UK Politics

Ed Miliband: Hedge funds more important than hedge cutters

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Media captionEd Balls: "Since I've been involved in politics and Treasury matters I think it's really important to have a record"

Ed Miliband has tried to neutralise the debate over whether people should get a written receipt for all transactions - even small £10 gardening jobs.

The issue has been hotly debated since Shadow Chancellor Ed Balls called for people to get such receipts because it was the "right thing to do".

Work and Pensions Secretary Iain Duncan Smith said the suggestion was "absurd".

Quizzed on his attitude to tax, Mr Miliband said hedge funds were "more important than the hedge cutters".

"And I think that has been the clarity of view right across the shadow cabinet," he added.

'Lack of understanding'

But 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.

Analysis, by personal finance correspondent Ian Pollock

Image copyright Thinkstock

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.

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.

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.

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 since came under fire from from the Tories and Mr Duncan Smith who said his comments demonstrated "Labour's complete lack of understanding of how business works and how people get by".

'Blind eye'

But when asked about tax avoidance in a speech to workers at the Jaguar Land Rover factory in Wolverhampton, Mr Miliband said: "I think there is a big contrast here between a party that is willing not to turn a blind eye to tax avoidance but actually to take it on, and to deal with it, and to change the rules, and change the law because I think this is a huge issue and a government that has frankly failed on this.

"They turn a blind eye to the tax havens and they haven't properly dealt with it. They're not dealing with the hedge funds and tax avoidance. They've got no explanation for what's been going on at HMRC [Her Majesty's Revenue and Customs].

"... I think we're all clear the hedge funds dealing with these issues [are] more important than the hedge cutters."

Mr Miliband made his comments as he set out his party's business policies for the general election.

Image copyright PA
Image caption Ed Miliband and Ed Balls visited Jaguar Land Rover's factory in Wolverhampton

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."

Mr Balls had been "extremely careful" about observing such rules ever since entering politics, he said.

Here is a selection of your comments:

Helen Pask

I do not ask for a receipt for a small job like cutting a hedge. Of course I would ask for one if the amount involved was over £25, as there are some crooks about who take your money and don't do the job. I only use tradesmen I know such as plumbers or brickies. We live in a small town and I do know most of the local businesses. I try to take my custom to local businesses because I feel they do a better job than big companies especially if they are known to me. I find Mr Balls remarks offensive as it does appear he thinks all small businesses are on the fiddle which is wrong.

Ian from Southampton

He probably gets a receipt so he can claim the hedge trimming back on his parliamentary expenses.

Graham Cox

I have been self employed for 20 years repairing domestic appliances. It's so important to leave a receipt not just as a record of payment but a record of what work has been carried out in respect of guarantees etc. Shame on the Conservatives for suggesting anything else.

Mary Nathan

I always receive a receipt when I pay the chap who cuts the hedges and trees in my garden. He is scrupulous about invoicing for the time he's worked and providing a paper record. As we're both self-employed, we often talk about this issue, and agree that keeping records and paying tax on your earnings is the only way.

Liz Bradshaw

I'm a self-employed gardener and I record my transactions in a receipt book purely because it's easier for me to keep my own accounts. Most of my customers pay me in cash and most take the receipt but bin it. I object to the implication from a man in a proven "dodgy profession" that I am inclined to subversiveness. If HMRC concentrated on chasing the big avoiders instead of piffling around quibbling with me about the square root of bugger all we might all be a lot better off.

Cuger Brant

A receipt is necessary for many things. Take the hedge cuttings; you pay someone to cut your hedge so what do they do with the trimmings? Dump them around the corner or in the nearest lay by? A receipt is a note to say who you paid to do the job thus they are accountable for the transfer of the waste product produced (waste transfer note). Or the producer could be liable for prosecution if the waste was dumped!

Andrew Archer

If you got rid of cash and everything was paid for by card, there would be a record of every payment thus it would have to be declared and tax paid on it. This would generate more tax and only hit the people trying to avoid paying tax. It is so easy to make payments by mobile phones and online, it shouldn't be a problem to get rid of cash.

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