Black Economy

Rabidlamb

For 3 years I worked a 2nd job delivering flyers door to door in the evenings. It was brown envelope cash in hand work that paid very well but I had to give it up when I moved down the country.

I'm now doing some evening consulting work based around my 9 to 5 but once a client mentions liability, VAT numbers or receipts I scarper. I'm already well into the high tax bracket so half what I make on these side jobs would go straight to the revenue. Instead of coming out of the woodwork it's my instinct to only work for clients who also prefer to deal under the table.

Why does it seem more acceptable to accept cash in hand for part time retail/delivery/bar work than work involving a professional qualification ?.

seamus

Because work involving a professional qualification generally involves more money and as such is harder to hide. A company has to account for every single bit of cash that they spend. Paying a young fella €20 a night delivering flyers can easily be hidden as "expenses", but paying a consultant €300 a night for his services can't.

If you insist on dealing under the table, you'll find that most of your clients are pretty dodgy too and would have no qualms in letting the Revenue know about you (if they got audited), or renaging on their bills. You will get a name for yourself in the industry (whatever it is) as a dodgy operator, even if you're perfectly good at what you do. You know those traders who drive around in a van with a mobile number on it? Many of them build up a portfolio of unhappy clients and when the number of complaints is greater than the number of new customers, they get a new mobile, change the name on the van and start a "new business". In the eyes of reputable companies, you'll be considered about as reliable and trustworthy as one of these people. Proper businesses won't touch you.

You're betting off working over the table - in the end it opens you up to the rest of the market which means more money.

the_syco

Pretty much what seamus has said. Also, if you get a dodgy name, you may find it hard to get a 9-5 job, if you ever have to look around.

Eoin

seamus wrote: »

If you insist on dealing under the table, you'll find that most of your clients are pretty dodgy too and would have no qualms in letting the Revenue know about you (if they got audited)

I don't know if informing on someone not paying their tax is solely the trait of a dodgy client!

jaggiebunnet

on a similar note i was going to ask about the implications of the following: a friend, ahem, is moving from company a to company b. he has said he would be interested in doing some nixers for company a on the side, say effectively 1 day a week in addition to his normal hourse at company b. now company a are happy with that but will only pay via company cheque and therefore through the books - where does this leave my friend. is it probable that he will be caught if he does not declare it. if he does declare it and lose half the cash will company b know about it as it says in their contract that he is not allowed to work for anyone else.

anyone have any experience in this?

mick.fr

Yeah get paid in ticket restaurant or shopping center vouchers, it is less risky lol

SerialComplaint

Ireland is changing. Those who thought it was acceptable 10-20 years ago to have bogus non-resident accounts are now facing into huge bills from Revenue, including interest and penalties. It is extremely difficult to find an accountant who will take on these cases to negotiate the debt with Revenue.

Maybe in 10 years time, those who do nixers for cash now will find themselves facing similar bills.

jaggiebunnet

mick.fr wrote: »

Yeah get paid in ticket restaurant or shopping center vouchers, it is less risky lol

very useful, maybe i could get some educational vouchers and give them to you, to go and learn how to spell.

jaggiebunnet

SerialComplaint wrote: »

Maybe in 10 years time, those who do nixers for cash now will find themselves facing similar bills.

Yeah there is not a problem in declaring it but the wonder is if company b would be aware that my friend is earning from another income source at the same time as being employed in company b.

Eoin

jaggiebunnet wrote: »

Yeah there is not a problem in declaring it but the wonder is if company b would be aware that my friend is earning from another income source at the same time as being employed in company b.

I would think he can keep the two separate

doolox

From my considerable second-hand experience of the black economy I strongly advise anyone to stay away from it especially for big ticket items. It is a question of degree, the revenue will not bother with asset poor people earning small money as it is not worth their while pursuing them. The black economy makes it very difficult to accumulate wealth and assets which are visible and vulnerable to seizure if you break the rules.
My dearly departed father played close to the edge and was not able to make the most of his considerable energies and earning abilities because of his aversion to paying tax. Buying houses, land etc was closed to him because the money saved up couldn't be accounted for and would go to the taxman if made visible. Several of his colleagues were in trouble with the taxman and had to make settlements to become compliant. It was the way of things in the 60's,70's and 80's. Once the government changed to tax credits and other technical changes and above all the changeover to the Euro, flushed out all the hidden money and made tax evasion much more difficult for people.
It is marginally possible to earn money on the sly if you are prepared to spend it by cash on consumer items such as meals out holidays etc using cash no credit cards etc and being prepared to take the disadvantage that you can never avail of any good investment opportunity that comes along.
REALLY rich people know that you must buy income-generating assets, houses and land etc to get ahead in the income making stakes. In order to do that you must be relatively compliant with the all-powerful taxman, the Money-gods representative on Earth.
White money, where tax is paid on it is generally worth more than black money because of its ability to BUY ASSETS. Assets do your work for you eventually.

mick.fr

jaggiebunnet wrote: »

very useful, maybe i could get some educational vouchers and give them to you, to go and learn how to spell.

