Three people were arrested after HM Revenue and Customs (HMRC) officers visited businesses across the country in a day of action after new powers were introduced in the fight against till fraud
Businesses involved in making, supplying or promoting electronic sales suppression (ESS) systems that help users hide or reduce the value of till sales, now face fines of up to £50,000 and criminal investigations. Users also face fines as HMRC increases efforts to target the tax evasion practice.
HMRC investigations visited 30 businesses on 18 May including shops, takeaways and restaurants, across nine counties to tackle ESS and two men and a woman were arrested in Nottinghamshire as part of a criminal investigation into the alleged supply of ESS software.
The men, aged 43 and 58, were arrested along with a 56-year-old woman on suspicion of fraud offences and cheating the revenue.
A search warrant was executed by HMRC officers at three addresses and computers, digital devices and paperwork were seized. All three suspects have been released under investigation.
Financial Secretary to the Treasury, Lucy Frazer, said the overwhelming majority of businesses are paying their taxes and rightly want to see HMRC stepping in where needed to ensure a level playing field for all.
“Tax crime does not stand still and neither do we – the new powers available to HMRC allow them to clamp down on ESS and help recover tax revenues to fund our vital public services,” she said.
Marc Gill, HMRC’s director of individuals & small-business compliance, said electronic sales suppression gives the appearance a business is trading legitimately, when in fact they’re really just stealing money from taxpayers.
“We encourage anyone using, supplying, making or promoting ESS to report via our disclosure facility. Making a disclosure is not only the right thing to do it could also lead to a reduction in financial penalties,” he said.
ESS users will either have access to specialist software or will configure their electronic point of sale (EPOS) device in a specific way that allows them to consciously hide true sales and the resulting tax that is due.
Sales processed through the till give the impression they have been recorded as normal, however the end-of-day report is deliberately manipulated behind the scenes to reduce reported takings.
As part of investigations into ESS HMRC can also recover tax evaded and launch investigations that could result in criminal convictions.
HMRC has a voluntary disclosure facility and would encourage anyone using, making, supplying or promoting ESS to contact them. By making a disclosure now those using or benefiting from ESS could see their financial penalties reduced.
HMRC has increased its late payment interest rates to 0.75% after the Bank of England increased their base rates
The tax authority revised its interest rates for late payments after the Bank of England (BoE) increased the base rate from 0.5% to 0.75%.
HMRC confirmed that the repayment interest rate will rise to 0.75% with the rises due to come into effect shortly The repayment interest rate will remain at 0.5%.
The changes to late payment interest will come into effect on:
- 28 March 2022 for quarterly instalment payments; and
- 5 April 2022 for non-quarterly instalments payments.
HMRC’s interest rates are linked to the Bank of England’s base rate, and due to the base rate increasing HMRC automatically increases rates.
HMRC has emailed employers ‘strongly encouraging’ them to label the increased National Insurance contributions (NICs) rate on their employee’s payslips as ‘for the NHS’
Last month the tax authority sent out a statement in its emails and bulletins to all registered employers asking them to consider highlighting the increase in order to help employees to understand what the increase would be funding.
The statement released by HMRC said: ‘We are therefore requesting that employers include a message for affected employees on all payslips between 6 April 2022 and 5 April 2023, explaining the increased National Insurance contribution. The message should read: 1.25% uplift in NICs funds NHS, health and social care’.
The email also stated that HMRC had been in contact with payroll software providers to request that they include the message in their software and wider support models.
From 2023 the rate for NICs will return to the current level and the Social Care Levy will be highlighted on payslips.
HMRC confirmed that the suggestion had been made, however it was not mandatory for employers to include the message, but it was ‘strongly encouraged’.
An HMRC spokesperson said: ‘We have asked employers to include a generic statement on all payslips from April 2022 to help employees understand the changes they will see to their contributions and that the increase will be used to fund the NHS, health, and social care.’
