HMRC are still engaged in what they refer to ‘in –house’ as Raids into premises.
Locally to my area, I am seeing an increase in HMRC turning up at night at eating places like takeaways or restaurants, in order to eat and then return to check the till!
And it is also going on across the UK.
HMRC staff will order food and eat and then, as the restaurant closes, reveal their identity and call in the back up team waiting outside.
Their Till expert will log into the till and dependent upon the type of till, can access the total takings rung in there ever since the till was installed!
They will always check your cashing up systems on the night and whether all cash takings have been recorded in there.
They will also ask to speak to the staff present mainly to address their hours and wages paid.
They are looking for evidence of cash extractions and cash wages paid.
You do not have to give them access to your records and discuss matter with them, but we find most people do so, as feel under pressure and are in fear of HMRC – although the HMRC staff will be ultra polite and pleasant on the whole.
You should seek the advice of a tax expert in this field as it usually sends the general accountant running when this happens ! As a Tax specialist Lindsay can get straight to the points at issue and guide you though the next steps following the unannounced visit.
Why do HMRC carry out these type of visits ?
One of the main reasons for these raids is their previous in depth research into your business and accounts carried out before they arrive.
Number one is MA – Merchant Acquirer information – which means they will have accessed your Credit/Debit Card providers records to see what amount of takings you have taken on card — NOT CASH.
When they compare this to your accounts takings figures as submitted on your tax returns, they can see what level you take in cash ! HMRC come from a starting position of expecting the ratio to be 50/50 Card V Cash which we know is unrealistic these days.
With the much more extensive use of card nowadays and contactless sales the % of cash is being seriously eroded and HMRC need to update their risk assessment before raids are carried out
They do still feel however that a 50/50 ratio is still viable and seen in many cases where cash is still king!
Call Lindsay if you need advice, or to talk about this.Share