Tax Dodging!

[Nelli]

How do people get away without paying tax. I'm talking of course about people with their own businesses. Now the whole idea seems pretty simple to me...you get paid for Goods/Services by Cash-in-hand and then who's going to know, I've heard people saying that they never put their money through their bank. Is it the banks then that tell the Inland Revenue of your extra curricular activities, if not how on earth are you going to be find out. (Nelli is not entrepreneurial enough to run her own business);-)

[gilf]

Your correct in part, i.e. that they take cash in hand work, the inland revenue need to see your accounts which would include you buisness bank account and therefore able to calculate the amount of money going in and out.

[rinkytink]

Nelli, what you is is very true.....for a very small business that only has a few (or even one) people working for it. As soon as you want to expand you are going to need to employ others and you will have to pay tax for them. Also if you are not paying any tax then you are also not making any national insurance contributions. I am not sure how that would leave you if you wanted to claim something. Ahhhh...maybe that's how they find you out - everyone has a national insurance number - maybe they can find out if you are not making any contributions ?

[darth vader]

the IR primarily use bank statements to verify your income it is true. But cash-in-hand is not always a successful way to dodge the tax man as they aren't daft. eg. when i was an accountant i remember hearing about an owner of a bar trying to convince the IR that he had takings as low as �10 on some nights. They cased the joint and watched how many customers he got over the next few weeks. He didn't stand a chance in court

[andy hughes]

The Inl;and Revenue are human (contrary to popular belief!) and are able to see through most people's attempts to avoid paying tax. Up to a point, they will let a certain amount go, but if you take the pee, they will land on you from a great height! You must remember that anyone paying 'you' will be trying to avoid paying their tax, and may well declare their payment to 'you' on their tax return. The IR are pretty sharp at threading these transactions together, and if they think it is wholesale fraud, the put a specialist on your case, and you are in big trouble. Honesty really is best - you can't beat the system for ever, and if they start delving into 'your' murky past ...

[Nelli]

Thanks people! andy hughes: it hadn't occured to me that other people may declare this payment and then of course you're gonna be in it up to your neck. I suppose the only way to achieve "tax free living" in the UK is to have a regular job, and an extra business where it's luxury low cost items where people are going to pay cash in hand! Thanks guys!

[cardinal]

It's easy but I'm not telling you as you never know whose reading this stuff. Not that I'm paranoid, but even paranoids get it right sometimes.