As a UK employer, that'd be a straight ticket to an HMRC investigation and severe penalties, possibly jail. Employing people illegally, "off the books", is treated as a serious thing here.
Ok, got it. Then just keep your savings in gold or Bitcoin. Even if half the population did just that, the government would be shitting bricks already.
But as long as it passes through your bank account, the tax has already been paid. I could convert all my savings to gold or bitcoin, but the government has already had their slice by the time that happens, which wouldn't be much of a protest at all.
EDIT: To clarify for non-UK residents (I'm not sure how it works in other countries), everything in the UK is fundamentally tied to your bank account. Your wages go directly to your bank. Your bills come directly out of your bank account via payment agreements that are set up with your bank and the 3rd party (see Direct Debit). There's no real way you can be paid in cash and pay your bills in cash.
The essence of fraud is finding loopholes that allow you to move cash outside of the system. Those loopholes are intrinsically not common knowledge, otherwise they'd be closed.
Not so. Inflation is yet another tax you'll be paying if you keep your money in a bank. Inflation is a huge thing for governments. Without inflation, they'd be out of so many opportunities to finance various things and the fraudulent financial system governments run would be instantly exposed.
Then you would also have to remember that if you keep your savings in Bitcoin, you can pay for other products and services with them directly. And taxes would be paid only by a company that at some point decides to convert Bitcoins to fiat. That is, if you are A then your bitcoins may be in a chain of payments A -> B -> C. Obviously A (you) paid taxes, C would also have to pay taxes when he converts them to fiat. But because B decides to spend bitcoins earned from you directly by purchasing things from C, taxes are not paid from that deal.
Bitcoin has a lot of volatility. I'd rather take a steady 2-4% cut every year than an unpredictable swing that could take out 95% of my savings overnight.
