Is the black economy effecting your sales?

HellFireClub

This is a subject that cropped up recently in a discussion with a few colleagues who sell in the domestic economy. It seems to be an emerging trend where small firms are getting outpriced on the internet. This wouldn't be a problem but when I looked into a few instances of this in my own industry, it appeared that the "competition" were black market operators on websites like DoneDeal and EBay, who are blagging the VAT on sales (basically just not charging it).

Anyone else running into this problem, it seems to be evolving into a large scale problem in the industry that I work in, (motor industry)...

stephendevlin

HellFireClub wrote: »

This is a subject that cropped up recently in a discussion with a few colleagues who sell in the domestic economy. It seems to be an emerging trend where small firms are getting outpriced on the internet. This wouldn't be a problem but when I looked into a few instances of this in my own industry, it appeared that the "competition" were black market operators on websites like DoneDeal and EBay, who are blagging the VAT on sales (basically just not charging it).

Anyone else running into this problem, it seems to be evolving into a large scale problem in the industry that I work in, (motor industry)...

This can still be done legally, can you give an example

Bazzo

HellFireClub wrote: »

This is a subject that cropped up recently in a discussion with a few colleagues who sell in the domestic economy. It seems to be an emerging trend where small firms are getting outpriced on the internet. This wouldn't be a problem but when I looked into a few instances of this in my own industry, it appeared that the "competition" were black market operators on websites like DoneDeal and EBay, who are blagging the VAT on sales (basically just not charging it).

Anyone else running into this problem, it seems to be evolving into a large scale problem in the industry that I work in, (motor industry)...

I assume you are talking about dealers selling cars on donedeal to dodge VAT?

EDIT: I see that you were, removed irrelevant bit.

To answer your question, yes this does seem to be an issue. I know a lot of illegal cigarette sales are happening, and some business owners that I know are saying it's driving business away from convenience shops, petrol stations etc. If a person was in buying cigarettes they might pick up a chocolate bar or something else with better margins. I'm sure there are plenty of other examples, but that one springs to mind.

HellFireClub

stephendevlin wrote: »

This can still be done legally, can you give an example

One example is of a trader who is pretending he has a VAT number and is bringing in parts from the UK on a VAT exempt basis. He is obliged by law to apply VAT on the sale price and pass this onto Revenue. What he is doing is buying the goods ex VAT, putting a mark up on them and then selling them ex VAT, and by doing so, is coming in under legitimate traders selling the same brand of goods, by at least 23% (the current VAT rate). If you ask him for a VAT receipt, he will give you a receipt with the words (VAT Inclusive) at the bottom, even though the VAT isn't in there at all.

I'm a photographer (so more a service than a product, but still a small business, really) and I find that I'm being undercut by about a dozen people that I know of (all of whom are on social welfare, or in other jobs and working on the side).

Can make things a bit difficult at times alright (especially when I know of two or three competent professional photographers, who are fantastic at what they do and have made serious time and financial investment into their line of work, going on social welfare because they're being undercut left, right and centre).

Can be quite disheartening.

HellFireClub

Deleted User wrote: »

I'm a photographer (so more a service than a product, but still a small business, really) and I find that I'm being undercut by about a dozen people that I know of (all of whom are on social welfare, or in other jobs and working on the side).

Can make things a bit difficult at times alright (especially when I know of two or three competent professional photographers, who are fantastic at what they do and have made serious time and financial investment into their line of work, going on social welfare because they're being undercut left, right and centre).

Can be quite disheartening.

This is EXACTLY what I am up against at the moment, disheartening is not the word I think.

HellFireClub

Bazzo wrote: »

I assume you are talking about dealers selling cars on donedeal to dodge VAT?

Not cars, more replacement car parts & garage equipment.

riveratom

HFC, tell me you are reporting these cowboys to the Revenue?? (anonymously or whatever).

HellFireClub

riveratom wrote: »

HFC, tell me you are reporting these cowboys to the Revenue?? (anonymously or whatever).

Yip, but the process is highly confidential at their end and despite a series of comprehensive statements to Revenue including documented evidence, the same cowboys are still operating openly on the internet.

I find it hard to blame Revenue because with the best will in the world, their hands are tied by legislation. I genuinely get the impression that the correspondence and the interactions I have had with Revenue have been seriously received, but it is something that they have admitted they are struggling to deal with, because it is based around mobile numbers on sites like Ebay and DoneDeal. It's deliberately evasive and under the radar in terms of where they operate from, etc.

HellFireClub

HellFireClub wrote: »

Not cars, more replacement car parts & garage equipment.

