HMRC continues to target Restaurant sector over Tax Evasion

22 May 2019

Restaurants and takeaways make up approximately a quarter of the businesses ‘named and shamed’ by HMRC as ‘deliberate tax defaulters’ since it began publishing the list in December 2017.

They are believed to be more likely than most businesses to under-declare income due to the high volume of cash transactions they process and with margins under intense pressure in the industry.

More stringent checks are being used during investigations e.g. HMRC is collecting data directly from payment terminals and cross-referencing the information with its existing records to check that payments match declared income.

The pursuit of lost tax through tips has also been an on-going area of focus for HMRC and failure to comply with regulations surrounding the reporting of tips could result in a business being investigated.

If a restaurant is found to be misreporting its tips, HMRC can seek any unpaid tax along with interest and penalties.

HMRC investigations can be costly, disruptive and stressful. Consequently, business owners need to be aware that even simple errors on a tax return can be a red flag to HMRC and could lead to an investigation.

At Daly Park we offer clients a Tax Investigation Service for a relatively small annual fee to cover the Accountancy costs in fighting clients’ tax investigations.  If you would like to find out more please contact Roisin at our Newry office for more information.