HMRC Targets ESS & Till Fraud: Are You at Risk?

HMRC suspect many of using electronic sales suppression (ESS) or Till Fraud to under-declare their income.

HMRC are issuing their letters which they call their “One to many letters” in a campaign targeting individuals or businesses they suspect of undertaking till fraud.
So, what do they mean by this.

Letters are being sent out to people they believe have been misusing their till systems. They believe that not everyone declares all of their sales through their electronic tills.

You may get a letter and if you do and firmly believe that you have done nothing wrong, they invite you to make a ‘Nil’ disclosure, but care needs to be taken as errors can happen without it amounting to fraud.

HMRC rarely use the word ‘fraud’ in their day to day enquiries, even though any tax evasion could strictly be known as fraud – as they are happy to take the easier route accepting voluntary disclosures from businesses and individuals provided, they pay their tax back in full, plus interest due to the Crown and a penalty charge for the errors whether, deliberate or careless.

They always reserve the right, of course, to open a civil or criminal investigation if they disagree with information that is disclosed to HMRC on a voluntary basis.

This can also include errors relating to not only income tax and corporation tax but to VAT – which is often a very costly tax to repay, so what is the detail behind this campaign now being launched by HMRC ?

If you receive a letter you are invited to make a disclosure about the misuse of your till system and there are many ways of understating turnover through your till and this can be by the owners, staff might have been instructed to do this.

It can also be done at the point of sales or on cashing up, on these very sophisticated tills which are in effect minicomputers.

HMRC have many ways of interrogating your tills as they are really computers and easily accessible by HMRC’s specialists in this field, who will attend your premises. They may write to you advising you that they are coming but often they turn up on an unannounced visit and at that point you need specialist help.

If you have got a warning letter or an offer to make a voluntary disclosure prior to HMRC visiting, then grasp it with both hands, the last thing you want is HMRC crawling all over your business premises in front of your customers and staff. Any alterations at the point of sale or after can easily be traced once HMRC have access to your tills.

So, to prevent this, systems should be in place to constantly check that all income is being rung through the till.

HMRC have guidance on Gov.uk under the heading of ‘electronic sales suppression’ (ESS). Their guidance tells you how to come forward to HMRC and declare to them all suppression of sales – earlier rather than later. But we can help with that as traders very often prefer to come to a third-party specialist than to go back to their own Accountant, who will more than likely be totally unaware of such suppression. We can discuss it with you and carry out the checks to make the notification to HMRC before they come knocking on your door.

How does a business manipulate its systems to hide or reduce the true value of sales? This can be by using built-in functions contained in electronic tills or by installing software specifically designed to suppress sales. Of course, the more serious the attempts to hide sales, and higher the levels of omitted sales, the more likely HMRC are to investigate you under for example Code of Practice 9 for cases of suspected serious fraud or they could go down the criminal prosecution route.

If you co-operate from day one and certainly if you come forward on a voluntary basis, you have more chance of avoiding the criminal prosecution route. Even under COP 9 route we are experienced in this and can walk you through the whole system from beginning to end making it as painless for you as possible and holding your hand through what can be traumatic process instigated by HMRC.

HMRC employ experts, in this highly specified area. If you are involved with ESS, it is deemed to be tax fraud. If you have been involved in any way in ESS, either within your business or supplying or promoting it to others, speak to us and we will register you for a voluntary disclosure to give you the protection you need from prosecution and to minimise the penalty charges levied for understated turnover cases.

Come in and see us in our offices in Hull or we can visit you wherever you are in the UK because HMRC are out and about now and it is not only the tills that will be interrogated electronically, but it could be you and your staff as well as your bookkeeping staff.

So, ring us on the numbers below in complete confidence if you think you may be about to receive one of their letters or if you think that you have something to declare.

Call Andy Rusling on 07879 464577 or Lindsay Henson on 07584 706664 for advice or fixed price for the work needed.