People who pay cash in hand are “morally wrong”, damaging the economy
2012-07-25 0:00

By Christopher Hope |

It is ’morally wrong’ to pay tradesmen cash in hand, says David Gauke.

David Gauke, a Treasury minister, told The Daily Telegraph that home owners who allow workmen to evade VAT or income tax were forcing others to pay more.

His comments reflect growing concern in Whitehall about the cash-in-hand economy, which costs Britain billions of pounds a year in lost tax revenues.

However, critics accused the Government of being “unnecessarily moralistic” about ordinary people trying to keep their household bills down.

Mr Gauke, the Exchequer Secretary to the Treasury, said: “Getting a discount with your plumber by paying cash in hand is something that is a big cost to the Revenue and means others have to pay more in tax.

“I think it is morally wrong. It is illegal for the plumber but it is pretty implicit in those circumstances that there is a reason why there is a discount for cash. That is a large part of the hidden economy.”

According to a report by the Public Accounts Committee, more than two million people make cash-in-hand payments costing the Treasury an estimated £2  billion. There is no law against paying someone in cash, but tradesmen are under a legal obligation to disclose their earnings to HMRC and say whether they are liable for income tax or VAT.

Labour MP Austin Mitchell, who sits on the Public Accounts Committee which monitors public spending on behalf of Parliament, said that Mr Gauke was being “unnecessarily moralistic” and should focus instead on large-scale tax avoidance.

He said: “This is petty stuff. There would have to be large-scale surveillance to stop it. You can’t control people’s morals like this and it is best not to try.”


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