DAS Group UK

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    DAS Group UK has been a pioneer of the legal expenses insurance market since the concept was first introduced to the UK in 1975. DAS provides protection against unforeseen legal costs to millions of families and motorists, and hundreds of thousands of businesses every year, offering both before-the-event and after-the-event insurance products and a range of telephone advice and assistance services, including the flagship legal advice service.

    DAS is an authorised and regulated insurance company, based in Bristol, with offices in London, Manchester and Bedwas, South Wales, as well as subsidiaries in Arundel, Dublin and Toronto. DAS employs some 600 staff and has become one of the UK's leading specialist insurers.

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DAS asks - Is it illegal to pay a handyman cash in hand?

Tradesman

Spring has sprung and the sun is out but before firing up the barbeque the garden needs to be mowed, the trees need to be pruned and the handyman is often the best person for the job. The handyman is a seasoned professional and a jack of all trades; often they can build a bookcase from scratch, sort out the plumbing and clear the gutters. 

Hiring a handyman seems like a great idea, but is it really? What happens if the handyman you hired isn’t so handy? What if they damage your property? And what can you do if you are not happy with the standard of their work? 

The experts from the DAS Law are here to answer the important questions. 

If the handyman doesn't give you a VAT receipt at the end of the job, who's responsibility is it that the work done is registered for tax?

Any trader who sells goods or provides a service can initially exercise discretion as to whether they want to register with HMRC for VAT purposes. Therefore, not all businesses will be in the position to provide a VAT receipt. It would however be good practice to request a receipt for the services received and amount paid in order to ensure that a clear paper trail is available.

Where a business turnover exceeds (the current rate) of £83,000 the business must register with HMRC. The onus of registration with HMRC is on the trader and they are therefore responsible for declaring any income received. Failure to register and declare their full income to the HMRC in order to avoid paying taxes is tax evasion and a criminal offence. 

Are you breaking the law by paying cash in hand, and what are the consequences? 

The position with any trader is that they are responsible for declaring any cash paid work/income received to HMRC. There are no legal implications for either party to pay in cash for work, or offering a discount for paying in cash in order to avoid administration/banking charges. 

However, this does not negate the trader’s obligations to declare the services and cash received to HMRC for TAX purposes. The onus of declaration to HMRC will always fall on the trader.  HMRC could potentially argue that you are aiding and abetting the crime, although proving this would be difficult. Therefore, the action would generally be against the trader alone. 

If you've paid cash in hand, are there any insurance implications if the handyman is injured whilst at your property?

Any claim for personal injury is based on negligence and not the method of payment used. Any Personal injury claims are determined by the individual facts and circumstances surrounding the injury. In order for the trader to pursue a claim against the homeowner, they would have to prove that the homeowner had caused the injury through negligence, and that it was essentially a foreseeable injury. 

There is no reason why paying in cash would affect any liability insurance claim because the legal principles are paramount as outlined above. That said, it is always recommended to check the terms and conditions of the insurance policy to ensure that there are no exclusions that would affect any element of the cover.

Is there any difference in terms of recourse if you're unhappy with the work that is done?

There are implications for failing to obtain a receipt or evidence of any payments made in cash. Without any evidence of the services supplied and amounts paid, this places the consumer into a position of vulnerability. 

Although there are no legal consequences for paying in cash, consumers receiving services should be aware that in the event of any poor workmanship or if the business ceases to trade there may be limited recourse available. Trading standards may also be reluctant to help if the services are considered to be informal and there is no clear trail of the legitimate contract agreed. The trader’s liability insurers may also refuse to cover a claim where there is no receipt or evidence of the payments made. 

The Consumer Rights Act 2015 provides protection for consumers. It sets out implied terms that the trader must follow or they may be considered to be in breach of contract. For example, any services supplied must be carried out with reasonable care and skill and in compliance with reasonable timescales and fixed costs. There is no requirement to have a written contract because the terms are implied by statute regardless of whether they are set out in writing or agreed verbally. However, it would certainly be beneficial to have a paper trail available in order to prove the contract did in fact exist in addition to any agreed terms.