HMRC increases efforts to target till fraud and the tax evasion practice
The scope of tax fraud seems to be taking on new forms according to a recent press release issued by HMRC.
The latest attempt involves the use of software to suppress sales recorded at point of sale. The systems even warrant a new acronym, ESS.
Electronic Sales Suppression (ESS)
Businesses involved in making, supplying or promoting ESS systems that help users hide or reduce the value of till sales, now face fines of up to £50,000 and criminal investigations. Users also face fines as HMRC increases efforts to target the tax evasion practice.
HMRC investigators hit the road
On 18 May 2022, thirty businesses were visited, including shops, takeaways and restaurants, across nine counties to tackle ESS and two men and a woman were arrested in Nottinghamshire as part of a criminal investigation into the alleged supply of ESS software.
The men, aged 43 and 58, were arrested along with a 56-year-old woman on suspicion of fraud offences and cheating the revenue.
A search warrant was executed by HMRC officers at three addresses and computers, digital devices and paperwork was seized. All three suspects have been released under investigation.
How does ESS work?
ESS users will either have access to specialist software or will configure their Electronic Point of Sale (EPOS) device in a specific way that allows them to consciously hide true sales and the resulting tax that is due.
Sales processed through the till give the impression they have been recorded as normal; however, the end of day report is deliberately manipulated behind the scenes to reduce reported takings.
New powers to tackle ESS were included in the Finance Act (2022) introduced in February this year.
HMRC recently visited businesses suspected of being associated with ESS practices in Derby, Nottingham, Alfreton, Ashbourne, Stoke, Chesterfield, Nuneaton, Warwick, Pershore, Leeds, Hull, Scarborough, Whitby, Cleethorpes, Canvey Island and Ashford.
Mitigating tax fraud
Tax fraud is an issue for us everyone because it takes from us all. Whether that’s the money it steals from our vital public services or the harm that organised criminals cause to our communities, we all have a responsibility to tackle it.
Additionally, your business could be acting fraudulently without you knowing about it so it is important to have a regular check up to make sure you are paying the correct amount of tax.
The following list includes some of the elements HMRC consider as tax fraud or avoidance to HMRC:
- Running a business without telling HMRC.
- Not paying enough Income Tax or National Insurance.
- Making false claims for the Coronavirus Job Retention Scheme.
- Making false claims for Child Benefit or Tax Credits.
- Not being registered for VAT when they should be.
- Not charging VAT or other taxes on goods or services they sell.
- Not paying VAT or other taxes on goods or services they buy.
- Hiding money, shares or other assets in an offshore bank account.
- Other types of tax avoidance or tax evasion.
If you need any assistance ensuring you are paying the correct amount of tax or need a check up for your business, get in touch.