Wage Payment Q

[cassa333]

Hello,

Can any one tell me if you are allowed to pay staff in cash with money that has come in to the company that has gone througthe books and accounted for etc but hasn't yet been taken to the bank?

Someone has said they can't do that and that HMRC will prosecute them.

[factor-fiction]

As long as tax and NI have been deducted I can't see the issue. It's not compulsory for an employer to have a bank account is it?

[Buenchico]

>>>Someone has said they can't do that and that HMRC will prosecute them

'Someone' seems to have (correctly) got hold of the idea that 'cash in hand' payments for employment (where that employment isn't notified to HMRC) are illegal and then (wrongly) assumed that all cash payments are thus illegal.

As F-F says, employers aren't obliged to even have a bank account, yet alone use it for paying employees. As long as the employment is properly recorded, with PAYE tax and NICs deducted and paid to HMRC, it's perfectly legal.

[cassa333]

Thanks that what we thought.

They were saying that it is not the cash wage payment that is the problem it is because it hasn't been put in the bank and then taken back out of the bank in cash.

I did point out that as long as the cash that came in (via bar takings) was properly accounted for and on the accounts etc we could use it.

[cassa333]

This 'we can't use unbanked cash' was from someone who constantly told us 'I'm an accountant' 'I'm an accountant'

[woofgang]

stoopid iriot.

[Buenchico]

Well I'm not an accountant but I used to do the books for a trader who ran a burger van and employed several staff. All of his returns to HMRC were entirely accurate. (I know because I compiled them!). I provided empty wage packets each week for the trader (with the employees' names and all of the relevant figures written onto them) and he simply took the money out of the till to put straight into those wage packets (with me then making the relevant adjustments within the books to account for it).

He had a visit from HMRC (who were doing a series of checks on mobile traders in the area) who complimented him on the way that things were done, so (even though I'm not an accountant) I remain confident that it's all perfectly legal!

[cassa333]

Woofang

It's nice to know, as a none accountant, that on this occation I had a better understanding than the little sh ccountant :)

[twix123]

Tell the little sh** that the company should also be saving money by not paying any bank charges, based on cash paid in, by utilising the cash to pay the wages!

[Buenchico]

That seems to be the wrong way round, Methyl!

Unless, and until, Parliament creates a statute specifically prohibiting cash payments for a particular purpose (as, for example, applies to the prohibition of cash payments for scrap metal under the provisions of the Scrap Metal Dealers Act 2013) all such payments must, de facto, be legal.

If you're aware of a statute prohibiting the cash payment of wages from the start of the current tax year, I invite you to provide a link proving it. (I'll be amazed if you can!)

[THECORBYLOON]

METHYL from the HMRC site, "What about cash in hand?

It's illegal for your employer to pay you cash in hand without deducting tax and National Insurance contributions from your wages.If you accept money in this way, you risk losing your employment rights and the right to some benefits, such as:maternity or paternity leave, sick pay, Jobseeker's Allowance. In addition you could end up having to pay the tax and National Insurance contributions yourself." Looks like cash is okay as long as tax and NI are deducted.