Businesses warned of HMRC crackdown on tax fraud

13 December 2023 by
Businesses warned of HMRC crackdown on tax fraud

Over 20 restaurants and takeaways across the UK have been raided by HMRC as part of a government crackdown on electronic till fraud.

HMRC's Fraud Investigation Service has already launched 24 raids following an end of amnesty earlier this year, according to international law firm Pinsent Masons.

The government is tackling tax evasion through the use of illegal Electronic Sales Suppression (ESS) software, which is known to have been used by some high street businesses, takeaways and restaurants to hide or reduce the value of purchases made via debit and credit cards.

In some instances, the software is able to automatically redirect a proportion of sales that would normally go through HMRC into a hidden bank account.

HMRC classes the use of ESS software as tax fraud, meaning those who are convicted may face a criminal investigation with considerable penalties up to £50,000 or prison sentences.

Sophie Warren says: "Businesses that defrauded HMRC using ESS software had an opportunity to come forward to HMRC by 9 April 2023 to avoid raids and criminal investigations. Those who didn't come forward are now being targeted by HMRC and the financial penalties are likely to be far more severe."

"HMRC will be looking at all businesses that could use an ESS tool, not just restaurants and takeaways. More investigations and raids are expected."

She added: "Anyone considering making a disclosure to HMRC through their disclosure service or under a Code of Practice 9 should take professional advice before contacting HMRC to ensure that they get the best outcome possible. Businesses that contact HMRC unprepared will not be best placed to limit the penalties they face."

Image Credit: Shutterstock/Monkey Business Images

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