Paying tradespeople

GillT57 I know all of what you mentioned having run a VAT registered business in the past, as I mentioned in my first response. However, I posted last response before changing 'earnings' to turnover.

I have no wish to hijack this thread into the whys and wherefores of other people's businesses, banking or book-keeping practises.

BBbevan asked a question to which she has received lots of interesting responses.

BBGranniel the VAT threshold is not on 'earnings' it is on turnover, so if for example, a plumber installs your central heating and you pay him £8000 to include labour, materials, new boiler and radiator, then if he does one of those jobs a month his turnover is £96000 and he must. by law, be registered for VAT. What his profit is out of that is neither here nor there as far as VAT is concerned. Banks charge a lot of money to pay in cash, more than they charge to pay in a cheque, so anyone asking to be paid in cash has presumably no intention of paying it in! I am not saying that everyone receiving cash is on a tax dodge, but as s small business owner trying to compete legally against others who work for cash it can be rather galling. Any decent trader with a good reputation, good credit with a builders merchant, will give you an invoice which can be paid through online banking.

Banking for a small business is a nightmare. The credit card companies charge me for the pleasure of having their service, then a % of how much the transaction is - different amounts for different types of cards. Then the bank charge for the payment into the account, as they do for cash/cheque/bank transfer and the bank also charge me for the pleasure of having an account with them even though the nearest branch is 25 miles away and I never visit. Taken all together bank transfer is my preferred option as it is safest for me - credit card transactions can be reversed, cheques bounced.

I would love to manage without a bank account - last year the bank blocked all my transactions due to an error (made by me) which they didn't tell me about and I only found out when someone asked me why my cheque had been returned by the bank (not bounced, returned). I was investigated for fraud and all my funds frozen until I was cleared. Even though I was cleared and compensated I think there must be a mark on my account as I tried to move my account elsewhere and was turned down.

It may not be for rad purposes. The bank charge business folk for everything these days, and if the tradesmen don't know u they ve no guarantee the cheque won't bounce

Online bank transfers round here in West Mids. Cheques???

Just like to add that not everybody is VAT registered. I believe the threshold is £85,000 per year turnover. I'm sure many of them would be more than happy to earn that amount & pay VAT. So if they are unable to provide a VAT invoice it does not mean they are 'dodgy' or evading taxes. I think we are often too quick to judge these days.

Not a problem paying in cash but an invoice that is signed, and dated, on receipt of payment, is a must .Otherwise there is no proof that you have made a payment.[hmm}

You could offer to pay by BACS if cash feels uncomfortable. If that is refused, they may be avoiding the VAT but you cannot be sure.
If your invoice includes VAT, not a problem.
You should ask for a receipt for own peace of mind, anyway.

If your trader wants cash- just pay up. Life throws up enough worries without adding a trader's conscience to the list.

Thank You!

I receive invoice and receipt in exchange for my cash, no problem that I see.

There's no reason why a cash payment should exclude the provision of a proper invoice and receipt. That is all perfectly above board and avoids bank charges which can be crippling for a small tradesman.

It is patently obvious that a tradesperson asking for cash is hoping to dodge tax and by paying cash you are colluding in this fraud. Why all this talk of cheques? Nobody uses them in business anymore, most companies, however small take payments by online banking. I have a small business so I know. The majority of my clients get sent an invoice by email, and then pay direct to my bank account, a few send me a cheque which is a pain and costs me £1 each to deposit. Nobody pays me cash, I do not want it. I just do not understand how anyone can keep a set of accurate accounts if they have got cash coming in all over the place, no invoices, and then paying out for materials. This is how so many small tradespeople go bust. I am with gillybob on this one, all of you paying your plumber, electrician, brickie in cash are helping them to avoid VAT at the very least, and make it very unfair on companies who do things the right way and issue invoices. Apart from my irritation at this, what do you think will happen to any guarantees on the work? What proof do you have that the work has been done by a registered tradesperson if you have difficulties with for example your house insurance?

Even if small traders are trying to avoid taxation, it troubles me very little compared to the activities of large corporations who get away with millions of pounds in tax evasion - most likely because they make contributions to political parties.
Cash payments every time for those who prefer it that way.

