Labour tax row: Chuka Umunna downplays Ed Balls' comments on cash-in-hand payments

Ed Balls was criticised after he suggested that people should get a written receipt for all transactions

Ed Balls, left, and Chuka Umunna appeared to have conflicting views on keeping receipts for small maintenance jobs (Getty)

Labour has come under scrutiny after conflicting advice on tax for cash-in-hand payments from its shadow business secretary and shadow chancellor.

Ed Balls was criticised after he suggested that people should get a written receipt for all transactions, including for jobs such as gardening, cleaning and basic maintenance work.

Balls told BBC Radio 5’s Pienaar’s Politics that people should ask for a record of paying somebody, even if was for something as small as a £10 hedge trim, because they had a “legal obligation” to pay tax.

His remarks were ridiculed as "ludicrous" by Conservative MP Peter Bone, who was interviewed on the same show.

Bone said: "If you go into a café for a cup of tea you would not expect a receipt for it. 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?"

Balls said today he would review every existing tax-planning scheme if he becomes Chancellor.

The comments by Ed Balls were later downplayed by his colleague, shadow business secretary Chuka Umunna, who said that he did not think Balls was telling people to keep every receipt they were given.

Umunna said: "Is he demanding that your viewers keep every single receipt that they get in respect of anything they spend, or make sure that they get a receipt? No, he wasn’t doing that."

However, Umunna also suggested it was "good housekeeping" to get a receipt. "I have to confess I don’t keep a receipt for every single thing that I get people to do," he said.

The dispute over tax avoidance escalated this week after Labour vowed to crack down on tax avoidance following revelations that HSBC's Swiss private bank had helped thousands of wealthy individuals to avoid paying tax in the UK.

The Conservatives have been quick to attack Labour over the tax arrangements of various figures including part donors. Unfortunately for the party, a video from 2003 has recently been re-circulated where Conservative MP George Osborne tells a caller to the Daily Politics show how to get around inheritance tax.

"The one piece of advice I would give to Bill is there are some pretty clever financial products which enable you to, in effect, pass on your home or the value of your home to your son or daughter, and then get personal care paid for by the state (I probably shouldn't be advocating this on television)", he says.