I fully understand the competitive advantage of a tradesman who is not
VAT registered has over one who is registered, and therefore the urge
some tradesmen might have to keep their (official) turnover below the
However once you reach that threshold and become VAT registered what if
any advantage is there to a tradesman of "discount for cash"?
On Thu, 15 Aug 2019 11:39:11 +0100, Chris B wrote:
Immediate cash for paying suppliers and employees ?
One less trip to a bank ?
A time saving for chasing up that "I'll transfer it as soon as I put the
phone down ...." customer ?
Having worked in a small business, I am weary of the "cash payments = up
to no good" trope that it's suited the media to keep frothed up.
Especially when the Apples, Googles, Starbucks and Amazons of this world
manage to swerve far more tax without taking payments in cash than Bloggs
builders might do with the odd <cough, cough> "cash job". (Which I
disapprove of anyway).
It's a perversity of the law that directors are obliged to maximise
In any case, no one (individual or corporation) is obliged to act in
such a way as to increase their tax liability. Neither legally nor
"People don't buy Microsoft for quality, they buy it for compatibility
with what Bob in accounting bought last year. Trace it back - they buy
Perversely, trying to charge more tends to lower receipts from global
businesses, since they are free to organise in whatever tax jurisdiction
works out cheapest for them. The key is often to make sure you are the
cheapest place to do business, so that they funnel as much money as
possible though your tax system rather than someone else's.
(needless to say that concept really upsets the lefties!)
It's not so simple when they don't move production (especially largely
service industries) but are allowed to arbitrarily allocate profit to
whichever locality suits them best. Like Amazon and Facebook etc. We
may need to bribe Nissan to make cars here, but we don't need to induce
Amazon and Facebook to make money out of activiities carried out in the
Back in the 60s when there were controls on capital movement large
companies like Phillips got round that by internal valuations of goods
being transferred between companies. Today its often done by charging
corporate overheads to transfer profits to a different tax regime.
However whist we target US companies such as Amazon and Google don't
forget there are many UK based companies who are doing the same thing
and bringing their profits back to the UK.
Within the EU they can also shift their VAT base to the lowest regime
(Luxembourg in particular - guess who set up that deal). Once we are out
we will be able to keep all the VAT we collect and set our own rates.
My experience (which is not recent) as a tradesman was that customers
always initiated the conversation by asking for a 'cash discount'. They
wanted me to take the cash, not declare the amount to the revenue and
not charge them the VAT. It's a mug's game as a tradesman because the
benefit is entirely the customer's and the risk (if you are caught) is
entirely the tradesman's.
The way I answer the "discount for cash" customers in the shop is:
It's more effort and security risk taking cash as it all has to go into
the bank to allocate stock etc.
In my head I'm thinking "you have cash because you took it and didn't
declare it for income tax therefore you've already saved 20 or 40% in
tax so I'll be buggered if you're then going to try and get additional
money off for ME defrauding the Tax/VAT inspector. If I were to choose
to not declare it then the "perk" should go into my pocket not a "double
dip" discount for one person.
But our cash intake is virtually non-existent and people use debit cards
in preference to having a wallet/purse full of cash these days.
True that at the end of the year that transaction might not appear in
the bloke's tax return.
Clueless as usual. As a tradesman I am allowed to take cash and I am
allowed to offer any price I like. The VAT inspector looks at your
records and your VAT return because any offense would take place
elsewhere at the end of the quarter when you fail to include that
transaction in your return. The customer would not be a VAT inspector in
disguise because that is just a bizarre idea. Why?
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