How does the government know your not paying your taxes?

Question

For example if i were to get cash in hand how can they know i was working for it and it wasnt just friends/ family giving it to me.

And if they do catch you whats the worsed that can happen?

Answer 1

Sometimes the Government doesn't know that you are paying tax or not.. For further details visit

http://taxation-suchithra.blogspot.com/

Answer 2

If HMRC (Revenue and Customs - see later) see from your NI number that you are employed (PAYE) or in receipt of benefit (JSA, IB ect) then you will not normally be bothered ..

If you have no obvious income, then they will assume you are getting money from some-where else .. and they can simply send you a Tax demand based on your 'life style' .. if you  pay up, they will assume they have 'underestimated' and send you a (much) bigger one ... if you object, you have to prove that your income is less than their assumption (yep, the burden of proof is on YOU :-) )

Now "what's the worse" ... well I believe Customs still have powers to send you to the Tower of London and have you executed :-)

Answer 3

If you are being paid cash in hand, it is not you who would be in trouble, but the person paying you. The law states quite clearly that it is the employer's responsibility to deduct tax and NIC from employee's wages. Failure to do so would incur them a fine, as well as having to pay the tax, plus interest.

There are loads of ways in which he could be caught out - not least 'friends' or ex spouses who might become jealous and inform HMRC.

Answer 4

Big Brother is watching you !

Answer 5

It depends on whether the person paying you declares it in his/her accounts.  Even then the Inland revenue might not catch up with you.

If they do they will make you pay the tax  you should have paid.

Just act surprised, dim, whatever and good luck!

Answer 6

if someone is paying you in cash they are likely claiming that as a deducation against their own income.  If so and they are forced to divulge who those payments went to you could on the hook for the tax due.

Here in canada the usual if they catch up to you they charge you the actual income tax due plus a 50% penalty plus daily compounded interest of 10% from the time the tax was due.   Usually jail is reserved for those that knowingly falsify returns not usually for a simple fail to submit/