I always pay the model in cash. I have seen models being cheated by a, now thankfully now out of the business, adult producer who paid them in dollar cheques based on his rate of exchange and also ones made of India rubber! He even bounced a cheque with me once after I had done some acting for him ...... being over 6ft I was able to 'explain' to him the error of his ways regarding my fee!
Cash is convenient and if I am unsure about leaving it in my kit in a property whilst filming I lock it in an a small strongbox fastened into my car.
I've mentioned numerous times a collegue who got stung for £15,000 for paying in cash and not establishing a paper trail. The taxmans arguement was that he could have claimed to have paid a model £250, but paid her only a part or none of it, pocketing the rest, efectively paying himself tax-free.
In the end his options were settle for £15,000 or go to trial. Thats why I pay by cheque and make sure there's a record of the payment.
But you are receiving income and treating the model fees as outgoings to balance the income and reduce the amount of tax you pay to your net income as opposed to your gross income.
Those that don't receive an income and just pay models have no income tax liability. They just have outgoings and provided they are not involving IRC by trying to claim losses to balance against future income should have nothing to worry about. After all, the IRC is going to have a hell of a job proving they have earnt any income if they have not.
I pay by cheque, I like to leave a paper trail of where the money goes. If the model wants to fiddle her tax or benefits, she can do it without my help.
I can understand why models want cash though, there are so many conmen, scammers and shysters about, I'd want paying in a format I knew had immediate value.
It's their prerogative to deal with their own tax business, if they don't declare or fiddle with the amount, it won't be your fault, it will be theirs alone