HMRC is cracking down on “till fraud” by targeting businesses that use special software to report lower sales and pay less tax.
Businesses that create these systems, as well as those that use them, could now face fines of up to £50,000.
Find out how till fraud works and how you can report it.
What is till fraud?
Till fraud is when a business deliberately hides or reduces the value of its sales at the till so it can report a lower income and reduce its tax bill.
Businesses that commit this type of fraud will give the impression that sales have been recorded as normal during the day, before deliberately manipulating their end of day report to show reduced takings.
Till fraud uses Electronic Sales Suppression (ESS) systems that either give businesses access to specialist software or configure their Electronic Point of Sale (EPOS) device so they can hide the true number of sales.
HMRC investigates 30 businesses for till fraud
HMRC has been given new powers to carry out spot checks on businesses and check their tills for potential fraud.
As part of the new powers, HMRC can hand out fines to businesses involved in making, supplying, or promoting Electronic Sales Suppression (ESS) systems.
It can also fine users of ESS systems, recover evaded tax, and launch criminal investigations that could lead to convictions.
On 18 May 2022, HMRC arrested three people in connection with till fraud after visiting 30 businesses across nine counties, including restaurants, takeaways, and shops.
Two men and a woman were arrested in Nottinghamshire on suspicion of supplying ESS software.
HMRC seized computers, digital devices, and paperwork from three separate addresses. The suspects have since been released but remain under investigation.
How to report till fraud
HMRC is encouraging anyone producing or using ESS software to make a voluntary disclosure.
It says making an early disclosure could lead to a reduced financial penalty.
If you suspect someone is involved in till fraud, you can report it on the government website.
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Cracking down on tax evasion
HMRC’s new powers to tackle till fraud are part of the government’s ongoing efforts to reduce tax evasion.
Financial Secretary to the Treasury, Lucy Frazer commented: “The overwhelming majority of businesses are paying their taxes and rightly want to see HMRC stepping in where needed to ensure a level playing field for all.
“Tax crime does not stand still and neither do we – the new powers available to HMRC allow them to clamp down on ESS and help recover tax revenues to fund our vital public services.”
Earlier this year, HMRC named the promoters of tax avoidance schemes for the first time as part of its Tax Avoidance – Don’t Get Caught Out campaign and will be updating the list regularly.
The Don’t Get Caught Out campaign helps small businesses and the self-employed identify tax avoidance schemes through case studies, payslip guidance, and an interactive risk checker.
Will targeting till fraud help HMRC to reduce tax evasion? Let us know in the comments below.
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