Contributor, Editor, Supervisor
2,305
edits
Difference between revisions of "Cash-in-hand (United Kingdom)"
Jump to navigation
Jump to search
no edit summary
Editor2018 (talk | contribs) |
|||
| (6 intermediate revisions by one other user not shown) | |||
| Line 1: | Line 1: | ||
{{infobox | {{infobox | ||
| nameofpractice =Cash-in-hand | |||
| flagemoji =🇬🇧 | |||
| definition =A business taking payment for good or services by cash, usually for a lower price than other forms of payment, so that the transaction remains 'off-the-books' and thus avoids taxes | |||
| location =United Kingdom | |||
| imagemap =United Kingdom map.png | |||
| clusters = | |||
}} | [[:Category:Market|Market]] – [[:Category: Functional ambivalence| Functional ambivalence]] – [[:Category: Gaming the system| Gaming the system]] – [[:Category: Camouflage| Camouflage]] – [[:Category: Free-riding| Free-riding]] | ||
| categories = | |||
[[:Category:Global|Global]] – [[:Category: Cash| Cash]] – [[:Category: Payment| Payment]] – [[:Category: Off-the-books| Off-the-books]] – [[:Category: Tax avoidance| Tax avoidance]] | |||
| authorofpiece =Colin C. Williams | |||
| authorinstitution =School of Management, University of Sheffield, UK | |||
In the UK in particular and in developed economies more generally, a recurrent question that customers ask of tradespeople, such as those doing home maintenance and repair work, is ‘How much for cash?’ Similarly, it is commonly the case that such tradespeople will give customers an official quote for doing a job with Value Added Tax (VAT) included, and then say, for example, ‘or 20 percent less for cash-in-hand.’ | | authorwebsite =[https://www.sheffield.ac.uk/management/staff/williams/index Profile page at US]}} | ||
<big>'''By Colin C. Williams, School of Management, University of Sheffield, UK'''</big> | |||
[[Category:Market]] | |||
[[Category: Functional ambivalence]] | |||
[[Category: Gaming the system]] | |||
[[Category: Camouflage]] | |||
[[Category: Free-riding]] | |||
[[Category:Global]] | |||
[[Category: Cash]] | |||
[[Category: Payment]] | |||
[[Category: Off-the-books]] | |||
[[Category: Tax avoidance]] | |||
[[Category:Entry]] | |||
[[Category: Volume 2]] | |||
{| class="wikitable" | |||
|- | |||
|style="font-size:1.1em;"| In the UK in particular and in developed economies more generally, a recurrent question that customers ask of tradespeople, such as those doing home maintenance and repair work, is ‘How much for cash?’ Similarly, it is commonly the case that such tradespeople will give customers an official quote for doing a job with Value Added Tax (VAT) included, and then say, for example, ‘or 20 percent less for cash-in-hand.’ | |||
‘Cash-in-hand work’ refers to monetary transactions that are unregistered by, or hidden from, the state for tax, social security and/or labour-law purposes but which are legal in all other respects (European Commission 2007; Williams 2014; Williams and Windebank 1998)<ref>European Commission. 2007. Stepping up the Fight against Undeclared Work. Brussels: European Commission</ref><ref>Williams, C. and Windebank, J. 1998. Informal Employment in the Advanced Economies: Implications for Work and Welfare. London: Routledge</ref>. ‘Cash-in-hand’ work has been denoted in other contexts using over 45 different adjectives and ten different nouns. It has been called the ‘black,’ ‘concealed,’ ‘informal,’ ‘irregular,’ ‘hidden,’ ‘invisible,’ ‘off-the-books,’ ‘subterranean,’ ‘undeclared,’ ‘underground,’ ‘unobserved,’ ‘unorganized’ or ‘unregulated’ economy, sector, work, employment, activity, sphere or realm, to name but a few of the adjectives and nouns employed. It is immediately apparent when one examines these adjectives that they all describe something that is absent, insufficient or missing. | ‘Cash-in-hand work’ refers to monetary transactions that are unregistered by, or hidden from, the state for tax, social security and/or labour-law purposes but which are legal in all other respects (European Commission 2007; Williams 2014; Williams and Windebank 1998)<ref>European Commission. 2007. Stepping up the Fight against Undeclared Work. Brussels: European Commission</ref><ref>Williams, C. and Windebank, J. 1998. Informal Employment in the Advanced Economies: Implications for Work and Welfare. London: Routledge</ref>. ‘Cash-in-hand’ work has been denoted in other contexts using over 45 different adjectives and ten different nouns. It has been called the ‘black,’ ‘concealed,’ ‘informal,’ ‘irregular,’ ‘hidden,’ ‘invisible,’ ‘off-the-books,’ ‘subterranean,’ ‘undeclared,’ ‘underground,’ ‘unobserved,’ ‘unorganized’ or ‘unregulated’ economy, sector, work, employment, activity, sphere or realm, to name but a few of the adjectives and nouns employed. It is immediately apparent when one examines these adjectives that they all describe something that is absent, insufficient or missing. | ||
