VAT crackdown hits restaurants

By Nigel Packer

Restaurants are being targeted in a nationwide clampdown on VAT fraud.

In Nottingham, Customs and Excise inspectors paid unannounced visits to premises throughout the city last week, and the accounts of around 10 restaurants are now being investigated further.

"We visited restaurants and take-aways that were not registered for VAT, plus two or three that were registered in order to validate their declarations," said John Powell of Customs and Excise, Eastern Region.

Action is to be taken against the restaurants involved, he added.

"It has been known for restaurants to take as much money in one night as they claim to be taking in a week," said Powell.

The Nottingham clampdown forms part of a nationwide Treasury initiative launched earlier this year, which aims to bring an extra £26m into the coffers this financial year.

"With the help of additional Government funds we have set up special teams throughout our 14 regions," said Mark Thomson, national spokesman for Customs and Excise.

"It is by no means a problem peculiar to restaurants, but any business involving a lot of cash transactions tends to be a fruitful place to pick up on undeclared VAT."

The main method for checking restaurants is for inspectors to sit outside and count customers going in, said Thomson.

"Sometimes they will even go in and order a meal in order to check that it appears on later declarations."

Businesses that are found not to have registered for VAT despite having an annual turnover above the £48,000 threshold are generally given a penalty fine in addition to a backdated VAT bill.

"We have recovered £11m since April, and are confident of reaching the £26m target," said Thomson. "We are not out to prosecute unregistered businesses - simply to draw them into the VAT net."