Article written by Emily Donaldson.
What should you know about suspected till fraud?
From November 2023, following previous action into alleged undisclosed till fraud in December 2022, HMRC have conducted unannounced visits to more than 20 businesses across England and Scotland, that are suspected to be using electronic sales suppression (ESS) tools to deliberately reduce their tax liability. During this period, unannounced visits were made to businesses along with the launch of criminal investigations by HMRC’s Fraud Investigation Service.
ESS Disclosure facility
In December 2022, HMRC opened an ESS disclosure facility, which anecdotally we understand was not as utilised as HMRC had hoped, allowing taxpayers to disclose information regarding their misuse of this technology, and by doing so, settle on more beneficial terms. Taxpayers had from 6 January 2023 to 9 April 2023 to make their voluntary disclosure. Although the initial ‘window’ to disclose has closed, taxpayers still have the ability to make voluntary disclosures, which is encouraged because HMRC’s penalties can be mitigated for voluntary ‘unprompted’ disclosures.
Misuse of ESS tools
Since the start of the campaign in December 2022, five individuals have been arrested due to the misuse of ESS tools. Since then, till fraud has become a growing concern, especially to the tax authorities in the UK, US and Australia. Typically, HMRC have focussed on ESS tools being used in takeaways and restaurants, but their investigations are expected to focus on other sectors in the near future.
Code of Practice 9 (COP9)
In more serious cases, or where there are other issues which require disclosure to HMRC, thought needs to be given to what other options for disclosure are available. This includes HMRC’s Code of Practice 9 (COP9) disclosure facility which is the only disclosure facility which offers immunity from criminal prosecution when a full disclosure is made.
As HMRC expects thousands of businesses to have used ESS technology over the years, we would encourage anyone requiring further information or assistance to contact Menzies Tax Disputes and Disclosures team via our confidential hotline below or contact us via the form.