Is it illegal to pay in cash?

The nation's top tax collector, Dave Hartnett, has said, "Every time someone pays cash in order not to pay VAT, the nation gets diddled."

In a Telegraph interview he's reported to have laid down that householders have a duty to ensure that other people do not evade paying their share of tax.

Plainly the remarks are directed against builders and other traders who ask for cash so that they can avoid VAT and income tax, which is wrong.

But some people might be worried that they are actually breaking the law if they pay in cash.

Just to clear this up, I checked with HMRC, the tax office, and they say, "it's up to you whether you pay by cash or cheque."

Also: "it's entirely the responsibility of the trader to declare the income they receive".

So it's fine pay in cash if you want to.

Incidentally, the UK has the highest threshold for VAT-registration in Europe. Businesses don't have to start charging it until they are taking in £73,000 a year.

It's quite possible that a small trader will not be required to put VAT on your bill.