Cash in hand

[fattony]

A few years ago my employer needed casual labour and basically used people he knew and paid them cash in hand when they were free, no invoices nothing but how did he get away with it. Im not wanting to follow his example but if I wanted to employ casual labour and they cant give me an invoice how could I do it or can't I?

 

[Richie N]

You can't pay any staff cash in hand, they should go onto your payroll for PAYE, if they are self employed, then they can invoice you as a normal supplier would.
Alternatively, you can use an agency and let them invoice you.

 

[yorkshirejames]

but how did he get away with it.

Low value, not that much of it, revenue have bigger fish to fry.

Just don't tell your accountant or solicitor as you don't want to put them in an awkward position.

 

[elaine@cheapaccounting]

Why can't the casuals give you an invoice? Are they illegal in some way?

Now of course as an accountant I would give the official line here which is that you need to register as an employer as follows:

When you need to register

You don't necessarily need to register as an employer once you take someone on. Check first that at least one of the following conditions applies to you. If any apply, then you need to register:

• the employee already has another job
• they are receiving a state or occupational pension
• you're paying them at or above the PAYE threshold
• you're paying them at or above the National Insurance lower earnings level
• you're providing them with employee benefits

If you need to register you can do so up to four weeks in advance of your first pay day.
Bear in mind that you might need to register as an employer even if you're the only person working in your business. If you run a one-person limited company, you'll be both an employer and an employee. So if any of the conditions above apply to you as an employee you'll need to register.

And here is info about taking on employees:

Taking on a new employee:

http://www.hmrc.gov.uk/paye/employees/start-leave/new-employee.htm#2

You would be responsible for non compliance to these rules - which could lead to heavy fines etc.

 

[MyAccountantOnline]

Low value, not that much of it, revenue have bigger fish to fry.

I have to disagree very strongly - as one who has seen the effects on a small business who has paid casual labour cash in hand and been subjected to a PAYE enquiry.

In a word DONT - its just a matter of time.

 

[David Griffiths]

I'd agree with Nicola. The people who are paid cash in hand will drop you in it the minute that it suits them, no matter how long they've worked for you, and even if they know that it's under the counter. If they sign on and are asked where they've been working before, there's a very high chance that they will give your details, even if it's only occasional. There's even a chance that they'll come back and ask for holiday pay!

 

[KidsBeeHappy]

With PAYE/NIC it's not so much what the PAYE penalties are, its what it leads to. Frequently, if you get a PAYE investigation, the IR or VAT may just come along for the ride too, and even if they don't, if the PAYE tend to find something, then the IR and the VAT usually put you straight to the top of their list for an investigation.

Suddenly a bit of cash in hand to save a few £ of PAYE, has turned into 3 years of PAYE, TAX and VAT investigations, accountants fees through the roof, and 3 years worth of grief dealing with it all, and that's the best case that you can hope for.

Simply put. Not worth it.

If you really want to avoid PAYE, then use contractors, or even better, use a staff agency that invoice you. Yes, you pay a couple more £ per hour, but you have no sick pay, no holiday, none of the rules and regs regarding employment conditions, legistlaition etc. (As long as they are proper temp staff, rather than long term staff).

 

[yorkshirejames]

I have to disagree very strongly - as one who has seen the effects on a small business who has paid casual labour cash in hand and been subjected to a PAYE enquiry.

In a word DONT - its just a matter of time.

I simply answered the question as to why someone got away with it - I wasn't advocating this for others.

 

[MrPAYE]

Suddenly a bit of cash in hand to save a few £ of PAYE, has turned into 3 years of PAYE, TAX and VAT investigations, accountants fees through the roof, and 3 years worth of grief dealing with it all, and that's the best case that you can hope for.

HMRC can go back 6 years for PAYE

 

[yorkshirejames]

HMRC can go back 6 years for PAYE

They can go back as far as they want if they suspect fraud.

 

[MrPAYE]

They can go back as far as they want if they suspect fraud.

True, although it has to be said that such action is pretty rare. Well, it is if you have normally law-abiding clients of course

 

[KidsBeeHappy]

True, although it has to be said that such action is pretty rare. Well, it is if you have normally law-abiding clients of course

However, it will still sap 3 years of your life dealing with it, if it does open up into VAT and IR too. Never underestimate the length of time and the money it costs to deal with an inspection, even if you do come out of it smelling of roses.

 

[David Griffiths]

True, although it has to be said that such action is pretty rare. Well, it is if you have normally law-abiding clients of course

Quite. There's often nothing left after they've gone back six years in any event.

 

[SamDineWithMe]

I have to disagree very strongly - as one who has seen the effects on a small business who has paid casual labour cash in hand and been subjected to a PAYE enquiry.

In a word DONT - its just a matter of time.

What happened - happens please?

 

[Scalloway]

At a very minimum the employer will have to pay the tax and NI they should have deducted, based on the gross sum paid.