HMRC target restaurants who cook books, warns James Cowper

HMRC has today announced a new taskforce targeting restaurants and their owners that it believes are avoiding paying the correct tax. This new taskforce follows recent clampdowns on doctors, dentists and plumbers.

Thames Valley accountants and business advisers James Cowper warns that restaurants in London, Scotland and the North West are the first priority for HMRC, but restaurants across the UK should consider their position.

Mark Herson, a director in the Private Client Tax team at James Cowper who has advised clients on earlier disclosure opportunities, said: “Deliberate tax evasion is illegal and HMRC is conducting a series of high profile campaigns targeting different professions it believes under pays tax due.

“I would expect HMRC to take a particular interest in high street fast food outlets, take-away restaurants and family owned businesses. Such establishments tend to have a high turnover of staff and use casual labour. I would also expect HMRC to take a keen interest in what happens to any tips.”

James Cowper offers this advice to restaurateurs who believe that they may have an outstanding tax liability:

Do not approach HMRC directly without first speaking with your accountant or tax adviser. HMRC are not overly tough negotiators, but it can be extremely complex and without detailed knowledge of the tax system could lead to a larger tax bill and penalty than necessary.
Do not ignore the disclosure opportunity. It is possible that HMRC is already aware of your financial details and the penalties for non-disclosure could mean a penalty of 100 per cent of the tax liability and a criminal prosecution

Mark adds a note of caution: “It is likely that HMRC already has a pretty clear idea of the restaurants and food outlets it wishes to target. If you suspect your tax affairs are not completely up-to-date this disclosure opportunity cannot be ignored or avoided. Now would be the time to come clean.”

Mark Herson, Director, James Cowper LLP +44(0)1865 200500 or email mherson@jamescowper.co.uk

12.05.11