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Ed Balls: I always get a receipt for getting my hedge cut Ed Balls: I always get a receipt for getting my hedge cut
(about 20 hours later)
People should get a written receipt for all transactions, even small cleaning and gardening jobs, the shadow chancellor has advised. Ed Balls has come under fire for suggesting people should get a written receipt for all transactions, even small gardening jobs.
Ed Balls said it was "the right thing" to ask for a record of paying somebody to cut the hedge because they have an obligation to pay tax. The shadow chancellor said he always asked for a written record, even if it was just for £10 to cut a hedge, because it was the "right thing to do".
He had been "extremely careful" about observing such rules ever since entering politics, he explained. Work and Pensions Secretary Iain Duncan Smith said this was "absurd" and showed Labour did not understand business.
Tory MP Peter Bone accused him of being "out of touch" with small businesses. He added he did not think anyone in the country would do such a thing.
On BBC Radio 5's Pienaar's Politics, the shadow chancellor was challenged about different forms of tax avoidance, after pledging a crackdown against it. On Sunday Mr Balls told BBC Radio 5's Pienaar's Politics that people should ask for a record of paying somebody, even if it was for small jobs like cutting a hedge, because they have a "legal obligation" to pay tax.
He was asked whether he had ever paid a tradesman or a plumber in cash. But Mr Duncan Smith told BBC Breakfast Mr Balls's comments demonstrated "Labour's complete lack of understanding of how business works and how people get by".
Mr Balls responded: "I think the right thing to do if you are having somebody cut your hedge for a tenner is to make sure that they give you their name and address and receipt so there's a record that you paid them." Analysis, by personal finance correspondent Ian Pollock
'Sensible thing' Cash payments are not dirty. In case you had gained the opposite impression, paying a self-employed person in cash for doing a job around your house or garden is completely legal.
Asked if he always does so, he replied: "Absolutely - it's because I'm shadow chancellor. I'm extremely careful about these things so I can answer your kind of question. Furthermore there is no legal obligation on you to keep a record of the payment, or to account for it to anyone at all. It is your money and you can do what you like with it.
"Over my life - have I ever given people a tenner and not got a receipt for it? Probably yes. Since I've been involved in politics and treasury matters, absolutely I think it's really important to have a record." All UK tax obligations lie with the self-employed person you are paying. As a matter of fact, a tradesman is not obliged to even offer you a receipt.
He added: "It's not your job to pay their taxes for them and I think most people you give a tenner to are not going to be VAT-registered. But they should keep proper records so they can pay the right income tax and pay VAT too, if applicable.
Of course, everyone knows that some tradesmen prefer cash because it is hard to trace.
That makes it easier for them to dodge their own tax obligations, if they so choose.
But so long as you have not colluded with them, there is no onus on you to do anything about it. You aren't even obliged to grass them up, though HMRC would like you to do so.
He added: "Here we have a man that would be the chancellor who is wandering around saying Big Brother is going to watch you carefully, that if you do any cash transactions and don't keep receipts, somehow they are going to punish you. I find that absurd."
'Legal obligation'
And Mr Balls's colleague, shadow business secretary Chuka Umunna, also said he did not think most people would keep a receipt for such things.
He told BBC Breakfast: "I don't think everybody will keep a receipt..I don't necessarily keep a receipt for everything I pay for though it's a good idea to keep a record."
The shadow chancellor's comments were made as Labour and the Tories continue to row over alleged tax dodging in light of the HSBC tax scandal.
Pressed on the issue Mr Balls said: "It's not your job to pay their taxes for them and I think most people you give a tenner to are not going to be VAT-registered.
"They've got the legal obligation to make sure they pay their taxes if it's that kind of transaction - but I think the sensible thing for anybody is that you've got a record of it and you've done it properly.""They've got the legal obligation to make sure they pay their taxes if it's that kind of transaction - but I think the sensible thing for anybody is that you've got a record of it and you've done it properly."
Backbench Conservative MP Peter Bone, appearing on the same programme, accused him of implying that all small businesses were trying to dodge taxes. Mr Balls had been "extremely careful" about observing such rules ever since entering politics, he explained.
'Lack of understanding''Lack of understanding'
Backbench Conservative MP Peter Bone, appearing on the same programme on Sunday, accused him of implying that all small businesses were trying to dodge taxes.
"There are so many cash businesses," Mr Bone said. "If you go into a cafe for a cup of tea you would not expect a receipt for it. If you were running a fish and chip shop you do not always give receipts."There are so many cash businesses," Mr Bone said. "If you go into a cafe for a cup of tea you would not expect a receipt for it. If you were running a fish and chip shop you do not always give receipts.
"It shows a complete lack of understanding of business. Is he trying to imply that if you are a small business that deals in cash, you are trying to dodge tax?"It shows a complete lack of understanding of business. Is he trying to imply that if you are a small business that deals in cash, you are trying to dodge tax?
"I think it shows how completely out of touch he is with small business. There is an implication that everybody is out to fiddle their taxes. It is just wrong.""I think it shows how completely out of touch he is with small business. There is an implication that everybody is out to fiddle their taxes. It is just wrong."
In recent weeks, Mr Balls has been asked to answer accusations that the Labour Party is anti-business, but has insisted it has a track record of supporting an "open, dynamic, wealth-creating, entrepreneurial economy".In recent weeks, Mr Balls has been asked to answer accusations that the Labour Party is anti-business, but has insisted it has a track record of supporting an "open, dynamic, wealth-creating, entrepreneurial economy".
Do you ask for receipts for small jobs such as window cleaning and gardening? Do you have a small business and give receipts to customers? You can email haveyoursay@bbc.co.uk with your experience. Please include a telephone number if you are willing to be contacted by a BBC journalist.
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