|} | |||
The one thing absent from ‘cash-in-hand’ work, and its only illegitimate feature, is that it is not declared to the authorities when it should be. It is not declared for three reasons: to evade paying direct or indirect taxes (income tax in the former case; VAT or excise duties in the latter); to make a fraudulent benefit claim (where someone who is officially unemployed claims state benefits while working); and to avoid labour legislation (such as employers’ insurance contributions, minimum-wage agreements or safety standards in the workplace). Cash-in-hand work covers only activities where the means do not comply with regulations but the ends (goods and services) are legitimate (Staudt 1998)<ref>Staudt, K. 1998. Free Trade? informal Economies at the US-Mexico Border. Philadelphia: Temple University Press </ref>. It does not include criminal activity where the goods and services are themselves illegal, such as drugs-trafficking. The only illegitimate feature of cash-in-hand work, to sum up, is that the monetary transactions are not declared for tax, social security or labour law purposes (Portes 1994; Thomas 1992)<ref>Portes, A. 1994. ‘The Informal Economy and its Paradoxes,’ in N. Smelser and R. Swedberg (eds), The Handbook of Economic Sociology. Princeton: Princeton University Press: 89-101 </ref><ref>Thomas, J. 1992. Informal Economic Activity, Hemel Hempstead: Harvester Wheatsheaf </ref>. | The one thing absent from ‘cash-in-hand’ work, and its only illegitimate feature, is that it is not declared to the authorities when it should be. It is not declared for three reasons: to evade paying direct or indirect taxes (income tax in the former case; VAT or excise duties in the latter); to make a fraudulent benefit claim (where someone who is officially unemployed claims state benefits while working); and to avoid labour legislation (such as employers’ insurance contributions, minimum-wage agreements or safety standards in the workplace). Cash-in-hand work covers only activities where the means do not comply with regulations but the ends (goods and services) are legitimate (Staudt 1998)<ref>Staudt, K. 1998. Free Trade? informal Economies at the US-Mexico Border. Philadelphia: Temple University Press </ref>. It does not include criminal activity where the goods and services are themselves illegal, such as drugs-trafficking. The only illegitimate feature of cash-in-hand work, to sum up, is that the monetary transactions are not declared for tax, social security or labour law purposes (Portes 1994; Thomas 1992)<ref>Portes, A. 1994. ‘The Informal Economy and its Paradoxes,’ in N. Smelser and R. Swedberg (eds), The Handbook of Economic Sociology. Princeton: Princeton University Press: 89-101 </ref><ref>Thomas, J. 1992. Informal Economic Activity, Hemel Hempstead: Harvester Wheatsheaf </ref>. | ||
Examining the extent of participation in cash-in-hand work, an English Localities Survey conducted at the turn of the millennium found that 4.6 percent of those surveyed had engaged in cash-in-hand work in the past twelve months (Williams and Windebank 2001)<ref>Williams, C. and Windebank, J. 2001. ‘Reconceptualising Paid Informal Exchange: Some Lessons from English Cities,’ Environment and Planning A 33(1): 121-40 </ref>. Similarly, a 2013 Eurobarometer survey found that 4 percent of respondents across the European Union (EU) had engaged in cash-in-hand work in the previous twelve months (Williams 2014b)<ref>Williams, C. 2014b. Explaining Cross-National Variations in the Prevalence and Character of Undeclared Employment in the European Union, European Spatial Research and Policy 21: 115-32 </ref>. These were, however, likely to be lower-bound estimates given the likelihood of under-reporting in these surveys. | Examining the extent of participation in cash-in-hand work, an English Localities