Ed Balls has received controversy for saying we should always get a receipt when paying cash-in-hand for a job, however small. He is quoted as saying he always gets a receipt even when paying £10 for having his hedge cut.
While it would be great for all of us if everyone paid their fair share of tax it is not that simple and unfortunately it is often the case that people are happy to pay cash if it means they can get a job done cheaper.
He has received criticism because the onus does not fall on a homeowner to ensure a tradesman is paying tax but rather on the tradesman.
Although there are exceptions to this if, for example, you employ a full time nanny then you are deemed to be their employer.
It also missed a key issue that the tradesman could just buy a spare receipt book. How would you ever know that receipt made it onto their tax return? Receipt are really only of benefit to businesses when their staff can take cash. A company receipt means it is more likely that the money will be traceable to the company especially if they give out an electronic till receipt. This is often why you see signs at kiosks saying please report if you are not given a receipt. Or why some companies will mystery shop to ensure they are given a valid company receipt.
If you are concerned that the person you are paying won’t be paying their fair share of tax on the money you pay them, you could insist on paying by cheque or bank transfer as this then needs to go through their account.
If you are self-employed and worried about your tax then Umbrella Accountants LLP can help on 0800 121 6513.