Bona fide security providers trying to make a living in the industry in Galloway say they are struggling to make ends meet after being undercut by ‘cash-in-hand’ tax dodgers.
An employee of such a company wrote to The Galloway Gazette this week to say the authorities “aren’t interested” in helping them stamp out this illegal practice that avoids stumping up thousands of pounds for both public and employers liability insurance.
The security worker, who wishes to remain anonymous, said: “I currently work for a security agency covering Dumfries and Galloway and South Ayrshire, providing security services to licensed venues within these regions.
“However, my employer has recently been in contact with me to inform me there may be no more work as he is being priced out of the business by other individuals being paid on a ‘cash-on-hand basis’.
“My main concern is the lack of action taken by HMRC upon receiving yearly complaints by either telephone, online forms and in writing naming door stewards operating on a ‘cash-in-hand’ basis.
“Grass roots tax avoidance isn’t a big issue because it doesn’t have a substantial effect on the Treasury. It does however have a substantial effect on my bank balance when I’m out of work. These stewards have no liability insurance in place, either public or employers.
“Our insurance is in place to cover the public entering or using the venues we provide security for.
“All of this has been brought to the attention of relevant parties, for example HMRC, Dumfries and Galloway Council, Dumfries and Galloway Licensing Board and Dumfries and Galloway Police Force.”
Galloway MP Russell Brown said, “Whilst the Government is quick to clamp down on people on benefits, all too often it can seem they turn a blind eye when it comes to tax avoidance.
“It is crucial that HMRC ensure that companies don’t avoid paying the tax they owe. The vast majority of licensed premises in Dumfries and Galloway take their obligations seriously and ensure that anyone working in security is
not only properly registered as an employee for tax purposes but also licensed through the Security Industry Authority. It is totally unfair to those well run businesses if one or two bend the rules in this way and I would encourage anyone with any evidence of this to get in touch with me and I will take this up with the authorities. If a company is not paying their fair share of tax, the chances are they may not have proper public liability and employer liability insurance and that means the public are not being properly protected when they visit the bars involved. This is something the council’s Licensing Boards should be taking very seriously “.
A police spokesman said that chasing tax dodgers was not their top priority. He said: “Our concerns surround the proper stewarding of licensed premises in collaboration with the licensing boards, that stewards are properly licensed and qualified, however the payment of stewards is outwith our responsibility.”
A spokesman for Dumfries and Galloway Council said: “Dumfries and Galloway Council and the local licensing boards do not have a direct role in enforcing the relevant tax avoidance laws.
“This would be for HNRC. However, we are always willing to work with agencies such as HMRC wheneven necessary, to make surethat evertone pays their share oftax.
A spokesman for HMRC added: “In general, if an employee is being paid and PAYE is not being operated then that is tax evasion, is illegal and not avoidance. The non payment of PAYE could lead to a tax bill in the future for an individual, and possible penalties for the employer. Also the non-payment of National Insurance may have consequences for the employee if benefits are to be claimed at a later date. However people can be self employed, in which case they would have to declare their income on a self-assessment declaration at the end of each tax year and then pay the relevant tax due.
Tax avoidance is bending the rules of the tax system to gain an advantage that Parliament never intended. It often involves contrived, artificial transactions that serve little or no purpose other than to produce a tax advantage. It involves operating within the letter –but not the spirit - of the law.
“Tax evasion is where there is a deliberate attempt not to pay the tax due. It is illegal. We will relentlessly pursue those who engage in evasion, with serious consequences for those who don’t pay all the tax they owe, from financial penalties to criminal conviction.”