Survey conducted at the turn of the millennium found that 4.6 percent of those surveyed had engaged in cash-in-hand work in the past twelve months (Williams and Windebank 2001)<ref>Williams, C. and Windebank, J. 2001. ‘Reconceptualising Paid Informal Exchange: Some Lessons from English Cities,’ Environment and Planning A 33(1): 121-40 </ref>. Similarly, a 2013 Eurobarometer survey found that 4 percent of respondents across the European Union (EU) had engaged in cash-in-hand work in the previous twelve months (Williams 2014b)<ref>Williams, C. 2014b. Explaining Cross-National Variations in the Prevalence and Character of Undeclared Employment in the European Union, European Spatial Research and Policy 21: 115-32 </ref>. These were, however, likely to be lower-bound estimates given the likelihood of under-reporting in these surveys. | ||
Cash-in-hand work has traditionally been viewed as low-paid waged employment forced on marginalised populations by unscrupulous employers (Gallin 2001)<ref>Gallin, D. 2001. ‘Propositions on Trade Unions and Informal Employment in Times of Globalisation,’ Antipode 19(4): 531-49 </ref>. Since the turn of the millennium, however, it has been recognised that much cash-in-hand work is conducted not only voluntarily but also on a self-employed basis. More recently, it has been recognised that much of this work is conducted for and by kin, neighbours, friends and acquaintances for community-building and redistributive rationales (see ‘Paid favours’ in this volume) (Williams 2004a,b; Williams and Windebank 2004)<ref>Williams, C. 2004a. Cash-in-Hand Work: The Underground Sector and the Hidden Economy of Favours. Basingstoke: Palgrave Macmillan </ref><ref>Williams, C. 2004b. Cash-in-Hand Work: Unravelling Informal Employment from the Moral Economy of Favours, Sociological Research On-Line 9: 1-18 </ref><ref>Williams, C. and Windebank, J. 2004. ‘The Heterogeneity of Cash-in-Hand Work,’ International Journal of Sociology and Social Policy 24(1-2): 124-40 </ref>. Indeed, the English Localities Survey found that some 20 percent of the cash-in-hand work that respondents had undertaken had been waged employment, 15 percent had been self-employment for previously unknown customers, and 65 percent had been ‘paid favours’ (Williams and Windebank 2001)<ref>Williams, C. and Windebank, J. 2001. ‘Reconceptualising Paid Informal Exchange: Some Lessons from English Cities,’ Environment and Planning A 33(1): 121-40 </ref>. This finding was reinforced at EU level in a 2007 Eurobarometer survey which found that in the EU 20 percent of cash-in-hand work had been waged employment, 25 percent had been self-employment for previously unknown customers, and 55 percent had been paid favours (Williams 2014b)<ref>Williams, C. 2014b. Explaining Cross-National Variations in the Prevalence and Character of Undeclared Employment in the European Union, European Spatial Research and Policy 21: 115-32 </ref>. | Cash-in-hand work has traditionally been viewed as low-paid waged employment forced on marginalised populations by unscrupulous employers (Gallin 2001)<ref>Gallin, D. 2001. ‘Propositions on Trade Unions and Informal Employment in Times of Globalisation,’ Antipode 19(4): 531-49 </ref>. Since the turn of the millennium, however, it has been recognised that much cash-in-hand work is conducted not only voluntarily but also on a self-employed basis. More recently, it has been recognised that much of this work is conducted for and by kin, neighbours, friends and acquaintances for community-building and redistributive rationales (see ‘Paid favours’ in this volume) (Williams 2004a,b; Williams and Windebank 2004)<ref>Williams, C. 2004a. Cash-in-Hand Work: The Underground Sector and the Hidden Economy of Favours. Basingstoke: Palgrave Macmillan </ref><ref>Williams, C. 2004b. Cash-in-Hand Work: Unravelling Informal Employment from the Moral Economy of Favours, Sociological Research On-Line 9: 1-18 </ref><ref>Williams, C. and Windebank, J. 2004. ‘The Heterogeneity of Cash-in-Hand Work,’ International Journal of Sociology and Social Policy 24(1-2): 124-40 </ref>. Indeed, the English Localities Survey found that some 20 percent of the cash-in-hand work that respondents had undertaken had been waged employment, 15 percent had been self-employment for previously unknown customers, and 65 percent had been ‘paid favours’ (Williams and Windebank 2001)<ref>Williams, C. and Windebank, J. 2001. ‘Reconceptualising Paid Informal Exchange: Some Lessons from English Cities,’ Environment and Planning A 33(1): 121-40 </ref>. This finding was reinforced at EU level in a 2007 Eurobarometer survey which found that in the EU 20 percent of cash-in-hand work had been waged employment, 25 percent had been self-employment for previously unknown customers, and 55 percent had been [[paid favours]] (Williams 2014b)<ref>Williams, C. 2014b. Explaining Cross-National Variations in the Prevalence and Character of Undeclared Employment in the European Union, European Spatial Research and Policy 21: 115-32 </ref>. | ||
How can participation in cash-in-hand work be explained? In recent years, the lens of institutional theory has been increasingly used. In institutional theory, institutions are defined as the cognitive, normative and regulative structures that give stability and meaning to social behaviour (Scott 1995)<ref>Scott, W. 1995. Institutions and Organizations. Thousand Oaks: Sage </ref>. Institutions or governance mechanisms exist in every society (Baumol and Blinder 2008; North 1990). On the one hand, there are formal institutions, which are the codified laws and regulations. On the other hand, there are informal institutions, which are the ‘socially shared rules, usually unwritten, that are created, communicated and enforced outside of officially sanctioned channels’ (Helmke and Levitsky 2004:727)<ref>Helmke, G. and Levitsky, S. 2004. ‘Informal Institutions and Comparative Politics: A Research Agenda,’ Perspectives on Politics 2(4): 725-40 </ref>; the norms, values and beliefs held by citizens reflect their individual views about what is morally right (Denzau and North 1994)<ref>Denzau, A. and North, D. 1994. ‘Shared Mental Models: Ideologies and Institutions,’ Kyklos 47(1): 3-31 </ref>. | How can participation in cash-in-hand work be explained? In recent years, the lens of institutional theory has been increasingly used. In institutional theory, institutions are defined as the cognitive, normative and regulative structures that give stability and meaning to social behaviour (Scott 1995)<ref>Scott, W. 1995. Institutions and Organizations. Thousand Oaks: Sage </ref>. Institutions or governance mechanisms exist in every society (Baumol and Blinder 2008; North 1990). On the one hand, there are formal institutions, which are the codified laws and regulations. On the other hand, there are informal institutions, which are the ‘socially shared rules, usually unwritten, that are created, communicated and enforced outside of officially sanctioned channels’ (Helmke and Levitsky 2004:727)<ref>Helmke, G. and Levitsky, S. 2004. ‘Informal Institutions and Comparative Politics: A Research Agenda,’ Perspectives on Politics 2(4): 725-40 </ref>; the norms, values and beliefs held by citizens reflect their individual views about what is morally right (Denzau and North 1994)<ref>Denzau, A. and North, D. 1994. ‘Shared Mental Models: Ideologies and Institutions,’ Kyklos 47(1): 3-31 </ref>. | ||
| Line 29: | Line 44: | ||
This opens up a new avenue for tackling cash-in-hand work, suggesting that there is a need to move beyond stricter penalties and higher risk of detection. Rather, it is necessary to tackle the causes both by improving formal institutions and by raising citizens’ norms, values and beliefs through campaigns to increase awareness of the benefits of taxation and the public goods and services that are provided by tax revenue (Williams 2014a)<ref>Williams, C. 2014a. ‘Public Policy Approaches Towards the Undeclared Economy in European Countries: A Critical Overview,’ European Labour Law Journal 5(2): 132-55 </ref>. | This opens up a new avenue for tackling cash-in-hand work, suggesting that there is a need to move beyond stricter penalties and higher risk of detection. Rather, it is necessary to tackle the causes both by improving formal institutions and by raising citizens’ norms, values and beliefs through campaigns to increase awareness of the benefits of taxation and the public goods and services that are provided by tax revenue (Williams 2014a)<ref>Williams, C. 2014a. ‘Public Policy Approaches Towards the Undeclared Economy in European Countries: A Critical Overview,’ European Labour Law Journal 5(2): 132-55 </ref>. | ||
==References== | |||