.

[Simon Brooks]

Cash is still legal tender
Provided the paperwork/invoices are in order the responsibility rests with the supplier