HMRC to target fast food restaurants who cook books, warns James Cowper
HMRC has yesterday (13 July) announced a new clampdown on fast food restaurants who it believes are deliberately ‘cooking the books’ to avoid paying the correct amounts of VAT.
This follows on closely from a separate clampdown by HMRC on restaurants in London, Scotland and North West announced in May this year.
Thames Valley accountants and business advisers James Cowper warns that fast food restaurants HMRC believes to be deliberately falsifying or mis-declaring their true sales can expect heavy fines and a possible criminal prosecution.
Ruth Corkin, VAT Manager at James Cowper who regularly advises clients on VAT inspections, 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.”
“HMRC has long believed that some fast food outlets are deliberately falsifying their records to avoid paying the VAT due. Inspectors will often visit a restaurant for a ‘test eat’, returning later to check whether the VAT has been properly accounted for. Fast food restaurants cooking the books are likely to face some uncomfortable visitors.”
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 increasingly tough negotiators, and 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 this announcement. 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
Ruth 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.”
Ruth Corkin, VAT Manager, James Cowper LLP +44(0)1865 200500 or email rcorkin@jamescowper.co.uk
14.07.11