Tax

[squarebear]

I have "a friend" who did some work for another person on a website for which they were paid £1000 via Paypal. They then withdrew the money to their bank account.

My question is do they have to pay tax on it, as they have no intention of doing so? Will anyone notice this in the bank and say anything? If someone does say something, what is likely to happen to "my friend"?

[ummmm]

Depends how much they earn in their other job/s...

No one will notice in the bank for such a small amount.

[squarebear]

Their wages are more than £1000 going in each month. Thanks for your answer.

[ummmm]

The bank won't be interested where the money came from. I was told that anything over 5k is flagged and HMRC might trace the source.

[squarebear]

Nice one!

[ummmm]

And HMRC are crap....

[Dodger666]

In answer to your question, Yes, they should declare it on their Income Tax return. If they don't declare it and someone "shops" them it may end up costing them more than just the unpaid tax. What happens if the person your friend did the work for claims the £1000 as a business expense and lists your friend as the person who they paid the £1000 to?

Anyone who works for cash-in-hand without paying tax is committing tax evasion.

Apart from that, the more these people pay in tax the less the rest of us has to.

[squarebear]

The person who paid the £1000 lives in Japan and is unlikely to mention it on any UK forms.

[ummmm]

Wrong dogger....the more the government gets. We still pay the same.

It's only 1k SB....why are you so bothered?

[squarebear]

Because my friend wants to keep all of the money but is a bit concerned that someone at the bank will wonder what it is and dob him in.

[ummmm]

Oh.....no they won't. It could be a repaid loan for all they know. Tell him not to worry...

[R1Geezer]

yes he should pay tax on his world wide income based on current thresholds and allowances so he should declare it on his tax return or ask for one if he does not get a tax return. It probably won't get noticed, the bank are no friends of HMRC so he'll be safe there unless they start to think it's some sort of laundering operation but for a bag of sand a month I'd say they wouldn't bother. If HMRC get wind of it in the future they'll back date the whole lot and demand the tax, could end up in jail if it's serious enough. I'd say he has 2 chance per year cumulative of getting caught. so after 50 years he'll have definately been caught, average time for getting caught 25 years. HMRC are snowed under so it'll take something that draws their attention before he gets caught.

[R1Geezer]

2 means 2% above

[ummmm]

This is a one off I think...

[squarebear]

He will have a maximum of 4 of these payments.

[ummmm]

Still don't think it'll make any difference...

Is he self employed?

[R1Geezer]

in that case SB don't bother they'll never notice it and even if they do it won't be the end of the world.

[squarebear]

He works at a normal job but this has been a one off job on the side.

[squarebear]

Thanks for your advice. I think I'll tell him to risk it.

[ummmm]

Being self employed would be more risky....as they're not I wouldn't worry.