Press release -
HMRC to crackdown on restaurants and others who 'cook the books'
The government has provided £900m of additional funding to assist HMRC in tackling tax avoidance and evasion. A new 'task force' initiative is expected to have immediate impact in what are perceived to be high risk industries such as the restaurant trade.
So far, HMRC has not provided any 'taster' as to the composition of these teams. However the department claims that resources will be used more effectively to swiftly tackle rule-breakers and evaders. This suggests that tax inspectors will be used to 'stir things up' by carrying out observations to identify the true level of trading on chosen days that can then be compared with the business records.
Where HMRC's checks suggest omitted business income or off record employees, restaurant owners can expect inspectors to seek additional tax, interest and penalties. The worst offenders could face criminal investigation.
The taxman waiting at the door
HMRC has the power to conduct unannounced visits to business premises and inspect business records as such action provides inspectors with a way of instantly testing the authenticity of the income being declared.
HMRC has been quick to point out that honest traders have nothing to fear and in a perfect world that would clearly be true. However, business owners do sometimes make mistakes with their record keeping. If they are unlucky enough to incorrectly record takings on a single 'observation day', HMRC may 'make a meal of it' and raise tax assessments going back many years.
Digesting the task force concept
The idea of HMRC closely scrutinising the restaurant trade is not new as there have been a number of similar initiatives in the past. This time, task forces will begin to target London restaurants over the next few weeks before moving on to restaurants in the North West and Scotland. We are then promised a further nine task forces set to look at other trades, with the expectation of more to follow.
A need to spill the beans..?
There is still a choice for restaurant owners who have knowingly understated profits, albeit maybe not for much longer. HMRC has a limited number of ongoing disclosure initiatives which encourage those who are prepared to come forward to regularise their affairs with minimal intrusion and significantly reduced penalties.
- Revision, Tax issues
- tax advice
Baker Tilly is an independent firm of chartered accountants and business advisers. For more information on tax advice please visit www.bakertilly.co.uk