MP: Paying Tradesmen In Cash Is Morally Wrong

A Treasury minister has hit out at households who pay tradesmen in cash, saying it is "morally wrong" as it helps workers avoid tax.

Exchequer Secretary David Gauke 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."

The Government loses about £2bn each year to the black economy as tradesmen fail to pay VAT or income tax by not declaring payments and keeping them "off the books".

Mr Gauke's comments, in an interview with The Daily Telegraph, come as HM Revenue and Customs plans an amnesty to encourage workmen to pay their fair share of taxes.

Mr Gauke earlier announced tax advisers who use avoidance schemes that push the law to its limits will be named and shamed in a crackdown to help recoup £5bn for the public purse.

When tough decisions needed to be made to cut the budget deficit, it was galling for the hard working majority to see others shirk their civic duty by using aggressive avoidance schemes, the minister told the think-tank Policy Exchange.

His comments came as the Government launched a consultation paper on its planned reforms.

It follows a wave of disclosures about the financial loopholes used by the rich and famous to legally side-step hefty tax bills.

The Treasury hopes the reforms will mean officials, often hit with dead-ends when investigating schemes that are based off-shore, will be able to follow up new leads as cowboy tax advisers are forced to disclose their client databases.

Those customers will then be formally warned how much they could owe if the scheme fails to stand up to legal scrutiny.

Comedian Jimmy Carr last month admitted to making a "terrible error of judgment" when it emerged he used a complex scheme to reduce his tax bill.