Your friend wants to buy Bitcoin from an exchange and will transfer the funds to your hardware wallet. Now you want him to give you the $700 cash so that you can buy through physical P2P because you want him to avoid tax. It will depend on the tax and crypto laws of your country if the move is legal or illegal. However, it is commendable to look for means to avoid taxes as much as you are not breaking any law. You can save a good amount by avoiding taxes.  If your your friend can give you cash and you have a genuine means of buying Bitcoin you can just avoid these exchanges. Buying through traditional P2P means also promotes privacy since there will be no KYC. The bottom line of your situation is that both you and your friend will avoid taxes and save money.