I cant remember the figures but isn't there a minimum turnover before you have to register for VAT? Maybe these guys on done deal havent reached that point yet? If they have can't you report them all to the revenue? Or at least report the website to the revenue because surely it reflects on the site if giving a platform for people to sell product while dodging tax.
You being the established guy you have to crush these guys coming in trying to steal your business.

HellFireClub

Deleted User wrote: »

I cant remember the figures but isn't there a minimum turnover before you have to register for VAT? Maybe these guys on done deal havent reached that point yet? If they have can't you report them all to the revenue? Or at least report the website to the revenue because surely it reflects on the site if giving a platform for people to sell product while dodging tax.
You being the established guy you have to crush these guys coming in trying to steal your business.

Well if that is the case (and I know it isn't from the figures involved and the goods involved), then they should not be able to buy on a VAT exempt basis in the UK. That's the problem, loose practice on the supply end of things.

HellFireClub

OK, I'm going to throw this idea out there, I was thinking of setting up a website where this kind of blatantly illegal behaviour could be basically outed, named and shamed.

It might help you mentally but probably not financially. Knowing the way people are these days they will probably go on the site to find people selling VAT free and you'll end up helping them!

Or you could fight fire with hellfire, and set up a sole trader company but relate it to your existing business, dont register for VAT because your turnover won't require it, take advantage of the bad practice of suppliers in the UK and undercut these pricks on done deal until they go away. I believe thats all legal on your part and will only cost you the 30 euro or whatever to register the sole trader name and whatever % you then decide to undercut these guys on the websites

Gloomtastic!

El Rifle wrote: »

It might help you mentally but probably not financially. Knowing the way people are these days they will probably go on the site to find people selling VAT free and you'll end up helping them!

Or you could fight fire with hellfire, and set up a sole trader company but relate it to your existing business, dont register for VAT because your turnover won't require it, take advantage of the bad practice of suppliers in the UK and undercut these pricks on done deal until they go away. I believe thats all legal on your part and will only cost you the 30 euro or whatever to register the sole trader name and whatever % you then decide to undercut these guys on the websites

He's not wrong you know!

HellFireClub

Gloomtastic! wrote: »

He's not wrong you know!

Well at this stage I've a pain in my bóllox being undercut by people who I know full well are on the dole and yet are at the same time illegally generating undeclared income on sales, on the back of a 23% unlawful VAT advantage, while I've been trying to operate above board myself.

I personally am of the view at this stage that the right thing to do, is throw it right fúcking out there and name and shame.

Hellfire, you'd be shooting yourself in the foot. Don't do it.

I could book a cowboy photographer for a paid shoot, pay in advance, and organise the shoot so he's actually shooting a revenue official, and he'd be caught with no way out, but do you think I'd get any thanks for it? A few self employed photographers would (possibly) be glad to see the competition from those who are undercutting the whole time start to dissolve, but the general public don't want to see people being reported. It'd be career suicide for me.

The general public don't want to see businesses succeeding, in my experience. They just want the cheapest they can get (regardless of quality, sure they can always complain about that afterwards). The same people that buy from John down the road, who has a shed that's a photo studio, mechanic's garage, storage space, operating theatre, bed sit and workshop rolled into one, will also be the same people that complain about tax rises and cuts when Revenue start seeing a fall in what's being reported to them.

You really get put in an awkward situation at times. I've been doing okay at times for the past year, and could make a living, but every day there's a new photographer emerging who's undercutting, so much so, that I reckon I'll be back on the dole in a few months, myself.

It does anger me and makes me a little bitter at times to be honest. I'm okay, in that I'm young-ish (24), have no kids or dependents, etc. but I really feel so sorry for the poor photographers, painters, mechanics, etc. that have a family to take care of, who can't get a job on because their industry is overcome with amateurs (and we all know how rough social welfare can be on people who were formerly self-employed).

It's a tough situation, and very unfair on people who opt to comply with the system.

highlandseoghan

I have to fully agree with everything KKV has just said. For some strange reason in Ireland, a lot of people don't like seeing people succeed in there own business, Nobody believes in reporting dole cheaters and cowboys in this country and everyone for the last few years are buying goods / services at the lowest prices possible even if they know these goods are stolen or the person doing the service is also claiming the dole.

I have seen so many friends have to close there business because of these cowboys and it is so hard seeing people you know who are trying to make a genuine life for themselves fail because of the illegal trade going on in Ireland.

There are areas in ireland where people go around door to door and make a living selling stolen goods, this should not be allowed or accepted. I have a friend who is a photographer and had to give it up because people were buying cameras for 3 - 4 hundred and advertising to do weddings for 300. He was been undercut so much he had to give it up.

