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

Sunday Independent (Ireland) - - Anaysis -

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.

UN­FAIR: Mark O’Keeffe

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