Speak French like I do speak English then you can come back to me and whine again.

mick.fr

Many people got caught because they have not taken appropriate precautions.
Opening a bank account in the Isle of Man was not something very smart.
Since the 60ies many "major" countries are partnering with neighbors in order to track tax evadors etc.

Regarding the asset tracking, you really have to be dumb to be caught as well.
Paying 1000 PRSI/PAYE a month and driving a brand new M3 registered to your name...

The smart people don't get caught. Or only when they got old and have too much confidence.

It is still very easy to get money paid to a bank account abroad and spend it anywhere without leaving a trace. Some countries use to trace for individual names and Visa transactions and other means of payments directly with central banks. Heavy operation, but effective. But easy to bypass.

Ireland has very very little connections with countries outside the EU. Many places abroad have no connection whatsoever with the EU, and the money and assets are very well protected. There is almost no risk.

I know this type of stuff pretty well for having done a lot of searches in the past. I am not one of those guys, I never had millions or even thousands and thousands to evade, otherwise I would be living under the sun already.

SerialComplaint

mick.fr wrote: »

Many people got caught because they have not taken appropriate precautions.
Opening a bank account in the Isle of Man was not something very smart.
Since the 60ies many "major" countries are partnering with neighbors in order to track tax evadors etc.

Regarding the asset tracking, you really have to be dumb to be caught as well.
Paying 1000 PRSI/PAYE a month and driving a brand new M3 registered to your name...

The smart people don't get caught. Or only when they got old and have too much confidence.

It is still very easy to get money paid to a bank account abroad and spend it anywhere without leaving a trace. Some countries use to trace for individual names and Visa transactions and other means of payments directly with central banks. Heavy operation, but effective. But easy to bypass.

Ireland has very very little connections with countries outside the EU. Many places abroad have no connection whatsoever with the EU, and the money and assets are very well protected. There is almost no risk.

I know this type of stuff pretty well for having done a lot of searches in the past. I am not one of those guys, I never had millions or even thousands and thousands to evade, otherwise I would be living under the sun already.

This is the same kind of guff that was going round in the 80's about how the smart guys would never get caught. They did get caught. Finance Act 2003 contains an important provision extending certain Revenue powers to facilitate cross-border exchange of information. Notwithstanding that there may be no “domestic interest” involved in a particular case, Revenue powers can be used to obtain information relevant to tax liabilities in countries with which Ireland has a tax treaty. Revenue have built and continue to develop fairly sophisticated systems for identifying unusual cases which merit audit or investigation.

I'm not suggesting that everyone gets caught - but unless you have a crystal ball, you can't seriously suggesting that there is no substantial risk of getting caught in the future.

nesf

SerialComplaint wrote: »

I'm not suggesting that everyone gets caught - but unless you have a crystal ball, you can't seriously suggesting that there is no substantial risk of getting caught in the future.

Once you keep the numbers small you probably don't have to worry about anything. Getting 50 quid a week for handing stuff out on a Thursday night is probably going to be easy enough to hide. What catches people out is when they are trying to hide substantial sums or start living a life that's obviously beyond their "official" means.

SerialComplaint

nesf wrote: »

Once you keep the numbers small you probably don't have to worry about anything.

Are you prepared to risk your future on a 'probably'? Revenue's automated tools are 'probably' going to get better and better over time, and will 'probably' be able to look back at historical data. Just because you're spending the hot money in cash doesn't mean that your overall financial profile will not trigger an alert for Revenue.

Keep remembering all those cute hoors from the 80's who were absolutely convinced that they would never be caught.

seamus

SerialComplaint wrote: »

Are you prepared to risk your future on a 'probably'?

For small numbers such as €50 here and there, you're never going to get caught. That's not really income - that's just small bonuses. For most of us who may pick up a few quid here and there, the money would never even hit our bank account so would be completely untraceable. There would be no way to account for every penny I've spent in the last month, for example, so there's no way any "extra" income could be shown.

Revenue aren't interested in these kinds of amounts anyway.

It's when these small amounts become "income" that you need to start declaring it - €50 every night for doing a favour for someone, or €300 every weekend for some casual bouncer work, and so on.

nesf

SerialComplaint wrote: »

Are you prepared to risk your future on a 'probably'?

Do you think your name would be forever blackened for accepting a 50 euro note to hand out flyers for the local club when you were a teenager? It's all relative. If the amounts are slow, no one really cares much tbh.

the_syco

nesf wrote: »

Do you think your name would be forever blackened for accepting a 50 euro note to hand out flyers for the local club when you were a teenager? It's all relative. If the amounts are slow, no one really cares much tbh.