The dole needs to be slashed in this country or else nothing will ever change.

highlandseoghan

highlandseoghan wrote: »

The dole needs to be slashed in this country or else nothing will ever change.

While I agree with your general points, I think that slashing the dole would only encourage even more people to pick up a wrench/camera/plunger/hammer/etc. and start seeking paid jobs.

It would also push the expense of a proper professional out of reach for a lot of people, too.

(and on top of that, I'm praying it won't be cut too much in the budget, as I do reckon that with so many amateurs in photography, I'm almost guaranteed to be back on the dole in 2013 at some point (unless I get very lucky). I made the foolish decision of investing money into proper camera equipment and accessories, but of course no one wants to pay for that kinda thing, so I'm still in debt over it).


I've also never reported anyone to welfare, but I did look at the site for it. It seems you can't do it anonymously. Does this not make it difficult to do (seen as, as you said yourself, Ireland loves it's dole cheats, so if word got out that i was reporting people, it'd come back to haunt me, and if i have to sign my name on the report form, then..? )

mikemac1

Deleted User wrote: »

I've also never reported anyone to welfare, but I did look at the site for it. It seems you can't do it anonymously.

Look again

You can report suspected social welfare fraud anonymously by completing this form.

https://www.welfare.ie/EN/Secure/Pages/ReportSuspectFraud.aspx

mikemac1

mikemac1 wrote: »

Look again


https://www.welfare.ie/EN/Secure/Pages/ReportSuspectFraud.aspx

Well, that's my weekend sorted!



(I'm only joking! :P )


No, I won't report anyone. The damage has been done to photography. There's no career in it anymore unless you're extremely lucky and land a few long-term contracts.

Mechanics and the likes still have some ground to stand on as their line of work is forever being updated with new Health and Safety grounds, but photography is the definition of a free market.

But sure that's my issue, and my own fault for going out self-employed thinking I could make anything of it, in the first place.

I've had a pretty decent year, but not something worth being self-employed for. I'd rather be in Tesco and have the guaranteed money, to be honest. At least I'd know exactly what I have coming in.


I only hope, as I said above, that those who have families to feed are able to make ends meet somewhat. That's the thing that really gets to me.

neris

We dont have issues with the black economy most of the year. We are in childcare so come summer we do find kids leave coz other family will look after the kids. We do get phone calls and emails from people who are just looking for prices which we are always reluctant to give out as they usually tend to be women who are going to mind kids in their homes.

Not reported dole cheats but i did report a staff member and their partner for social welfare scamming. Never found out what happened

Peterdalkey

There is little point in moaning public about welfare fraud/VAT/PAYE PRSI and the consequent unfair competition to legitimate business unless you are prepared to do your own civic duty and report it.
There is nothing improper in being a whistleblower if you know of such wrong doing. People cheat because they think(know?) they can get away with it. If we are to have any chance of equality of opportunity and fairness, we must each do what we can to make this practice not worth the risk.
This is a far more serious issue than the squealer in the schoolyard. Not to do so is hypocrisy of the highest order, and you are actually contributing to the problem by failing in your duty as a citizen. There is no room for a fudge here.

Cheers

Peter

Markcheese

HellFireClub wrote: »

One example is of a trader who is pretending he has a VAT number and is bringing in parts from the UK on a VAT exempt basis. He is obliged by law to apply VAT on the sale price and pass this onto Revenue. What he is doing is buying the goods ex VAT, putting a mark up on them and then selling them ex VAT, and by doing so, is coming in under legitimate traders selling the same brand of goods, by at least 23% (the current VAT rate). If you ask him for a VAT receipt, he will give you a receipt with the words (VAT Inclusive) at the bottom, even though the VAT isn't in there at all.

I've bought tools from the uk without vat by giving my vat number... I gave the wrong number once by mistake ( 1 digit out) and the supplier was Back to me in no time asking for correct number or pay the vat as HM customs were going to charge him.... If they know ,revenue here know.. (by the way tools were for my own use)

HellFireClub

Peterdalkey wrote: »

There is little point in moaning public about welfare fraud/VAT/PAYE PRSI and the consequent unfair competition to legitimate business unless you are prepared to do your own civic duty and report it.
There is nothing improper in being a whistleblower if you know of such wrong doing. People cheat because they think(know?) they can get away with it. If we are to have any chance of equality of opportunity and fairness, we must each do what we can to make this practice not worth the risk.
This is a far more serious issue than the squealer in the schoolyard. Not to do so is hypocrisy of the highest order, and you are actually contributing to the problem by failing in your duty as a citizen. There is no room for a fudge here.

