Cash Jobs and Moral Repugnancy

Posted on July 25, 2012

Minister for the treasurer David Gauke has recently said that paying builders in cash for a discount is morally repugnant and that it is illegal tax avoidance? What I find surprising is that this has come out in the news as if it is some sort of dramatic recent discovery; I am no mathematical genius, but within a couple of years of leaving a pretty basic education, I kind of got the feeling that cash deals to avoid  paying tax was more than likely, morally wrong but pretty much widespread. That was in the mid eighties.

 Gauke: A question of morals

There are not many people in this country who have never benefited or thought they had benefited from cash discounts from builders, plumbers, window cleaners or gardeners and it is difficult for anyone to turn down the opportunity to save money, especially at time when it is particularly scarce unless you a re hedge fund manager or a calculator of derivatives. However, what really winds me up, is when tradesmen tell you they are doing you a huge favour, when then cash deals they are offering are heavily weighted towards themselves.

Most of my friends who work in relation to the construction industry will now what I am about to say, but for everyone else’s benefit I am going to give an example of how the builder is the one who gains everything in a cash in the hand deal. Let’s say, to keep it simple, that you have been quoted £10,000 for a fit out of kitchen and you pay roughly 30% Tax and NI on your own personal earnings as a PAYE employee.

  • Cost of kitchen =£10k
  • VAT at 20% = £2k
  • Total cost = £12k
  • Income you have had to earn to pay the job £15.6k

This is what normally happens in a builders cash deal.

  • Cost of job £10k + 20% VAT = £12k
  • Cash offer £11k- saving you £1k (“I’ll split the VAT saving with you mate”)

It is important to remember that any VAT you pay is passed directly to the revenue, so taking the example above, the builder is not only pocketing a grand for doing nothing, he is also avoiding income tax of £3k on the job. He is four grand and no paperwork better off and you are a grand better off. That doesn’t seem so good now does it? Especially when you realise a cash job is participation in illegal tax evasion and has no guarantee or receipt. If you are prepared to take a risk on a cash job, get your calculator out and assess how much the builder is making by avoiding tax, then you can start talking about a deal that will suit all parties, not just him. But remember…….No income tax no vat, no money back no guarantee!

Cash is King….But who is the real winner (Photo by David Cole © Press Portrait Service 01798-342716)

We all have what what we judge is an acceptable moral code, it is something we generally keep quiet through fear of condemnation but I would suggest that a man (David Gauke) who allegedly claimed inland revenue stamp duty of £8,550 on a second home through parliamentary expenses, is not the man to call us morally repugnant or tell us to pay a £10.00 window cleaning bill by BACS payment into a legitimate business account on receipt of a full invoice.

For my part, I would never pay a builder cash, not because I love the taxman, far from it, it’s just that I can’t stand the thought of saving a few quid to fill the pockets of someone doing a job where the risk is all on me.

Though I guess that has nothing to do with morality and more to do with not getting screwed over.

5 Replies to "Cash Jobs and Moral Repugnancy"

  • Steve Heath
    July 25, 2012 (11:57 pm)

    Is that why you payed me by tinternet banking for your tax exile pad in hayling island

  • Bob Lethaby
    July 26, 2012 (6:45 am)

    Get it right Steve, Canvey Island!

  • Nick
    July 26, 2012 (7:21 am)

    David Gauke knows what he is talking about. His wife Rachel is a corporate tax lawyer. And that’s what gets my goat. The ‘cash in hand’ culture involves large numbers of not very wealthy people making a few quid and allegedly costs the country £2bn in potential tax revenue. At the same time corporate tax rules and ‘sweetheart’ negotiations means the UK missing out on an alleged £25bn in potential tax from a small number of large companies. Thats over 10 times as much potential revenue.

    So let’s not pretend this is about fairness or morals. It is distraction, plain and simple. As long as the government can set working man (or woman) against working man (or woman) then we have less chance of noticing what is really going on.

  • Bob Lethaby
    July 26, 2012 (9:42 am)

    A very good point Nick, Phillip Green recently broke all records with his £1.2 billion dividend payment to his wife in Monaco…..however, what often happens, if you are not familiar with the person you are dealing with, is that a cash deal is not as great as it seems, I have had experience of this.

    If governments are to set new standards of morality in taxation, the whole system needs to be overhauled, starting with offshore accounting…..98 of the FTSE 100 including the leading High St Banks have bases offshore….wrong, whichever way you paint it.

    If I have been misinterpreted about how I morally perceive cash in the hand, I have written the blog in the wrong context, but what I do find morally wrong is someoneone using the word CASH as a tool to make the general public thinking they are on to a cracking deal, when often it is not the case.

    I am lucky enough to have a lot of friends in the trade like who I can trust to give me “good deals” on work, but the one time I got someone to price what I would class as a “major job” the “cash in the hand deal” was heavily stacked in favour of contractor….fuck that!

    I also think that people who openly brag about cash in the hand deals (you know who) shouldn’t really spend their time in pubs getting moralistic over a single Mother claiming a few quid a week in working tax credits…………

  • David Cole
    October 9, 2012 (10:41 am)

    You seem like a decent guy – with a good website, but you simply cannot steal a © image and post it on the net – it is a bit sort of morally repugnant – the cash in hand picture at: belongs to a man trying to make a living in the UK – the image is sold via Alamy (it is CR8N6A) in the Alamy library and it is clearly © David Cole) – If you were a commercial company I would charge you a license fee for your retroactive use – you are not – I won’t – but please do not do it again – ALL pictures are the © of the person who created the image.
    If you had stolen a Getty image you would be looking at a £1,000 bill plus their legal costs with no let off. Please take this on board as friendly advice.
    Best wishes for the future
    David Cole –

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