What nesf said. I did the leaflet job once upon a time, and it was always cash in hand.

As for bouncers, as long as 4 or 5 of the bouncers are on the books (usually the head bouncers) in a nightclub, it's seemingly "cool" with revenue (having no bouncers on the books of the nightclub would raise alarm bells), as said nightclub has another 10 or 15 bouncers not on the books, paid cash in hand. Why? Because having that job wouldn't be worth it. Many of the bouncers I knew worked Monday to Friday in trades, banks, etc, and did the extra night or two in the nightclub for extra cash.

SerialComplaint

the_syco wrote: »

What nesf said. I did the leaflet job once upon a time, and it was always cash in hand.

I'm not suggesting that Revenue can or will trace the odd €50. I am suggesting that if somebody is regularly taking advantage of under-the-counter income, Revenue may well be able to trace it today, and it not today, maybe tomorrow.

the_syco wrote: »

As for bouncers, as long as 4 or 5 of the bouncers are on the books (usually the head bouncers) in a nightclub, it's seemingly "cool" with revenue (having no bouncers on the books of the nightclub would raise alarm bells), as said nightclub has another 10 or 15 bouncers not on the books, paid cash in hand. Why? Because having that job wouldn't be worth it. Many of the bouncers I knew worked Monday to Friday in trades, banks, etc, and did the extra night or two in the nightclub for extra cash.

This example clearly demonstrates just how risky tax evasion can be. Where on earth do these ideas that something is 'seemingly cool' come from? Revenue officers implement tax law. No officer is going to turn a blind eye to such abuse. No officer is going to expose themselves to disciplinary action to just suit a nightclub owner. Revenue officers aren't stupid - when they target a sector (as they have already done with pubs and construction), they understand how those businesses work. If they chose to target nightclubs, they would have a very good idea of the relationship of door staff to customer numbers to income. Where the numbers are way up or down for particular clubs, they will be able to crawl over them with a fine toothcomb.

And even ignoring all that, if we do stretch the imagination and agree that 5 door staff is 'seeming cool' today, how do you know that it's going to be 'seemingly cool' with a different tax inspector next year?

nesf

SerialComplaint wrote: »

I am suggesting that if somebody is regularly taking advantage of under-the-counter income, Revenue may well be able to trace it today, and it not today, maybe tomorrow.

If "money" changes and we go from a relatively anonymous system like we have today (mainly cash payments for day to day stuff) to one where it's all done through accounts etc (using cards/mobile phones whatever) then yeah, but in a cash based system it's easy to hide relatively small amounts, 50 quid disappears easily. The problem with 40K in 20 euro notes is spending it without getting noticed etc.

the_syco

SerialComplaint wrote: »

This example clearly demonstrates just how risky tax evasion can be. Where on earth do these ideas that something is 'seemingly cool' come from?

By "seemingly cool", I mean that once you have a reasonable number of bouncers for the nightclub on the books, it'll be harder for Revenue to see that something bogus is happening, than say, one barman in a large nightclub which is taking in a lot of profit.

SerialComplaint wrote: »

Where the numbers are way up or down for particular clubs, they will be able to crawl over them with a fine toothcomb.

Agreed. Thus having 5 bouncers (for example) on the books for X amount amount of customers may seem reasonable enough not to raise any red flags.

SerialComplaint

nesf wrote: »

If "money" changes and we go from a relatively anonymous system like we have today (mainly cash payments for day to day stuff) to one where it's all done through accounts etc (using cards/mobile phones whatever) then yeah, but in a cash based system it's easy to hide relatively small amounts, 50 quid disappears easily. The problem with 40K in 20 euro notes is spending it without getting noticed etc.

Indeed, a €50 note is pretty much untraceable. A regular income of €50 notes is another matter. You also have to consider the tracability at the other end, i.e. will it be possible for Revenue to identify that the employer has been up to no good?

the_syco wrote: »

By "seemingly cool", I mean that once you have a reasonable number of bouncers for the nightclub on the books, it'll be harder for Revenue to see that something bogus is happening, than say, one barman in a large nightclub which is taking in a lot of profit.

Agreed. Thus having 5 bouncers (for example) on the books for X amount amount of customers may seem reasonable enough not to raise any red flags.

It's all relative. 5 on the books out of 6 may indeed not raise any red flags with Revenue (though it may raise some red flags with the staff themselves). 5 on the books out of 10/15 (as in the scenario you outlined earlier) will have red flags jumping up and down in front of the tax inspector's eyes.

The story titled 'Revenue to hunt Irish tax cheats across EU' from today's Examiner is a great example of how Revenue will use technology to track cheats down. In this case, they are focussing on foreign property transactions, and they'll be picking up lots of cute hoors who were certain that opening up an account in Spain was enough to keep Revenue off the trail.