# Cash in Hand ?



## Pablo74 (18 Jan 2008)

Hello all,
     I have been asked to post this thread by a friend of mine who has a query about her wages. 
     She has been with her employer for the best part of 2 yrs now and asked for a small pay rise about 2 months ago. The boss agreed but since then she has been paid her wages every week ( as usual ) but she gets her payrise paid in cash. 
What are the repercussions of this if there are any ? Is he doing something wrong ? Is she loosing out in any way ?
Thanks
Pablo


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## Mpsox (18 Jan 2008)

Is she getting a payslip as well?


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## pinkyBear (18 Jan 2008)

> Is he doing something wrong ? Is she loosing out in any way ?


Absolutly he is doing something wrong, he is not declaring her full wages, therefore he doesn't pay full PRSI and pension. And these are possibly not taxed either so he is defrauding the revenue. 
And is she loosing out, well yes she is really - well for one she is loosing out on pension and she is also getting wages in cash and not declaring them to the revenue.


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## shipibo (18 Jan 2008)

Problem is, if she asks for it in wages, probability is the raise will be used 

.I.E raise cut to take into account tax.

The onus is on employer to pay tax, and as long as neither party complains here , she should be fine.

If redundancy was an issue, this could be an issue, as stated before pension


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## ClubMan (18 Jan 2008)

crumdub12 said:


> Problem is, if she asks for it in wages, probability is the raise will be used
> 
> .I.E raise cut to take into account tax.


Exactly - the employee is assessable for income tax and _PRSI_/health contribution deductions on the gross payrise. 


> The onus is on employer to pay tax, and as long as neither party complains here , she should be fine.


Wrong! The onus is on the employer not to facilitate tax evasion and to apply/remit all necessary statutory tax and _PRSI_/health contribution deductions. But the onus remains on the individual employee taxpayer to ensure that his/her tax affairs are kept in order, that all relevant income is declared for tax etc. The fact that the employer is acting dodgily here in no way gets the employee off the hook!


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## John Rambo (18 Jan 2008)

Are you sure about that Clubman? I understood all monies paid to employees are assumed to be net of PAYE/PRSI etc. If the proverbial hits the fan it's the employer who is in the firing line.


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## pinkyBear (18 Jan 2008)

No the employee is obliged to to declare the cash as additional income to the revenue.


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## ClubMan (18 Jan 2008)

Precisely.


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## John Rambo (18 Jan 2008)

I'm going to investigate this further because I believe you're both wrong. It's not another source of income as it's money from the same source.


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## pinkyBear (18 Jan 2008)

> It's not another source of income


 It is additional income - irrespective of the source. 
I worked as an agency nurse while in collage, I had to do a number of private cases and was paid in cash - this also had to be declared to the revenue.


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## ClubMan (18 Jan 2008)

John Rambo said:


> I'm going to investigate this further because I believe you're both wrong. It's not another source of income as it's money from the same source.



Unless it's under €250 p.a. (in which case it could qualify for employer to employee small gift _BIK _exemption) then it seems obvious to me that it is additional income from the employment and thus assessable for income tax. Unless you are arguing that it's a gift and assessable for _CAT/Gift Tax _or something? Any reasonable analysis would class it as income since the original poster has said that it was given in respect of a salary increase (just illegally under the table!).


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## John Rambo (18 Jan 2008)

That is not the same. We're talking about income from one source...an employer paying an employee partially through PAYE and partially through cash. I'm basing my opinion on the case of someone I know. Essentially half their salary was being paid legitimately and the other half in cash. when this was discovered by the Revenue all payments to the employee were deemed net of deductions and the employer had to pay the taxes and penalties. The salient point was monies paid to an employee by an employer are net of deductions. Nothing happened to the employee at all.


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## moondance (18 Jan 2008)

But if the employee gets a payslip (and it's illegal not to get a payslip) then surely it's obvious that they are aware and therefore compliant with accepting cash "under the table" so they (as well as employer) should be answerable to revenue if found out.


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## ClubMan (18 Jan 2008)

John Rambo said:


> That is not the same. We're talking about income from one source...an employer paying an employee partially through PAYE and partially through cash. I'm basing my opinion on the case of someone I know. Essentially half their salary was being paid legitimately and the other half in cash. when this was discovered by the Revenue all payments to the employee were deemed net of deductions and the employer had to pay the taxes and penalties. The salient point was monies paid to an employee by an employer are net of deductions. Nothing happened to the employee at all.


If that happened in this situation then it in no way means that _Revenue _will treat every such incident the same way. I stand by my assertion that all individuals are ultimately responsible for keeping their tax affairs in order, to declare all assessable income etc. and failure to do so *could *lead to repercussions. Obviously employers are also responsible for applying and remitting all relevant statutory deductions from all relevant income.


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## so-crates (18 Jan 2008)

What does her payslip say? If it includes the raise then it doesn't matter if a portion is paid in cash, tax, PRSI, etc would all be listed for the full value. 

Although I would be seriously surprised if it does. Why else would they pay the only raise in cash?


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## z107 (18 Jan 2008)

Many of our customers would split the pay, some in cash, some by cheque, some by paypath etc. All the money, regardless how it is paid, still goes through the payroll. If an employee want (for example) €50, in their hand, then this is 'grossed up', and can be paid in cash.

As other posters have pointed out, it should all be quite clear what's going on from the payslip.


