MOONLIGHTING - or working for under-the-counter payments - could soon send you to jail, whether you are boss or worker, warns a York accountancy expert.

Anyone who avoids tax and NI contributions by making or receiving payment in cash could soon face jail terms of up to seven years, warns Julia Judson Smith, of Calvert Smith and Co, of The Mount, York.

A new statutory offence of "evading income tax" came into force on January 1, but businesses should brace themselves any day now for the first trickle of offenders to work through the system, she says.

The jail threat applies to anyone who does not deduct PAYE from employees' wages, pays staff cash-in-hand or fails to submit tax returns. The Postmaster General is allocating extra staff in anticipation of a flood of legal actions.

The legislation is backed by another Government initiative, the tax dodgers' hotline. Anyone who "blows the whistle" on fellow workers bending the tax rules will expose them to the very real threat of imprisonment.

Mrs Judson Smith said: "These are extremely far-reaching measures, with implications for both employees and employers. Those who transgress the law will find themselves risking unlimited fines, not to mention their liberty as well.

"I think we'll see a few widely-publicised cases where scapegoats are heavily fined or imprisoned in an attempt to focus the minds of employers and workers on the error of their ways.

"If ever there was a time for people caught up in the 'black economy' to get their affairs in order with professional help from an accountant, it's now."