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Buddy can you spare a dime, with a full receipted invoice and including 20% VAT

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Buddy can you spare a dime, with a full receipted invoice and including 20% VAT


 


The Government has announced a crackdown on the ‘Cash-in-hand Economy’ given the perceived loss of revenue from unpaid taxes.


 


I doubt that there are any of us who have not had a service or made a private sale or purchase for cash in the full knowledge that the Revenue may not necessarily become involved at some stage.


 


It occurred to me when this was announced that if you own your Limited Company business and are VAT registered then £100 worth of work you generate will invoke 20% VAT on top of your core price (£20). If that £100 is converted to net profit then you will probably pay 19% Corporation Tax (£19). If you then take that sum out as part of your remuneration and are fortunate enough to pay higher rate tax on part of your earnings then potentially this could mean another 40% on the net sum, meaning another £32.40 to the taxman.


 


Your £100 job has thereby generated £71.40 for the Revenue Services.


 


Staggering really and clearly difficult to offset against the cash-in-hand economy but certainly a significant loss of income for the taxman if you choose to prefer ’holding folding’ as Arthur Daley would say.  


 


It will clearly be a massive task. A much simpler way to generate revenue might be to look at the current structure of top flight football and Premier League Club’s continued desire to harvest players from all over the World despite the fact that our national junior teams have all won major tournaments this summer.


 


The vast sums paid to these players and their agents all end up away from these shores and outside the clutches of HM Revenue Collection. There are of course many schemes available to UK taxed players which seek to reduce their own liabilities and yet they still garner the affections of the masses. When a player kisses the badge it might just as well be a £50 note for that is where their true loyalty lies.


 


It is Joe Blogs who may have painted someone’s front door for cash in hand along with several thousands more cash in hand and full taxpayers that pay Jose’s or Romelu’s wages. A very small percentage comes back into the well- being of this country other than top of the range car salerooms and hairdressers.