HMRC targets takeaways and restaurants in crackdown on electronic till fraud

The Inland Revenue has launched a series of unannounced visits on takeaways and restaurants leading to interviews under caution with several people, including from St Helens.

HMRC undertook visits to 20 locations in St Helens, Edinburgh, London and Stoke as part of a crackdown on electronic till fraud.

The action took place over the past four weeks, with 24 hot food takeaways and restaurants targeted.

The visits coincided with the launch of criminal investigations by HMRC’s Fraud Investigation Service, which are conducting three interviews under caution this month with individuals from St Helens and Stoke.

A small minority of takeaways and restaurants in the UK are using Electronic Sales Suppression (ESS) tools, which are software or devices that alter electronic point-of-sale records. They are used to under-report a business’s sales and consequently evade tax.

Those involved are being urged to contact HMRC now before their wrongdoing is detected. The longer a business delays in disclosing information, the higher the financial penalties will likely be. Since May 2023 the department has received more than 50 voluntary disclosures from businesses about their undeclared sales.

Marc Gill, HMRC’s Director of Individuals & Small Business Compliance, said: “ESS tools give businesses the appearance of trading legitimately, but in reality they are stealing tax that should be helping fund our vital public services.

“We have sophisticated ways of detecting this type of fraud and anyone using, supplying, making or promoting ESS can face fines of up to £50,000 or criminal prosecution.

“We urge those involved to come forward and use our disclosure facility on rather than wait for us to contact you – it could lead to a reduction in financial penalties.”

ESS tools are usually hardware or cloud-based software that allow businesses to understate their income in various ways. Sales are put through the till as normal, but the system allows records to be manipulated – sometimes by deleting sales and linking to either domestic or offshore payment platforms.

To investigate ESS in the takeaway and restaurant sector, HMRC uses third party information, including bank account and transactional data from online food ordering platforms, to check against what has been declared.