Boris Johnson and Nick Clegg were among politicians who today admitted to paying tradesmen cash in hand after a Treasury minister condemned the practice as “morally wrong” if the aim was to help them avoid tax.
The comments by David Gauke, the Exchequer Secretary, put senior political figures on the spot over their domestic arrangements.
Mr Johnson confessed he often produced a bundle of notes to settle his bills. The Mayor of London said: “I have certainly paid a lot of cash in hand.”
It is a rarer practice in the Clegg household. An aide to the Deputy Prime Minister said: “Nick has very occasionally paid in cash - but not to allow someone to avoid tax or in exchange for a lower price.”
His Liberal Democrat colleague, Vince Cable, took a similar line. Asked if he had ever paid cash in hand, the Business Secretary replied: “Of course. It’s perfectly legal and perfectly moral, providing you are not doing it with the objective of avoiding tax.”
But the Culture Secretary, Jeremy Hunt, side-stepped the same question at an Olympics press conference. He said: “David Gauke was saying that tax-dodging is wrong and personally I haven’t dodged tax.”
The Home Office minister, James Brokenshire, answered: “Would I make cash payments to avoid VAT? No, I certainly would not.”
Ed Miliband, on a visit to Paris, was also opaque on the question. The Labour leader said: “What I say is that the job of government is to pass the right laws to clamp down on tax avoidance – that’s the most important thing.”
Treasury sources stressed that Mr Gauke’s comments were aimed at householders who pay with money in return for a discount – and know the recipient would avoid tax as a result. They said: “Our priority remains to tackle large-scale aggressive avoidance by the richest in our society.”
Tariq Dag Khan, from the tradesmen recommendation website Rated People, said the minister’s comments would “do little to help tradesmen who are struggling in a difficult economic climate.” He said: “There is little or no alternative to cash payments for many tradesmen."