Hi Anka

"Purely theoretically" .....

In the US if the US authorities were to become aware of the situation, you could count on :

• some pretty heavy fines,
• plus a demand to pay US social security contributions 
• plus interest for late payment
• a possible expulsion of the person for being in an irregular situation (and maybe barred from future travel to the US - yes it happens)
• serious audits from the Internal Revenue and social security teams

In the UK, if the UK authorities were to become aware of the situation (likely because no tax will be collected via PAYE...)

• some pretty probing questions in order to establish the reality of the situation
• a messy situation to untangle
• regular audits from HMRC over the following years

For both countries, tax declaration will also be wrong because the wrong social security deductions and payments will have been applied.

There are a handful of countries in the world where non-conformity is viewed as a serious matter - the UK and US are part of this august group (also Singapore, India, Nordic countries....)

In reply to Ray:

Thanks, Ray. A fount of knowledge on all things international, as usual! I am very grateful.

In reply to Anka:

Anka
I would NEVER take risks with the US - tolerance zero is the way it works over there.
As an illustration, some years ago a member of my team was sent on a 2 week business trip to the US. Because she had overstayed her student visa some 8 years earlier (and hadn't told me), she was refused entry and informed that she was persona non grata for 10 years. We had to organise an immediate return flight whilst she was kept in an immigration holding cell....