Minister deems cash in hand payments morally wrong

Exchequer Secretary David Gauke has said that it is morally wrong to pay tradesmen such as plumbers by cash, as they will avoid paying taxes.

The government has emphasised a crackdown on tax avoidance, as it is estimated that about £2 billion are lost each year because tradesmen fail to pay VAT or income tax.

Mr Gauke said: “When a tradesman says: ‘Here’s a 10%, a 20% discount on your bill if you pay me cash in hand’ that is facilitating the hidden economy. That’s as big a problem in terms of loss to the Exchequer as tax avoidance. Revenue is not being paid as it should be paid.”

Earlier, Mr Gauke announced that those involved in tax avoidance will be named and shamed in a crackdown to help recoup £5 billion of “the hidden economy”.

He said: “At a time of economic difficulty, when tough decisions have to be made on public spending and when the burden of taxation remains high, there is little sympathy for those who do not make their full contribution.

“For those who work hard and pay their taxes, it is galling to see others shirk their responsibilities on either front”.

Gauke has been called a hypocrite by some, as it emerged in 2006/7 that he used his expenses to cover the costs of the Inland Revenue Stamp Duty when he moved home.

Labour MP Austin Mitchell believes that it is “impossible to police” tax avoidance and that Mr Gauke’s statement is “petty”.

Erica Sesay