Many people will have come across ‘cash in hand’ deals whether it is for business or other purposes. Some traders may even offer you a ‘cash’ price lower than an official price as this means they may. Illegally, choose not to declare the income for tax or indeed VAT.
You should always ask for written quotations, invoices and receipts when buying goods and services, the reality is that many do not.
Hidden within this week’s Spring Statement by the Chancellor of the Exchequer, the Treasury is proposing the close in such transactions.
A crack down could be imposed by:
You not being able to claim the expenses against income taxes or capital gains taxes if needed without a receipt.
Imposing a minimum legal threshold, as many countries do, where a receipt must be paid e.g. £10,000.
This would tie in nicely with anti-money laundering regulations where banks, financial advisers, loan companies, solicitors and many more have to check, validate and certify sources of funds as well as an individual’s or business’s identity when they are used for transactions above a certain cash limits.
It is estimated that an additional £3bn+ could be secured in tax revenue if such rules where introduced. It tells a story though, that if £3bn additional tax could be raised, that means there is a ‘black economy’ in the ‘cash in hand’ business alone of sum £15bn.