HMRC have established various task forces to combat fraud in specific areas of industry. However, it seems that even in today’s society of cashless purchases and mobile payment apps, HMRC consider consumers to be still in the dark ages and spend cash in restaurants and takeaways.
Given that the most recent consumer trend report according to UK Finance shows that as few as 1 in 10 customers pay in cash at café’s, HMRC have still been known to issue statements of assessment based upon their theory of 75% cash sales.
I have had to question on many occasions the lack of economic tests performed by visiting officers when arising at their unsubstantiated conclusions that the VAT registered tax payer is “guilty” of under declaring their cash sales. I have carried out many visits at client’s premises to prove their theories wrong, and as any owner of a business within the catering industry knows that consumer spending is not linear! Indeed, it fluctuates according to external factors, regional tastes, tourist and events being held in the area which directly impact upon sales, competitors, pricing, weather……and so on.
So it’s important that if you receive a visit from HMRC, you ask the inspector to document all of the aspects that are currently affecting your business before they make an incorrect judgement on how your business should be performing. As a business owner you are best placed to know whether your sales figures are correct and whether you should be concerned about the lack of cash sales in your business.
If you would like any advice on the matter, please do not hesitate to contact me.
By Annette Stone, Personal Tax Manager