Cheers

Peter

Hi Peter, I've already reported it to Revenue authorities in both jurisdictions and in a very comprehensive manner. I've been given feedback to the effect that the complaint has been acted on and is "work in progress".

But the problem is that the situation still hasn't been resolved to any extent whatsoever. I couldn't have done more in terms of acting responsibly, but I'm still in the same position as I was before I reported, so I'm thinking of using the nuclear option of setting up a website and naming and shaming, because at this stage I genuinely have a pain in my hoop with trying to work around this problem and see it impacting my business on a daily basis. I set up this business to take myself off the dole and it's not sitting right with me to see my business being so undermined by this activity on a daily basis.

HellFireClub

Markcheese wrote: »

I've bought tools from the uk without vat by giving my vat number... I gave the wrong number once by mistake ( 1 digit out) and the supplier was Back to me in no time asking for correct number or pay the vat as HM customs were going to charge him.... If they know ,revenue here know.. (by the way tools were for my own use)

That's part of my problem Mark, the supplier in the UK is turning a blind eye to the VAT requirements in terms of issuing goods on the basis of an exemption. This is being done to encourage sales in this jurisdiction, on the basis of giving Irish clients a 23% price advantage, (by allowing them to basically blag the VAT).

highlandseoghan

If anyone knows who is cheating the system or claiming dole and working for cash I think we have to report them like a previous poster said not reporting them is going to make them keep doing it.

I have to disagree that slashing the dole is going to make things worse. While I understand and know that there are genuine people who have lost there jobs and are on the dole and need the money, there is also people sitting at home each week day in day out happy as larry because they know they get there dole and everything that goes with it and get to do what they want for the week.

If I work in a job for a €11 or less for 40 hours and pay my taxes and everything I would be at home right now going what the hell am i doing theres joe bloggs next door watching tv all week and getting his dole and benefits and if he gets one days work cash in hand he can come out better than me who is trying to live an honest life.

A friend of mine is a manager of a store and has had people come in ask if theres jobs that they know there not qualified for and all they want is for him to sign a form saying they looked for work. Things have to change.

In relation to KKV I hope your business survives, I know there is people out there who are happy to go with someone for there photography needs who has a €300 camera but I have seen the difference between these cheap cameras and a pro camera and there is a huge difference then you also have the professional editing that you get with a pro photographer so best of luck with your business and just remember there are still people out there who are happy to pay the extra to get the pro service and security of knowing there photography needs are in safe hands.

Sakinah

highlandseoghan wrote: »

I everyone for the last few years are buying goods / services at the lowest prices possible even if they know these goods are stolen or the person doing the service is also claiming the dole.

I just wanted to say that I don't agree with you here. (And its not because I'm trying to set up a business). I still think people will pay good money for quality and a product that is unique and that goes for photography too. Anyone can 'point and shoot' but it takes a skill and a good imagination to be a great photographer. My heart nearly broke because I couldn't afford the photographer I wanted for my wedding, and all that made me want her was looking through her albums, no one was posing, every picture was taken spontaneously.

I wanted to buy my hubby a pair of 'Beats by Dr Dre' headphones but the prices on donedeal were too suspiciously cheap and I don't believe in wasting money on potentially fake crap that will break, so I paid 80 euro more from the shop. Some industries like the food industry where you can't argue the quality of food from Aldi versus Tesco, of course I will buy cheaper if I believe the quality to be the same.

I think too many businesses believe their product just 'deserves' a certain price without really looking at what they are offering in value. People will definitely pay for quality and something 'extra' or 'different'.

I might buy something from someone on the dole, more out of trying to help (yes its a paradox) than trying to get a cheap deal - but most people I know wouldn't touch stolen goods. Just because we lost our money doesn't mean we lost our conscience.

Now....off my soap box.

highlandseoghan

Sakinah I agree there is some people out there who see and know the difference in fake and poor service. I fully agree in photography that there is a huge difference between a pro and someone just pointing and shooting. I myself would definetely pay the extra because the results the pro will give you are outstanding. However there is a lot of people out there that just pay for the cheapest service or buy the fake or are happy to pay for stolen stuff because they know there getting it so much cheaper.

You go out to one of the large markets in Meath any sunday and you will see the fake dre headphones the copied cds / dvds and clothes, them guys are making a huge amount of money each week selling fake gear. They are making so much money because there is so many people going out there and buying the stuff.

Don't get me wrong while there is a huge amount of people supporting this illicit business I know that there are good people in the country who wont go near stolen, fake or poor service.

The op mentioned setting up a website name and shame and while the idea might be good I think too many people would go onto it looking to get details or info of where they can get fake or stolen stuff.