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Is It Illegal To Pay Cash To Avoid V A T?
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I'm having a small building job done and I offered to pay cash to avoid the VAT. I'm I illegal or would the builder be illegal if he accepted it?
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It looks like you've offered to pay less than quoted if the builder drops the VAT, don't blame you but this is a bit of a grey area. Legally speaking you are fine but the builder must then assume what you pay in cash includes the VAT and declares it but we all know that's unlikely so I'd say somewhere in among this something is probably illegal. No doubt the judge will be along soon.
Paying in cash is perfectly legit. It's just another method of payment (as are cheque; bank transfer etc.)
If the builder does not enter it in his VAT accounts, then that is his problem. (Guilty of VAT fraud.)
BUT.................. at a push, it is possible that you could be prosecuted for conspiracy to defraud HMRC.
Highly unlikely since most people would lie through their teeth and say that the builder told them he was NOT registered.
Your word against his.
It had to be said as this is a public website.
If the builder does not enter it in his VAT accounts, then that is his problem. (Guilty of VAT fraud.)
BUT.................. at a push, it is possible that you could be prosecuted for conspiracy to defraud HMRC.
Highly unlikely since most people would lie through their teeth and say that the builder told them he was NOT registered.
Your word against his.
It had to be said as this is a public website.
Failure by the builder to declare income to HMRC would be a criminal offence under Section 3 of the Fraud Act 2006. ('Fraud by failing to disclose information').
Further, Section 1(1) of the Criminal Law Act 1977 states: “If a person agrees with any other person or persons that a course of conduct shall be pursued which, if the agreement is carried out in accordance with their intentions, either will necessarily amount to or involve the commission of any offence or offences by one or more of the parties to the agreement, or would do so but for the existence of facts which render the commission of the offence or any of the offences impossible, he is guilty of conspiracy to commit the offence or offences in question.” (There's also a common law offence of 'conspiracy to defraud' which can be used as an alternative charge, as per the provisions of Section 12 of the Criminal Justice Act 1987).
So, while it rarely happens in practice, it is possible that a customer (who knowingly pays a lower price on the basis that a trader won't then declare that income to HMRC) can be prosecuted, alongside the trader, for committing a criminal offence.
Further, Section 1(1) of the Criminal Law Act 1977 states: “If a person agrees with any other person or persons that a course of conduct shall be pursued which, if the agreement is carried out in accordance with their intentions, either will necessarily amount to or involve the commission of any offence or offences by one or more of the parties to the agreement, or would do so but for the existence of facts which render the commission of the offence or any of the offences impossible, he is guilty of conspiracy to commit the offence or offences in question.” (There's also a common law offence of 'conspiracy to defraud' which can be used as an alternative charge, as per the provisions of Section 12 of the Criminal Justice Act 1987).
So, while it rarely happens in practice, it is possible that a customer (who knowingly pays a lower price on the basis that a trader won't then declare that income to HMRC) can be prosecuted, alongside the trader, for committing a criminal offence.
The at-fault party would be the builder. However, the builder would obviously not be able to give you a receipt that itemised the VAT (since there wasn't any), which could cause problems for you either in getting remedies done in the event of a problem, or if HMRC asked to see your receipts because they were investigating the builder ...
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