Tax officials have ramped up a nationwide investigation into electronic till fraud with a series of surprise raids on takeaways

The raids were part of a major clampdown on electronic sales suppression (ESS), where takeaway owners only put a fraction of their sales through their tills to evade tax and VAT liability.

The action by HMRC officers took place at a total of 17 different outlets in London, Ipswich, Manchester and Newcastle over the last month.

Takeaways in London were targeted as far afield as Sutton, Lambeth, Wimbledon and Romford with eight sites raided, while Newcastle saw HMRC officials descend on seven different establishments.

HMRC knows some takeaways are using ESS tools which are either software or devices that alter electronic point-of-sale records. They are used to under-report a business’s sales and consequently evade tax.

On the surface, a transaction might appear to go through as normal, but ESS tools enable records to be manipulated – sometimes by deleting sales and linking to either domestic or offshore payment platforms.

To combat ESS in the takeaway industry, HMRC has robust methods in place, including accessing data from external sources, such as bank statements and transaction records from online food ordering platforms. This includes payments some platforms facilitate between takeaways and wholesalers. The information is then compared against a business’ declared income to identify any discrepancies.

The latest raids follow several earlier till fraud enquiries, which included the arrest of a 47-year-old man in Manchester on 21 February, plus voluntary interview invitations issued to four people in the Cheshire area.

Anyone using, supplying, making or promoting ESS can face fines of up to £50,000 or criminal prosecution.

HMRC stressed that anyone involved in ESS fraud should come forward and a admit their actions on the ESS disclosure facility. The longer a business takes to disclose information, the higher the financial penalties will likely be. The disclosure guidance states: ‘If we accept your disclosure, we will raise a charge and tell you how to pay it. If we do not accept your disclosure, we will write to you and explain what to do next.

‘If we find that the information you have provided is significantly incorrect, we will open an investigation.’

HMRC can commence a criminal investigation into tax fraud with the view to prosecution or, if appropriate, carry out a civil investigation under Code of Practice 9 (COP9).

Source: Accountancy Daily