Hair and beauty black market secrets revealed
House calls from stylists offering cheap services for cash-in-hand are on the rise, thanks to social media, writes Niamh Horan
THE underground tax-free black market in hair and beauty is destroying legitimate salon businesses, according to leading stylist Mark O’Keeffe.
Freelancers are earning up to €1,000 in three days by using social media to find clients, whom they then style in their own homes.
The growth of unofficial blow-dry, cuts and colouring services has prompted O’Keeffe, one of Ireland’s top stylists, to urge the Revenue to trawl through social media for tax-dodgers operating off the books.
The director of Brown Sugar, who operates five salons and employs 100 staff, says the new VAT hike is unfair on both salons and their customers, who are now facing VAT rises of 4.5pc in the new year while the growing trend of cashin-hand styling continues unabated.
Speaking to the Sunday Independent, Mr O’Keeffe said: “There have always been ‘nixers’ in the industry and people would have turned a blind eye to it, but it always happened on a very small scale. I’m not saying it was ever acceptable but it was never as widespread as what we are seeing now. And the reason it’s so prevalent is down to social media.
“These people are calling themselves ‘freelance hairdressers and beauticians’ and they post their services on social media. Of course there are the legitimate kind who operate online too, but there are others working from home or going to the customer’s home and not putting it through the books.”
In October, Finance Minister Paschal Donohoe confirmed the VAT for the hospitality sector will rise from 9pc to 13.5pc from January 1, a move that has caused frustration in the industry.
“What irks me is that the Revenue is putting up the VAT on hard-working men and women who are pulling this country out of a recession, when, if they just maybe put a little bit more effort in trying to reduce the numbers working in the black market in this country, they could easily gain as much money that way instead of going for the easy option,” said O’Keeffe.
The Brown Sugar owner, who is opening two more salons, Sugar Daddy and Sugar Coated, in Blackrock’s Frascati Centre this spring, added: “Unfortunately, another effect of this is that we are also losing staff to the black market because they feel they can work two or three days a week there and bag a couple of hundred euro.
“I could easily name 12 people, between hairdressers and make-up artists who I know, and at least three or four are comfortably making €1,000 in two to three days.”
“Meanwhile, legitimate salons now have to face 4.5pc VAT hikes on services in January and there is no business out there that can comfortably absorb that kind of expense while still trying to cover other costs such as rent increases.
“So wage costs are also going up to keep hairdressers and makeup artists interested in working in salons.
“I have to pay them very well, so there’s another effect of the black market.
“Then there are people who are fully qualified, who I would have trained and spent thousands putting them through courses, only for them to leave and go freelance. All of a sudden, they are advertising the same hair extensions that we are using for a third or a quarter of the price on social media. Back in the day, people were too scared to even hand out cards in case the Revenue found out and now, all of a sudden, they’re all over social media.
“I don’t think they are smart enough to know that everyone can see this, including the Revenue.
“I just don’t know why Revenue aren’t looking at people’s online pages and going after them.”
Black market trading is estimated to cost the economy close to €2.5bn a year. Almost €800m of that is a direct loss to the Exchequer, according to a 2016 report by Grant Thornton.