November 21, 2018

Business Advice from Berkshire – Would you accept Cash ?

Would you accept cash…

And not put it through the books? With all the current discussion concerning tax evasion and tax avoidance there are still grey areas. You may say that the example above is clearly evasion i.e. personally pocketing money which correctly should be accounted for by the business and tax, and possibly VAT, paid over to HMRC.

Birmingham-20121029-00114What if the cash received is for something other than you usual business activity. An electrician takes some rubbish down to the tip for a neighbour and gets paid for it. Is that taxable income? If he trades as a sole trader, all activities should be included in his tax return – so yes. But is this fair?

If you are sticking to the rules, fairness does not come into it. The rules say that international firms can recharge for services within the group which then means there may be very little income left to charge under the UK tax regime – is this fair?

How well do you sleep at night? Does it matter what others do if you are happy with your decision and any consequences? Using an accountant will help you understand what the rules are. As with speeding, whether you stick to the rules is up to you. Is your accountant a passenger in your car, keeping an eye on your speed, or did you leave them at the last stop and are keeping him in the dark as to what speed you did?

Tax evasion is breaking the speed limit, tax avoidance is using the dual carriageway bypass to get to your destination faster. When you are Book coverpreparing your accounts or submitting your tax return, which route do you take to your destination?

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