Paid contractor in cash

josephsoap

I got a contractor to do a specialist job that is not located in my area during the summer.

I foolishly paid him in cash when he was leaving (quite a substantial amount).

He thanked me and said he would give me the receipt when he would be back the next day to pick up one of his tractors or throw it in the letter box if i was not around

I was not around when he came to pick up his tractor and he did not throw the receipt in the letter box :mad:

I have since phoned him twice in the past month to post the receipt but he has failed to do so.

What are my options here, should I learn from my mistake and never pay anyone in cash again and forget about it?

I think I will call to his house and look for the receipt there but since this job was done in June what are my chances like.

EganTheMan

Are you asking from a Tax Perspective? On that level, I wouldn't worry about it. Here's my logic.

I would keep details of his address etc. and operate fully as if he had given me a receipt i.e. tax purposes etc.

If you are audited then explain the situation i.e. you paid him and he didn't give you a receipt . . .

If it's for warranty etc. well, I suppose, it depends on the type of service

Kevin McCloud

No paper trail with cash so no receipt.

josephsoap

EganTheMan wrote: »

Are you asking from a Tax Perspective? On that level, I wouldn't worry about it. Here's my logic.

I would keep details of his address etc. and operate fully as if he had given me a receipt i.e. tax purposes etc.

If you are audited then explain the situation i.e. you paid him and he didn't give you a receipt . . .

If it's for warranty etc. well, I suppose, it depends on the type of service

Yes from a tax perspective, are you saying I can write down myself that I paid x contractor x amount of cash and put it down as an expense ?

josephsoap

Kevin McCloud wrote: »

No paper trail with cash so no receipt.

That's what I didn't want to hear

ford2600

josephsoap wrote: »

That's what I didn't want to hear

Did he give you a cash price?

You can't have it both ways if so

Bullocks

josephsoap wrote: »

That's what I didn't want to hear

Im sure if you know him he will give a receipt but its painful to get a substantial amount of cash and have to declare it ! Feckin bank charges a few quid even to lodge it before you even pay the tax on it .
Can you connect the amount you paid with a withdrawal from your bank for accountancy purposes

josephsoap

ford2600 wrote: »

Did he give you a cash price?

You can't have it both ways if so

Not a 'cash price' job

josephsoap

Bullocks wrote: »

Im sure if you know him he will give a receipt but its painful to get a substantial amount of cash and have to declare it ! Feckin bank charges a few quid even to lodge it before you even pay the tax on it .
Can you connect the amount you paid with a withdrawal from your bank for accountancy purposes

Yes I would be able to do this, maybe all is not lost yet!

EganTheMan

Definitely . . . I would treat it as if he gave me a receipt i.e. claiming wherever you would claim if you had that receipt . . .

In an audit situation I would explain my situation and let them deal with him. The fact that he didn't give you a receipt speaks volumes.

What was the product / service? Can he plain out deny supplying it and deny receiving anything from you?

lakill Farm

is there a chance that VAT can be refunded via VAT 58?

For accountancy purposes have full details of the work carried out, by whom with contact details.

They write to the contractor or if not ask someone different to call him and that should buck him into action

Marion Morrison

josephsoap wrote: »

Not a 'cash price' job

Then why did you pay him in a large sum of Cash ?

If you pay in Cash never hand it over and let anyone away without giving you some kind of reciept.

What's to stop him claiming he was never paid ? ? . . . . Your word against his.

I know lots of people want to see cheques done away with, but they are a great simpe way of paying and providing a built in receipt.

Also did he do the job he was supposed to do ?

Nettleman

lakill Farm wrote: »

is there a chance that VAT can be refunded via VAT 58?

For accountancy purposes have full details of the work carried out, by whom with contact details.

They write to the contractor or if not ask someone different to call him and that should buck him into action

Seen article in rag a few months back where REv were publicising the "no invoice, no tax deduction" line about contractors. its too big a cost every year to not be getting a tax deduction. The 23% Vat rate is on harvesting unfair imo . If you sell your silage every year, its zero rated, but unregistered farmers have to pay 23% on contractor and wrap costs, and absorb the hit. There should be a flat rate rebate when you sell silage, like when you sell cattle.

