The recent decision by HMRC to introduce a new task force to tackle tax fraud and unpaid taxes in the restaurant trade will have many businesses concerned. This decision follow a number of recent initiatives by HMRC to target specific business sectors and the restaurant sector now joins the target list which has included plumbers, taxpayers with off-shore accounts and members of the medical profession. The restaurant trade has historically had a reputation as a sector where there is a significant amount of tax leakage and has always provided a happy hunting ground for HMRC.
Here’s a few of the issues restaurant traders need to be aware of:
- There is no amnesty. Any unpaid taxes discovered will be subject to penalties and interest, and in serious cases, criminal investigation and custodial sentences!
- Business records need to comply with HMRC’s reasonable care criteria.
- Tips & troncs – have you set up proper systems to deal with tips and service charges?
- Are staff aware of their responsibilities if they receive cash tips directly from customers?
- Do you know which gratuities paid to an employee are free of National Insurance deductions?
- Did you know that tips do not count towards National Minimum Wage calculations?
- Are you aware of which type of tips are outside the scope of VAT?
Cash takings are a key area of concern for HMRC inspectors. They will be keen to see evidence – till rolls, or other sales/takings records. They may also ask to see your bookings diary and cross check covers booked with actual takings recorded.
Call us if you have concerns about your accounting systems. Voluntary disclosure of omissions will minimize your exposure to penalties. Please call if you would like to discuss these issues in more detail.
Sue Stephens
Tax Manager
