Date
14 Dec 2022Category
Tax, Tax Investigations and Dispute ResolutionHMRC has opened a new disclosure facility in a bid to tackle manipulation of till takings with the aim of evading tax. The facility to voluntarily disclose is only open for a limited period. A person must register by 5 January 2023 and the disclosure must be completed by 28 February 2023.
Who is the new disclosure facility aimed at?
HMRC has been targeting individuals who have created and/or sold software commonly known as Electronic Sales Suppression (ESS). This software has been used by taxpayers to hide or supress electronic till sales. Legislation has already been introduced to tackle the sale, development and use of ESS software.
Why now?
On 8 December 2022, HMRC announced, as part of a global probe into major till fraud, the arrest of five individuals in the UK who are believed to have designed and sold the ESS software to taxpayers in the UK as well as the USA and Australia.
In its press release, HMRC advised that more than 100 HMRC officers visited 90 businesses across England, Scotland and Wales in a week of coordinated action. According to HMRC, data has identified thousands of potential users.
Simon York, HMRC’s Director of Fraud Investigation, stated that this is “just the beginning of our work in this area”. He also commented that “our action helps to ensure they [honest majority of businesses] are not being under-cut by tax-evading competitors.”
How to disclose?
Businesses can tell HMRC now that they plan to make a disclosure by filling out an online form, and by doing so, financial penalties may be less. The penalty percentage can be reduced, depending upon on the quality of disclosure.
What happens if those concerned don’t come forward?
HMRC is providing a limited opportunity to come forward to make a disclosure (from 6 January to 28 February 2023), and HMRC will commence enquiries into those who choose not to come forward, which could lead to more severe penalties or worse, criminal prosecutions.
New disclosure facility v Code of Practice 9 (Contractual Disclosure Facility) (COP9/CDF)
As HMRC believes the suppression to be deliberate (as businesses have acquired and used the software), it may be more appropriate (depending upon the quantum) for the disclosure to be made under COP9 as opposed to the new disclosure facility. This is because COP9 gives immunity from Criminal Prosecution provided a full disclosure is made of all tax irregularities. Given the complexity and associated penalties, we would highly recommend that a specialist advisor is consulted before taking any action.
We are here to help
If you think you need to make a disclosure and want some advice, our Tax Investigation and Dispute Resolution Team can help. Please get in touch with our specialist team or your usual Azets advisor.