We pay cash for most everything. If the sum is very large we arrange transfer, but more than once our bank has somehow done wrong and the tradespeople have had a long unfair wait. The bank system is my worry, not the cash.

A couple of people that we have used in the past have let us know recently that they won't be taking cheques any more because of the hassle. There are very few banks locally now so visiting a bank means a trip into town. What does make me wonder is the requests for payment part cash and part bank transfer. I presume only the bank payment is declared. But as someone else said, I've done my bit and paid my bill so can't be policing someone else's tax returns!

Its the big businesses we really want to stop evading tax. My husband is a gardener and gets lots of cash payments cos there's no trouble with it clearing etc. But if you look at the paltry amount of cash wealthy people pay, its awful. Lord Bathurst near here is building 2,500 new houses round here but his business is based in the Cayman Islands. The only tax paid for those buildings will be from the builders etc. Yet Bathurst has just been in hospital for months and received huge farming subsidies. Vote Labour for fair collection of tax!!

Nothing wrong in paying in cash. You know it's paid for straight away, the tradespeople get it straightaway ..no surprises/shocks when you receive your next bank statement that something you may have overlooked. As long as you get a proper receipt for any large jobs/work done etc I don,t see a problem. Although there is often talk of a cashless society I don,t see how this is feasable without taking away a lot of life,s little pleasures: ie. would we still have car-boot sales...travelling fairgrounds....street vendors ....fetes and galas and probably other things were we would mostly pay in cash. Some charity shops only take cash, one near me in particular and another where my daughter lives in different part of the country. I refuse point blank to do online banking,it might be convenient for some, but for others such as the very elderly it is near impossible for them to learn. My principle on this is that it's not for our convenience at all...but for the banks convenience so they can cut back on staff (more unemployment) and save themselves a lot of money at the same time by closing more branches.

I can pay the window cleaner with cash ,pay pal or bank transfer,the milkman is cheque,the paper delivery don't want cheques only cards or cashand and the gardener is cash or cheques. Cleaner prefers cash and hairdresser either cash or cheque.I pay credit cards with cheques although I occasionally pay with a debit card if it's the same bank. DH and rounds at the pub always cash. Some weeks I can get through £150 without blinking.and the dear man only gets out £200 and moans.

If only all did the same kwest

As a partner in a very small building business, may I explain how we do business? We do not want to be paid in cash. It means taking time out of the working day to go to the bank, queuing up and then be charged a fee for paying in cash. We certainly do not want to be paid by cheque as it takes five working days to clear. this means that if there are two bank holidays and a weekend during the processing time then we have to wait up to nine days before the money is cleared. There is a far simpler method. We give our clients advance warning of the dates they will be invoiced. We ask them to arrange a bank transfer on receipt of our invoice and the money arrives in our account within hours. Simple. There is a clear paper trail( or online trail) for the benefit of our accountant. So far no-one has had a problem with that. I might add that our client range in ages from young homeowners to people in their late eighties.

Thank youBGranniel I think your advice is spot on. Coming from the SE where we only had money for the odd newspaper and paid most else by card, it was a bit of a shock being asked for money. I now, from all these posts realise why. We feel a lot better about it now, and all the tradespeople have done a very good job

As long as you are given a VAT invoice....there is no problem for you paying cash...the problem is with the contractor. Its not your problem if they do not keep their affairs in order. But I do understand what you are saying...since I moved to the North East from London 11 years ago...it annoys me that anybody I "hire" wants payment in cash...even some of the local shops!! I have many thoughts about this....not good ones....but as I say I now always ask for an invoice for "my accountant"...that puts a stop to any jiggery pokery....by the way I don't have an accountant!

I have a person who cuts our hedges and is scrupulously honest.

He will give invoices if requested but likes cash as
a) he pays his young helper in cash at the end of each week
b) gets charged for cheques
c) only goes to the bank when he needs to
d) says he has been "diddled" by cheques in the past.

I have never asked him about bank transfers but it would mean he had to check his account on your doorstep to know it had gone through.

I think in his position (and especially with new people) I would prefer cash too.

I never carry much cash around, but don't use cheques, so unless tradesmen have a credit card machine, or I can do bank transfer, I would get some cash in rather than start writing out cheques