Taylor report recommends review of cash-in-hand

George Hay Chartered Accountants

Cash-in-hand payments should be replaced with technology driven alternatives in hopes of collecting up to £6 billion more in tax – this is the conclusion of a Government-commissioned review conducted by Matthew Taylor, head of the think-tank the Royal Society of Arts.

The 116-page report, entitled Taylor Review of Modern Work Practices, was commissioned to explore modern employment practices in the UK and how the country should adapt to the growing “gig economy”.

Reflecting on cash-in-hand, Mr Taylor said: “Technology can make life easier and what we are suggesting is, as we move more to a cashless economy, then when, for example, your window cleaner charges, you can pay without the need for cash.

“At the same time, their tax can be paid just as we as employees pay, through PAYE, which makes their life easier. They might at the same time be contributing to their pension or towards insuring themselves for sickness.”

Within his report, he also recommends:

  • Creating a new category of employee called a “dependent contractor”, who should be given extra protections, but should be offered the flexibility of a self-employed worker.
  • Closing the gap between the rates of National Insurance for employed and self-employed people.
  • Offering employees clear chances for promotion, higher earnings and career development.

Following the release of the report Downing Street said it would not introduce an outright ban on cash-in-hand payments, but said it would back the idea of digital payment systems that could be linked up to pensions and other benefits.

The Prime Minister said that the Government would review the report and see if it could implement some of its suggested changes in the future but emphasised that, to do so, she would need the support of the rest of Parliament.

Phil Blackburn, Tax Partner at George Hay, commented: “The conclusions drawn here seem to reflect the Government’s efforts to crackdown on individuals who are failing to pay the correct amount of tax.

“Late last year HMRC turned its attention to monitoring small businesses card transactions in a bid to identify those who failed to declare all the payments that they were in receipt of, more specifically those that were cash-in-hand.”

For advice on this and other tax and accountancy-related matters contact us today on 01767 315010.

Source: The Taylor Report

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