HMRC thwarted in suppressed-sales enquiry
HMRC issued an assessment for what it believed to be suppressed takings at a convenience store, involving using the “no sale” button on the till. The tribunal agreed it was valid but went on to allow the taxpayer’s appeal.
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It's not the opening of the till that does it ... it's the subsequent closing of the till (if no sale has been 'recorded') that causes the perceived 'shortfall'.
The HMRC assertion (unproven) was some of those occasions were not due to true 'no sale' scenarios ... thus depressing reported revenues.
The owner sounds a bright spark but, I feel sure, will recognise that she was fortunate to be believed by the tribunal.
Pressing the NSB button 22,580 times over 12 months is not just an average of 61.86 times per day (365 days p.a.), but approx. every 12 minutes of each of those days even if the shop was open for 12 hours/day!
I'm reminded of another experience of my mis-spent youth in the mid '60s.
The owner of a stall in Kensington Market was a stickler for stock control and for recording each sale through the (non-digital) till.
But customers (often American tourists) never seemed to expect a receipt.
So he came up with a novel incentive plan for staff.
So long as you obeyed his two rules ('no giving away freebies' and 'every sale goes through the till at sticker price') then he didn't care how much you actually charged the punter.
Discount something because the purchaser was pretty would cost you ... but overcharge a wealthy Texan and all the excess 'profit' was retained by you.
And 'best of all' - since the excess cash never 'existed' there was no PAYE on it.
But all his books balanced beautifully - and his profits soared on the back of a superbly incentivised set of staff!
My first employer, at the naive age of 17 / 18, taught me how to keep the perfect black books. Not something I'm proud of but it has served me again and again in sniffing out issues in clients' records. I always remember him saying to the accountant "if you can find it then I will pay tax on it". His black books were as meticulous as his "genuine" books. My clients rarely, if ever, take as much care over covering their tracks.
The use of the No Sale button would be a feature of a process known as "banking the till", used by dishonest employees as much as dishonest business owners. The customer pays for the goods and the shop person opens the till with the NSB and puts the cash in (and possibly gives change too). At that point the sale is unrecorded but the till cash would now show a surplus if counted. At some point, (intermittently if done by a dishonest employee or at the end of day if done by the owner), the shop person will open the till and remove the cash that has not been recorded as a sale - unseen by the customer. The use of the NS button is only an indicator to arouse suspicion and not definitive evidence of sales suppression, which presumably helped the shopkeeper's case.
(Apologies if this looks like teaching one's grandmother to suck eggs.)
If she was genuinely suppressing sales, surely she would have had a wooden drawer under the till, and no CCTV pointing at the till. Altogether more effective.
Unless very heavy sales ratios of newspapers and tobacco, skewing the totals downward, the achieved 13% to 13.5% does look a tad light.
Methinks a strong mark up exercise might have won the day for HMRC, shame they will no longer these days put in the hours wading through the purchase invoices and calculating anticipated sales on a line by line basis.
I wonder what will happen to the tax take in the country when they get rid of cash and all transactions are electronic?
Not a lot. The relatively few who treat cash as undeclared income will just find other ways (barter, low-profile crypto or whatever). The 'black market' will always exist - it's just a visible part of the human condition.
I am sure that at some point we had the legal concepts of innocent until proven guilty, along with the necessity of evidence. This is a story of HMRC making it up as they go.