6600

VAT on contractors is 13.5%. If you are foolish enough to pay big expenses with cash then get a duplicate book and write out an invoice and put it on your purchases file (if you have one). Bear in mind you might have to explain where you got the cash to pay him with in an audit. If it was from an undeclared source you're better off not trying to claim the expense.

Fuxake

EganTheMan wrote: »

Are you asking from a Tax Perspective? On that level, I wouldn't worry about it. Here's my logic.

I would keep details of his address etc. and operate fully as if he had given me a receipt i.e. tax purposes etc.

If you are audited then explain the situation i.e. you paid him and he didn't give you a receipt . . .

If it's for warranty etc. well, I suppose, it depends on the type of service

Good luck with the Revenue on that one!

IF they were willing to accept that we could all make up fairy stories to wipe out any tax liability. Reality is that when dealing with any branch of government, if you don't have paperwork, then it didn't happen. Anyway, surely everybody knows that the only possible reason for a cash transaction on big sums of money is an "understanding" that the whole deal is off limits for tax etc? Personally I would never pay anyone except by cheque unless we are talking less than €20. All above board and sleep easy at night.

Greengrass1

No cheque book here.
Kinda wish there was one to pay lads when they leave the yard.
We use bank draughts to pay any lads.
Or we transfere money online either.

Bullocks

Greengrass1 wrote: »

No cheque book here.
Kinda wish there was one to pay lads when they leave the yard.
We use bank draughts to pay any lads.
Or we transfere money online either.

I find online money transfer a great job

Nettleman

6600 wrote: »

VAT on contractors is 13.5%. If you are foolish enough to pay big expenses with cash then get a duplicate book and write out an invoice and put it on your purchases file (if you have one). Bear in mind you might have to explain where you got the cash to pay him with in an audit. If it was from an undeclared source you're better off not trying to claim the expense.

sorry, your correct 13.5%is right, not 23:eek:, but the vat loss is an analomy which remains, if your silage/hay/straw is regarded as agricultural produce for CAP purposes-same as cattle, vat refund on one, but not on other.

Fuxake

Greengrass1 wrote: »

No cheque book here.
Kinda wish there was one to pay lads when they leave the yard.
We use bank draughts to pay any lads.
Or we transfere money online either.

How can you manage to run a farm with bank drafts? Is it not fierce inconvenient dropping everything and wasting half a day going into a bank? Obviously online transfer is the ideal but do you not find that most lads still come looking for a cheque? How did you manage before online transfer?

6600

Nettleman wrote: »

sorry, your correct 13.5%is right, not 23:eek:, but the vat loss is an analomy which remains, if your silage/hay/straw is regarded as agricultural produce for CAP purposes-same as cattle, vat refund on one, but not on other.

You are talking about a situation where you are selling hay or silage to a non-registered person. No VAT arises on this transaction. The flat-rate addition is where VAT registered businesses buy cattle or crops from a non-registered farmer. They pay it to you and in turn claim it back themselves.

As a farmer you have the option to register for VAT and be entitled to claim back the VAT on your purchases. However you would forego the flat-rate addition on your sales. For most people it doesn't add up to do that.

Greengrass1

Fuxake wrote: »

How can you manage to run a farm with bank drafts? Is it not fierce inconvenient dropping everything and wasting half a day going into a bank? Obviously online transfer is the ideal but do you not find that most lads still come looking for a cheque? How did you manage before online transfer?

Mother does all that sort of stuff with money and all. Just the way its done I wouldn't like it myself now tbh

freedominacup

Greengrass1 wrote: »

Mother does all that sort of stuff with money and all. Just the way its done I wouldn't like it myself now tbh

No cheques here either. I've had to get two drafts here all year. Card or online no problems.

ganmo

Fuxake wrote: »

How can you manage to run a farm with bank drafts? Is it not fierce inconvenient dropping everything and wasting half a day going into a bank? Obviously online transfer is the ideal but do you not find that most lads still come looking for a cheque? How did you manage before online transfer?

if you go out and buy hay/silage there'll be no vat but as you are paying someone to make it, in essence you are buying a service which is 13.5% vat

Greengrass1

freedominacup wrote: »

No cheques here either. I've had to get two drafts here all year. Card or online no problems.

All the main ones like ESB mortgage insurance and all that are direct debits and then if he get anyone in to do work he transfere online or bank draft either. Was a bit of a,pain until online banking came alright