A sole trader runs a retail shop by herself i.e. with no employees. Last year she took a week's holiday and a "helper" ran the shop. This was the only time that trader received any outside assistance. At the time of writing I don't know whether or not the helper was paid, but if she was, it was privately by the trader and definitely not out of (undeclared) shop takings.
In trying to think through the implications of this, a number of points occur to me and I would be grateful for any comments on the following or indeed on any other points please.
- Is the helper an employee and if not, can she later claim that she was?
- From a money laundering perspective, am I under any obligation to find out whether the helper was indeed paid privately?
- Is there anything illegal about a helper receiving an undeclared payment privately? If for example I were to help out a friend with his duties as a weekend sports coach and he were to pay me say £25 privately as a mark of his appreciation, is it taxable on me? What if he bought me a meal instead?
- Does the helper's status matter? For example, if she is registered with HMRC as self-employed, presumably (a) it is up to her to disclose the income (if any), and (b) from a money laundering perspective, I'm not under any obligation to enquire whether or not this is the case?
- Is the fact that the helper wasn't paid "through the books" suspicious? - Afterall, I don't whether she was paid at all.
Thank you in advance of any replies.
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Money laundering
Bear in mind that under s330 Proceeds of Crime Act 2002 you are obliged to report your suspicions of money laundering by others (i.e. clients and / or third parties) arising from information that has come to you in the course of your accountancy / tax work - see s330(3).
You are not obliged to seek out information that has not come to you. So the enquiries you make are those which you need to make for accountancy / tax purposes - there is no need to launch into a wider investigation because you think that if you did the results of it might give rise to a suspicion of money laundering.
The next thing to remember is that criminal tax evasion (which leads to money laundering) involves dishonesty and dishonesty involves someone doing something (or failing to do something required) which they themselves realise amounts to wrongdoing. A person who is ignorant or just doesn't think about what they are doing is not thereby dishonest.
In this case it may be that neither the trader nor the helper gave any thought to whether there might be tax implications to their arrangement, particularly if the amounts involved are modest.
So I wouldn't be losing any sleep about money laundering implications here.
David