13 May 2011
- Focus on undeclared cash tips and VAT
- Undercover inspectors to visit restaurants
- Chips and other takeaways a favourite
HM Revenue & Customs (HMRC) is to crackdown on tax evasion by restaurants as part of the Government’s plan to raise an extra £7 billion a year from tax evaders.
HMRC is likely to pay particular attention to undeclared cash tips and VAT receipts. HMRC inspectors have been known to operate undercover and buy meals at restaurants and then check whether their purchases have been properly accounted for.
David Guest, chairman of our Hotel and Restaurant Sector Group, comments:
“HMRC will be looking at Michelin star restaurants right down to lowly takeaways. The cheaper restaurants are likely to have a much higher proportion of their takings as cash, which makes it easier for them to not record sales and evade tax.”
“VAT on takings is always a focus of attention for HMRC. Many restaurants are low margin businesses and are still suffering the effects of the decline in eating out. With VAT now 20%, the temptation to boost profits by not handing all of it over to the taxman is greater than ever.”
“Restaurant owners are supposed to apply income tax and National Insurance to tips, but when tips are paid in cash, it’s all too easy for waiting staff to pocket them and for the proprietor to turn a blind eye. It’s understandable as many restaurant staff are on low wages.”
“HMRC has been known to send undercover inspectors to restaurants to buy a meal, so that they can then check whether the purchase has been properly accounted for! The idea of tax inspectors spending time dining in restaurants may sound absurd, but it can provide valuable insight into how a business is run.”
“Restaurants which are attached to pubs or bars can be a fruitful avenue of enquiry. Pubs and bars account for VAT on sales at 6.5 per cent, but restaurants charge VAT at 20 per cent. When the two businesses are connected it can be quite easy to disguise sales made in the restaurant as pub sales and pocket the difference in VAT.”
We produce a range of informative publications focusing on the latest accounting issues. Click to add yourself to our mailing list.
Up to £15 million will be clawed back from academy schools before the end of the current academic year due to government budgeting errors, according to our data.
A quarter of all taxpayers may be paying the wrong amount of tax due to incorrect PAYE codes according to our analysis.
The cost of listing on AIM has risen at its fastest rate in more than five years according to our findings.
A sudden surge in M&A activity on AIM is being driven by private equity backed deals to take companies private, our research reveals.
From 6 April 2012 HMRC will be able to ask employers to pay a financial security where it thinks there is serious risk that the business won’t pay over their PAYE tax deductions or National Insurance contributions (NICs) on time.
The value of loans to businesses in the UK has slumped by 13% since the collapse of Lehman Brothers, the second fastest fall among the G8, according to our findings.
Our international network, UHY, welcomes new member firm in Tunisia, CNBA.
Hot on the heels of an announcement from HMRC that the closure date for the Liechtenstein Disclosure Facility (LDF) has been extended to 5 April 2016 has come speculation that the local banks are pushing for much higher transfers of funds into Liechtenstein and a minimum period for which any account must be kept open.
