People who pay cash in hand to tradesmen are “diddling” the economy and diverting money from hospitals and schools, according to the country’s most senior taxman, Dave Hartnett.
Mr Hartnett is urging everyone to pay by cheque, bank card, credit card or some other ‘delayed payment scheme’ I expect but it was always my understanding that nobody, and that includes businesses, is legally obliged to accept anything other than cash. When immediate payment is demanded for goods or services provided then strictly speaking, anything other than cash is not truly immediate payment.
For many years we have taken it for granted that we can pay for goods and services in a manner that suits us but I remember many years ago, before the explosion of the use of cheques, bank cards and credit cards etc, if you wished to pay for things with a cheque, you would always ask, “will you accept a cheque?” The person requiring payment was not obliged to accept a cheque because a cheque is a type of ‘promissory note’ given in lieu of immediate payment. What Mr Hartnett fails to consider is that any business that accepts, cheques, bank cards and credit cards incur extra costs (as well as income tax) in order to process payment in this manner, whereas, accepting cash is free from all charges other than income tax. Tradesman who accept cash are able to pass the savings, from not having to pay bank charges, on to their customers – giving their customers better value for money.
Suggesting that every tradesman who is paid in cash is not declaring the earnings is misleading. Many tradesman are operating as self-employed workers and not as a business as such. They prefer to work self-employed as a life-style choice rather than to grow a business. The rates that these tradesman are charging means that they are making a living, often living from hand to mouth, rather than running a profitable business.
I had a conversation recently with a tradesman who was carrying out work for me and he pointed this very fact out. He explained to me that after completing a week long ‘job’ for someone, if they then pay him by cheque he has to wait for the cheque to clear before he can put food on the table for his family. If they had paid him by cash he would have a regular cash flow with which to support his family.
Take taxi drivers as an example, do you know of anyone that has ever taken a taxi and then at the end of the journey tried to pay with a cheque or credit card? Although, I have heard of one large north east taxi firm that have the option for customers to pay their fare by card, the majority of taxi operators do not; what is more, people wouldn’t expect the taxi driver to accept anything other than cash.
If the government want to encourage unemployed people to get off benefits by becoming self-employed or starting small businesses, therefore saving the tax-payers the cost of benefit payments then they have to give the tradesman incentive to do it rather than encouraging us all to make it harder for them.
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