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HMRC invites sales suppressers to come clean | accountingweb

HMRC invites sales suppressers to come clean


HMRC is encouraging businesses that are using electronic sales suppression tools to evade tax to come forward and pre-register for a disclosure facility that will open in January 2023.

19th Dec 2022
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From 6 January 2023 taxpayers who have used electronic sales suppression (ESS) tools to reduce their tax liabilities will be able to make a formal disclosure to HMRC.

ESS (in this context) refers to the use of software or hardware tools used to manipulate sales recorded by an electronic point of sale (EPOS) device, such as a shop till. It’s the modern equivalent of cash-in-hand sales that are never put through the business’ books. 

Using ESS tools, the sales records can be manipulated either at the point of sale or later to supress certain sales, leaving a credible and apparently complete audit trail. To ensure the trader’s bank receipts match the total amount of sales recorded by the till, the card payments for those missing sales are routed through an offshore bank account. In this way, both the record of the sale and the revenue disappear from the business records.

The trader may not be aware (or admit) that their till has been programmed to suppress sales, and if they are aware of the ESS, they may not realise that such action amounts to tax evasion. 

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Replies (18)

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Danny Kent
By Viciuno
19th Dec 2022 09:22

Why give these people scope to disclose they are evading tax.

Throw the book at them.


Thanks (2)
By ireallyshouldknowthisbut
19th Dec 2022 09:37

but but but but but if its Digital it must be right.

Thanks (16)
Replying to ireallyshouldknowthisbut:
By Tornado
19th Dec 2022 11:26

You took the words right out of my mouth

Interestingly it seems that HMRC already have information on thousands of businesses that have the software to suppress sales digitally, but have have done nothing about it .......... why not?

Short of resources or something?

Thanks (1)
Replying to Tornado:
By Paul Crowley
19th Dec 2022 17:05

Too busy hiding from the telephone

Thanks (0)
Replying to Tornado:
By Justin Bryant
21st Dec 2022 09:41

Haven't you heard? HMRC are far too busy persecuting loan charge victims who undertook perfectly legitimate tax mitigation planing, rather than outright tax fraudsters (I suppose coz it's much easier.)

Thanks (0)
By tedbuck
19th Dec 2022 12:39

Just goes to show that you can really rely on digital information - doesn't it?

HMRC must be totally off their chumps to press on with MTD after this. What have we been saying for the last couple of years?

Can't see HMRC making much headway here the computer [people will always be ten steps ahead.

Good old Jim Harra he's really the man for the job - where does he buy his blinkers?

Thanks (3)
By adjadj
19th Dec 2022 17:31

An end of period statement (EPOS) system => too much MTD ITSA thinking !

EPOS in this context stands for Electronic Point of Sale system

Thanks (1)
Replying to adjadj:
By johnfrancis
21st Dec 2022 10:46

But that's an ETLA - an Extended Three Letter Acronym. HMRC likes those too.

Thanks (0)
By Moo
20th Dec 2022 09:48

As someone who doesn't have retailer clients I had no idea this was possible, let alone widespread.
I wonder whether it is focussed on particular sectors - those not selling physical goods for example so stock records aren't an issue.
Presumably the nudge letters will be landing on doormats in the New Year, will they be copied to agents.
I suspect one reason to encourage voluntary disclosure is so that the taxpayers and agents get to do the hard graft of identifying diverted takings and calculating lost tax, penalties and interest.
If I had a client I suspected of involvement I think I'd start by grilling them about any offshore bank accounts, that can be an illuminating conversation for many reasons.

Thanks (0)
Replying to Moo:
By Hugo Fair
20th Dec 2022 17:38

I guess that gap in your knowledge base is both unimportant (and not surprising) if you don't have retailer clients ... but FWIW the more advanced versions 'adjust' everything (including your stock records) on the fly - or as HMRC would call it 'in real time'!

But it's not exactly been a secret.
"At Budget 2018, the government announced a commitment to hold a call for evidence on ESS, which was open from 19 December 2018 to 20 March 2019."
And they published "Electronic sales suppression: Summary of Responses" in June 2020 - with input from ICAEW and CIOT.

Unfortunately CPD nowadays needs to cover not just the ever-widening scope of legislation, but also the use (and misuse) of technology for company records.

Thanks (1)
By Babs Harris
20th Dec 2022 12:35

Wow, how would ANYONE think use of this was not tax evasion!

Thanks (2)
By rememberscarborough
20th Dec 2022 14:27

Feeling very naive. Thought I was pretty knowledgeable but never heard of these until now.

Oh well...

Thanks (2)
Donald MacKenzie
By Donald MacKenzie
21st Dec 2022 10:53

Why on earth would HMRC "encourage" businesses that are clearly involved in tax evasion to apply for a "disclosure facility"? Surely they should just assess them on sales that have been fraudulently "suppressed" and take the tax.

And throw the book at any software house offering such systems.

Thanks (1)
Replying to Donald MacKenzie:
By Hugo Fair
21st Dec 2022 11:20

"And throw the book at any software house offering such systems" ... how do you propose that is to be achieved?

You surely don't believe that major publicly-quoted companies are offering these options within their software?
The world has moved on and there are now copious quantities of illegal 'things' that can be purchased over the internet - let alone through the old-fashioned channels of pub car-parks and dark alleys.
In the same way that it's easy to order cocaine or guns, it's not hard to purchase 'fixes' to commercial packages that open the requisite 'back-doors' through which things like ESS operate.

Since the items aren't legal and nor are their purchase (let alone installation), how exactly are HMRC meant to identify a 'software house' that only exists in the virtual world (and probably getting paid in crypto)?

Thanks (2)
By Tom 7000
21st Dec 2022 10:55

If I was HMRC, I would just wander into the manufacturers HQ, arrest the lot of them and say to the FD... show me your sales invoices for the last 4 years please....

Its not difficult... is it?

Thanks (1)
Replying to Tom 7000:
By vstrad
21st Dec 2022 11:18

Wouldn't their sales invoices have been suppressed?

Thanks (0)
Replying to vstrad:
By Tom 7000
21st Dec 2022 11:49

Thats the wittiest thing I have heard since 2017

Thanks (0)
By Nebs
21st Dec 2022 11:58

So, now we know the real reason they chose yesterday to announce the delay of MTD.

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