Car Wash and Laundry
I’m a great believer in free market enterprise and entrepreneurship. I thought I would just put that out there before anyone thinks I’m a luddite who frowns on progress. In fact I took a walk along my local high street yesterday and consciously tried to identify those businesses that have opened up in the 2 years preceding Covid-19 and were still open.
I was amazed. It seems to me that today’s typical high street is overcrowded with two particular types of businesses; coffee shops and charity shops. When you think of it, they are unusual bedfellows, given that the former is usually a sign of affluence-or at least plenty of disposable income, and the latter can only survive due to subsidised business rates and the fact that they don’t actually pay anything for their stock.
One thing that really grates on me is the fact that all charity shops (there might be the odd exception that was created in aid of a particular local cause) employ salaried managers, deputy managers and even retail staff. So they still have a hefty wage bill to cover every month, before a penny goes to charity! OK - Gripe over.
Back to the high street; In the space of a 150 metre stretch, I counted no less than four nail shops and 3 barbers. Clearly I have no personal interest in the nail shops, and the fact that (even pre-Covid) their staff all wear surgical masks makes me wonder how safe these places actually are. The barbers bear little resemblance to those I went to as a callow youth, the only similarity appears to be a striped barbers pole outside one of them, although this one is in flashing neon. I wonder how many have laid back in the chair expecting a haircut and shave only to be sent into an epileptic fit? Shaking violently whilst some stranger attempts to trim your goatee with a cut throat razor is just a recipe for disaster.
At the end of the parade of shops is a disused petrol station. It had lain vacant for about 9 months before a gang of strapping young men painted the kiosk and canopy in colours that would only appeal to some ‘funky’ designer on one of those puerile tv makeover shows.The hand-painted sign stated ’Hand Car Wash’ in bright red, with the price list detailed below. ‘Small Car £10, Big Car £15, 4x4 £20’ CASH ONLY.
I watched as a succession of high-end cars and 4x4s queued up before being ushered onto a slot of the forecourt by a rotund chap acting as the Maitre D’. His diminutive stature belied the power and influence he had over his workers. His ability to switch between a Uriah Heep type character, complete with wringing hands and obsequious attitude to customers, and that of some crazed megalomaniac to his staff, could have provided enough material for at least a couple of PhDs. At his command, a team of worker ants scurried and scuttled around the vehicles, each appearing to follow a preordained order of work. Quicker than you could say ‘Border Agency’ their work was done and the driver handed over payment. The Maitre D’ stuffed the cash into an oversized bum-bag hanging around his oversized waist; no receipt was asked for and nor offered. The driver drove away happy with the guy with the multiple personality disorder disappearing rapidly in his rear view mirror.
I grabbed a coffee from one of the aforementioned coffee shops and sat just inside the front window, giving me a perfect view of the car wash. As I sipped on my vastly overpriced latte I made a note of the time and began to count the number of cars being washed. In the space of 15 minutes, 15 workers (3 teams of 5) washed 6 vehicles between them. That works out to 24 vehicles an hour and at an average of £15 per vehicle, and that works out at about £360 an hour. That is £2880 a day and £20,160 a 7-day week, over £80,000 a month and just shy of £1m per annum.
Clearly there will be peaks and troughs and I might have just hit a busy period, although I can’t see why an unusually high number of people would want their car washed just after lunch on a Tuesday rather than at any other time. So here we have what appears to be an incredibly good business model. Where is Deborah Meaden when you need her?? The overheads appear to be limited to materials and wages for the workers, pretty much everything else is profit. I haven’t included any costs in relation to the premises themselves as I strongly suspect they are just 'guarding the forecourt' on behalf of the true owner until they decide they want it back.
I can just imagine the scene when Mr Multiple Personality Disorder sits down with his accountant to fill in his tax return. Actually I can’t - and I’m not sure I want to. I cannot find it in my heart to decry Mr MPD for making all efforts to minimise his tax bill. Having never paid tax during the period of my own fraudulent activity, I sneered at those that had to. Following my reformation I again joined the ranks of the great British taxpayer and looking around to see some of the crap that I help fund - I’m far from happy.
The old school view of such a cash-in-hand business is that rather than admit to washing 24 vehicles an hour, they claim to wash 4. They would maximise their overheads (premium quality products detailed on dodgy invoices to ramp up their expenses) and only pay tax on modest profits. However, let me suggest an alternative view - and probably exactly what is going on here; rather than play down the success of the hand car wash enterprise, they willingly admit to its rip-roaring success and even open up another branch at another disused filling station (either real or very possibly imagined) and submit similar accounts. This allows them to launder money from their drugs and prostitution/people smuggling operation and legitimise it in the business. So car washing becomes cash washing!
After a respectable amount of skimming a little cash off the top (not too much - or Mr MPD could be responsible for vacuuming interiors next week) the accounts are submitted via a compliant accountant. He charges like a wounded bull but is incredibly discreet, and a cheque sent to HMRC for the full amount due. I've obviously used a dodgy accountant myself in the past (he was actually ex HMRC guy) and his sage advice was always to pay some tax. Those that pay nothing draw attention to themselves and are almost inviting HMRC's attention. Paying a modest amount gives them some degree of comfort and allows them to look for an easier target. Now let me make it clear, I’m not suggesting that HMRC are turning a blind eye to money laundering practiced by cash-in-hand businesses, provided they get their cut (tax due). However, it is very clear that certain businesses are not all they appear to be!