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## shipibo (18 Jan 2008)

When I said onus on employer, my point was Employer initiated the transaction. It would be considered a bonus, which is a BIK (Benefit in Kind), and should be declared by employee.


But ..... as long as everyone keeps quiet, everything will tick on.

If employer is found out by Tax Man, onus will be on him to pay tax, or put squeeze on employee.

As its cash, no paper trail.


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## ClubMan (18 Jan 2008)

crumdub12 said:


> When I said onus on employer, my point was Employer initiated the transaction. It would be considered a bonus, which is a BIK (Benefit in Kind), and should be declared by employee.


Wrong again. The employer is legally obliged to process _BIK _tax and _PRSI_/health levy deductions at source (via payroll) on any benefits to which it applies and to pay them net of these deductions. It is not allowed for them to pay them gross and leave it to the employee to declare them. On the other hand if this happens the onus is still on the employee to declare them.


> But ..... as long as everyone keeps quiet, everything will tick on.
> 
> If employer is found out by Tax Man, onus will be on him to pay tax, or put squeeze on employee.
> 
> As its cash, no paper trail.


Just a hole in the company accounts which the accountants/auditors should spot?


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## John Rambo (18 Jan 2008)

Generally the company will raise dummy invoices from a fake company outside Ireland so as not to create a VAT fraud element, "pay" this company with a cheque made out to cash and just cash the cheque and pay the staff under the table.


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## RainyDay (19 Jan 2008)

John Rambo said:


> Generally the company will raise dummy invoices from a fake company outside Ireland so as not to create a VAT fraud element, "pay" this company with a cheque made out to cash and just cash the cheque and pay the staff under the table.



Is this kind of stuff (as detailed at the Mahon Tribunal) still going on routinely in smaller Irish companies? As an employee, I would suspect that any employer prepared to rip-off Revenue like this won't think twice about ripping off the employee when the opportunity arises.


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## Pablo74 (19 Jan 2008)

Hello,
    Just to update you, she does get a payslip but the payrise in not included. It is just in cash with the slip. 
What should she do ?
Pablo


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## FredBloggs (19 Jan 2008)

While posters here mqaight argue the who would be held to blame for this undeclared income the practical answer is if she does anything she will in all probability loose her job - even if this doesn't happen immediately her life there could be made pretty unbearable.  Even if she got an unfair dismisal award she would still have lost her job.  so she should only tackle this if she's confident that she could pick up another job.  

I also think the employer is being very stupid.  He's obviously doing this to more employees than her and all it takes is one disgruntled employee and he could be in trouble.


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## shipibo (19 Jan 2008)

ClubMan said:


> Wrong again. The employer is legally obliged to process _BIK _tax and _PRSI_/health levy deductions at source (via payroll) on any benefits to which it applies and to pay them net of these deductions. It is not allowed for them to pay them gross and leave it to the employee to declare them. On the other hand if this happens the onus is still on the employee to declare them.



That was point I was making, not very well though.



ClubMan said:


> Just a hole in the company accounts which the accountants/auditors should spot?



payrise, not a lot of money ....


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## ClubMan (19 Jan 2008)

Pablo74 said:


> Hello,
> Just to update you, she does get a payslip but the payrise in not included. It is just in cash with the slip.
> What should she do ?
> Pablo


She should declare the additional income to ensure that her personal tax affairs are completely legit and up to date. She may want to consider looking for a job with a more reputable employer whether or not _FredBloggs'_ analysis is accurate in this case.


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## FredBloggs (20 Jan 2008)

I agree with Clubman.  Any employer in this day and age who engages in under the counter practices is both stupid and disreputable.  I can understand why this was done when tax rates on companies were penal but now that they're not there is no reason why an employer should do so.  any money saved on employers prsi is negligable and it also creates false expectations amongst employees for future pay rises.


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## Joe1234 (20 Jan 2008)

John Rambo said:


> Generally the company will raise dummy invoices from a fake company outside Ireland so as not to create a VAT fraud element, "pay" this company with a cheque made out to cash and just cash the cheque and pay the staff under the table.



Will easily be spotted in the event of a revenue audit if the revenue auditor asks for a copy of the cheque.


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## ClubMan (20 Jan 2008)

Shouldn't it also be caught if/when the company itself has its own accounts audited?


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## Joe1234 (20 Jan 2008)

ClubMan said:


> Shouldn't it also be caught if/when the company itself has its own accounts audited?



Possibly.  The company's auditor may not go that deep.  Revenue may suspect something that the company's auditor may not know about.  Revenue could carry out an audit based on information they may have uncovered as a result of an audit of someone else.


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## ClubMan (20 Jan 2008)

OK - thanks for that info.


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## Thrifty (21 Jan 2008)

I think really the wage slip needs to be considered first. As long as the addition is added in there there should be no problem. Employer could be paying cash in hand for the present simply because he just hasn't altered the DD/ pay out from the bank.


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## moondance (21 Jan 2008)

ClubMan said:


> Shouldn't it also be caught if/when the company itself has its own accounts audited?



Depends - if the company itself is getting paid "cash" for some jobs it does and then pays employee the extra from this cash then there is no paper trail. People are definitely still getting away with this and I'd guess it's widespread. The amount of traders I've had doing work suggesting I pay cash is quite amazing!


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## Purple (21 Jan 2008)

The employer may be paying the wages out of their own pocket and then making bogus expenses claims (mileage etc) to recover the cosy from the company without incurring taxes. Either way it is dishonest and while the employee is in a very difficult position they are still facilitating tax evasion.


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