VAT: Restaurant found cooking the books
The FTT found that takings were deliberately suppressed on VAT and corporation tax returns leading to six years of tax investigation for the restaurant owner.
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Our local Indian has hand written receipts, no VAT number and sub lets the upstairs flat...hmmm.
Nice food though.
When I see HMRC writing off thousands of pounds in unpaid tax because they havnt bothered to collect it this case seems rather futile . It has to be done though.
You mention a cashless society. Have you really looked at how many outlets now have signs saying "machine not working" cash only. The card only places are expensive which means Joe Bloggs will go to the lower priced business so, of course, there is room for supressing sales. Cash was, is and always will be king.
The point in question is how many people actually don't trust banks and cards and only use cash? More than you would think. As technology leaves ordinary people behind the situation will get worse. Did they find any illegals????????????? Always reminds me of "border force" where an employee of an Indian restaurant went up to greet the investigator because he had met him the previous week in another Indian restaurant and was told as he was an illegal he couldn't work in that restaurant. Tip of the iceberg.
There is a barber's shop near Warren Street in London's West End. Haircuts start at £35! But it's 'Cash Only'!!
Whilst a cashless society would solve hmrcs problems with naughty businessmen the loss of privacy to the population generally is quite scary. Governments shouldn't know everything about you and what you do.
Goodness gracious me, who would have believed it.
Next thing your going to tell me is that the owners of Indian and Chinese restaurants also have property investment companies funded from unknown cash sources.
I am surprised that HMRC got away with this on the basis of one sample. At least three or more visits, perhaps on different days to get a better estimate should have been made. Also, the estimate of the waiter should be discounted as it could be argued that he would not have full information.
Have you actually read the case?
They went back for a second "invigilation" and were refused access, so observed from outside.
Also, the tribunal dealt with the waiters evidence but clearly thought that, as he had worked there for 7 years he probably knew whether a 50/50 split was more likely than 90/10. They did not really give it more credence and the decision was based on the evidence before them. Also actual numbers were left to be agreed by the parties because of several calculation issues and one assumes the parties will agree something that reflects the facts (or maybe I am being naive).
No, I did not read the case as I assumed quite reasonably that article included all salient facts. Clearly you have 'dug' into this case and revealed more! The point I was making was that a sample of one is not sufficient to arrive at a conclusion concerning the split of cash/credit card payments over time - this is based on applying basic statistical theory.
If the restaurant owners chose to settle on that basis then so be it. Perhaps it was to their advantage! But that is a different matter.
It is sad that a professional chooses to comment, adversely, on what was done, without checking the facts. Ironic really because the whole point behind your comment would be that the "facts" revealed by one test purchase need to be validated by further such!
Again you refer to the appellant "settling" for something. Read the case and you may then understand what actually has been done by whom and what ( very little) has actually been agreed and by whom. The tribunal decision is essentially one in principle and it has been left, for now, with the parties to reach some agreement as to quantum. Whether that causes the appellant to co- operate and be more reasonable remains to be seen. Only with such co-operation could HMRC arrive at a statistically better estimate of the amount of suppressed takings. Of course the result will only be as good as the information used to generate it and inevitably, I think, the answer will be inaccurate ( on any basis) because of changes in societal behaviour and the rise of the cashless society (that others have referred to) over the period actually covered by the enquiries.
Still, let's not spoil a comment for want of facts eh!
Fixed-price "eat as much as you like" buffets provide a particular opportunity. Years ago, I used to visit one which had a fixed price including soft drinks on certain days. Payment was by cash only and often you didn't even get a handwritten receipt unless you purchased extras such as alcohol, since the bill was always a fixed amount otherwise. The place is long-gone now (pity, the food was good!), but I bet it was a good source of tax-free cash for its owners.
Most cash based businesses suppress their takings, that is why you see their directors and their partners driving the latest cars and living in posh houses (within a few years of starting the business). It is only when greed takes over and the suppression becomes too obvious that problems start.
If his daily declared sales were often less than the card sales alone, you wonder how the investigation could've taken six years to conclude!
No deliveries, you are deprived?
I did not understand how prevalent the online ordered takeaway was (paid by card) until my kids returned from university- it also in part explains why they had no money when at university
There will never be a "cashless society" whilst there are so many cases of card fraud, online banking scams etc etc. HMRC want there to be one, as it saves them actually having to investigate cases like this, but in my opinion until fraud can be severely reduced, there's no chance.
I suppose that if the owner subtracted a figure from actual card sales to record sales....that was an Indian 'take away'!!
I had a client that was a takeaway selling sandwiches, salads and hot meals. Before HMRC knocked on his door they sat outside his shop on numerous occasions to count the split between hot and cold meals. His split was 80/20 cold to hot, HMRC's count was 80/20 hot to cold. How could they tell the difference? Hot stuff was carried out in a Styrofoam box, cold stuff in a paper bag. The colour drained from his face and his pants turned brown when they told him this. I also had to do a detailed analysis, line by line, for every purchase invoice for three month to analyse whether it was used for hot or cold food. Nice earner for me though, he had tax investigation insurance and the case went on for three years.
It never ceases to amaze me that people assume they will never be found out. As an auditor in an earlier life, I came across this attitude quite often. And then they are seemingly contrite when discovered to be fiddling either HMRC or their employer or both.
My old house (and office) was in a mixed street, at the top of which was a Chinese Restaurant. Very prominently in the window was the sign "10% off for cash".
Needless to say, I declined to be appointed as their accountant when one day they called me to say they had some problems with HMRC.....
Once knew a "pick your own fruit" farm, (not my client ) mostly cash, but the owner, for religious reasons, was meticulous in his books, viewed stealing from the tax man as a crime against God, he ended up assessed by HMRC as 30% under declaring, on the basis that all cash business under declare so you must, nothing he could say would convince them otherwise, but knowing the man, probably didn't get professional help, it's not a fair world, even for honest people, bb