Year in Review: Celebrating a Year of Achievements, Growth, and Giving Back. Above: Jacqueline Hardaway and Mahie Abey receiving Business of the Year at the Uckfield Business Awards. As we approach the close of an incredible year, we are excited...
Those involved in the hospitality or retail trade who suppress their cash takings with a view to avoiding tax must live in fear that the next person to walk through the door will be a tax inspector. As a case concerning a takeaway restaurant showed, such anxieties are more than justified.
When HM Revenue and Customs (HMRC) officers made two unannounced visits to the restaurant as part of a regional enforcement initiative, they discovered that cash sales were materially greater on those days than those recorded on any other day. They took the view that, for an extended period, the business's cash takings had been deliberately suppressed.
On that basis, VAT and Corporation Tax demands totalling over £85,000 were raised against the company that ran the restaurant. Substantial inaccuracy penalties were also imposed and one of the company's directors, who had day-to-day management of the premises, was notified that he would be personally liable to pay them.
In seeking to explain the discrepancies, the director said that the restaurant was doing particularly well at the relevant time because both of its main competitors had recently closed. He said that on one of the evenings in question, a large group of teenagers had been in and out of the restaurant, boosting its takings. HMRC, however, did not accept those explanations.
Ruling on an appeal against the demands and penalties, the First-tier Tribunal (FTT) found that the suppression of cash sales was systemic and sustained and could only have occurred as a result of the company's deliberate conduct. The demands were properly raised and, subject to minor adjustments, the FTT upheld them. The personal liability notice issued against the director was also appropriate in that the deliberate suppression was attributable to his conduct.