How do your customers pay you? Cash, BACS transfer, via an app, or perhaps you’ve invested in a mobile card machine?
Whereas most plumbers, electricians and gas engineers will occasionally take cash payments for work, these days the ability to accept online or card payments is key as many customers move away from coin and paper in favour of plastic.
Taking card or online payments is also beneficial to tradespeople when trying to keep on top of the books, as your bank statement serves as a perfect record of your income and outgoings.
In the Spring Statement, the government announced proposals to make large cash payments illegal; a move which could affect some trades businesses.
What is the problem with cash payments?
The government say that while the vast majority of traders and businesses accepting payments in cash will do so honestly, in some cases, the anonymous and untraceable nature of cash transactions is perceived to facilitate tax evasion, hidden economy activity, or money laundering.
People failing to “take reasonable care”, which includes people not keeping accurate records of their income, is the biggest contributor to the UK tax gap – the difference between what is owed and what HMRC actually collect.
According to government calculations, it cost £6.1 billion in 2015/16; 18% of the overall tax gap.
What are the government proposing?
At the moment, the government has issued a call for evidence on the matter, which will be open to responses until 5 June 2018.
However, other countries, namely France, Belgium and Spain, have already set a limit on cash payments of £13,000, so it has been suggested that the UK government may follow suite.
It is also thought that the Government is going to look at the feasibility of making it compulsory for tradespeople to issue receipts, a move that, in principal, would be welcomed by John Thompson, CEO of the Association of Plumbing & Heating Contractors (APHC).
Of the proposal to make large cash payments illegal, John commented:
“In principle we welcome the announcement, as this measure would not only make trading harder for the small minority of rogue traders that we have in our industry, but it would also target the rogue consumer wishing to dodge VAT.
“However, as with all new policy announcements, we need to understand the detail and whatever the detail turns out to be, the Government needs to ensure that a maximum cash transaction limit isn’t set too low or cause excessive red tape. If the Government follows the likes of Belgium, France and Spain who have limits of up to £13,000, then I don’t believe this will be over burdensome for the majority of plumbing and heating contractors.
“The other point to consider is that a maximum cash limit could lead to more transactions being made by card, incurring additional costs which will inevitably be passed back to the consumer.”
Let us know what you think!
How would a limit on cash payments affect your business?
What’s your experience of digital accounting and card reader apps or software?
Are there enough digital payment options out there for tradespeople? Do they offer value for money?
Would a decline in the use of cash in general result in it being used less by rouge traders for tax evasion and money laundering purposes?
We’re keen to hear your thoughts and experiences – tweet us @Logic4training