If you run a business which regularly deals in cash payments, you should know that this year’s Spring Statement featured some potentially problematic news.
While the Autumn Statement lays out the government’s plans for any tax or spending changes, the Spring Statement provides an overview of the status of the country’s economy including progress updates and forecasts. It also gives the public and businesses the opportunity to comment and give opinions on any proposed plans.
This year’s Spring Statement was delivered by the Chancellor of the Exchequer on the 13th March. One of the main propositions which has the small business community buzzing is what has been labelled by many as the ‘Cash-in-hand Crackdown’.
According to the government, the UK’s economy is missing out on around £3.5billion because of money being lost in a ‘hidden economy’ i.e. income not declared by tradespeople which avoids tax. Supposedly many traders are arranging cash-in-hand deals with customers in order to avoid declaring the income, thereby avoiding paying tax. This not only means the trader makes more money but usually the customer gets a cheaper deal. It is of course, illegal.
The government is saying enough is enough and intend to tackle what some refer to as the ‘black economy’. Firstly, some argue that traders should be banned from receiving payments in excess of a certain amount. They’ve not yet stated what this amount might be but countries such as Spain, Belgium and France have limits of up to £13,000. This would prevent businesses from receiving large sums of cash in one bulk payment. Compulsory receipts for all work carried out is another suggestion. This would mean tradesmen would have to produce receipts for all work, no matter how small.
As you might expect, these proposals have not been met favourably by all. Some experts are concerned that these measures would restrict legitimate business people from being able to deal in cash when it’s necessary.
Head of taxation at accountancy trade body ACCA, Chas Roy-Chowdhury, said: ‘The Government should have no truck with tax avoiders but we must be cognizant that we don’t want to things to become unnecessarily bureaucratic, for instance having to issue receipts for everything.’
Other Business News from the Spring Statement
The government plan to help businesses by bringing the business rates revaluation which was due in 2022 forward to 2021. In the Autumn 2017 statement they announced plans to revalue business rates every 3 years rather than every 5. This should mean business rates align closer with current property values. After 2021, the next revaluation will take place in 2024.
Does your business deal with large cash payments? Let us know what you think of the proposed cash-in-hand crackdown in the comments below.