In response to the request, many business owners took to Twitter to express their frustration about the email with one tweeting that the tax authority was using ‘payslips as propaganda’, stating ‘if you can’t sell it to the public, don’t expect us to’.
The former executive chair Edward Troup of HMRC in 2016-17 also tweeted that ‘it was questionable whether the request to businesses fell within HMRC’s legal powers’ as the department had asked employers ‘to push a political narrative despite it supposedly being politically neutral’.
Despite the backlash over the increase, which was announced in parliament in September last year, the government has stated multiple times that it is to continue with the move despite the current concerns over the cost of living crisis.
A large number of thinktanks, economic groups, and business bodies as well as parliamentary committees including MPs across multiple parties and members of the House of Lords, have come forward calling the government to scrap it. The Institute of Directors also launched a petition in January which received more than 180,000 signatures supporting the call for the tax rise to be abandoned.
HMRC is reminding about 7,500 tax credits, child benefit and guardian’s allowance customers they have just one month left to switch their Post Office card account
From 5 April 2022, HMRC will stop making payments to Post Office card accounts so customers must notify HMRC of their new account details, so they do not miss out on vital payments.
In November 2021, HMRC extended the deadline to the end of the financial year. The one-off extension to the contract meant customers could temporarily continue to receive their payments into their Post Office account, giving them extra time to set up new accounts and notify the department.
Nearly 138,800 customers have already switched their accounts and provided HMRC with updated bank account details. Time is running out for the remaining 7,500.
Customers can choose to receive their benefit payments to a bank, building society or credit union account. If they already have an alternative account, they can contact HMRC now to update their details.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘We want to make sure that no customer misses out on the benefit payments they are entitled to. If you still need to switch your Post Office card account, contact HMRC to update your bank account details by 5 April.’
Child benefit and guardian’s allowance customers can use their personal tax account to provide revised account details, change their bank account details via gov.uk or by contacting the child benefit helpline on 0300 200 3100. Tax credits customers can change their bank account details by contacting the tax credits helpline on 0345 300 3900. If customers cannot open a bank account, they should contact HMRC.
If the 5 April deadline is missed, payments will be paused until the customer notifies HMRC of their new account details.
The Money Helper website, provided by the Money Advice and Pensions Service, offers information and advice about how to choose the right current account and how to open an account.
HMRC has been contacting customers recently to encourage them to take action and will continue to contact them to remind them.
Following a trial, HMRC will now be temporarily closing the VAT and corporation tax phonelines on several days across February and March to help the tax authority deal with a covid post backlog
Over the trial closure between December and January, on average, HMRC cleared more than 4,000 additional pieces of post each day during the test and learn. This resulted in an increased productivity rate among colleagues, above its initial planning assumptions, as staff were able to focus on the task without stopping mid-way through to take a phone call.
There was an increase in telephony contact on Monday’s following the Friday closures, with an estimated 2,500 extra calls over the three Mondays (using November as a comparator). HMRC said it was ‘able to offer an acceptable level of service to these customers despite the additional demand’.
HMRC has sent out communications to tax agents and accountants advising them of the planned closures which will affect phone lines until the end of March.
An HMRC spokesperson said: ‘We are temporarily closing two specialist phonelines on Fridays so we can work through our stocks of post more quickly to help us return to pre-pandemic service levels in these critical areas of work.
‘Temporarily closing these two phonelines was trialled in December and helped us clear more than 4,000 extra pieces of post on each day they were closed.
‘We understand the frustrations of customers and agents who are waiting for HMRC to get to their individual enquiry, we’re sorry that we can’t get to everyone more quickly and thank them for bearing with us.’
Following the success of the December test and learn, the corporation tax and VAT telephony lines will see a further telephony shuttering exercise on Fridays in February and March 2022:
- Corporation tax – 25 February to 25 March 2022; and
- VAT (excluding bereavement) – 25 February to 25 March 2022 (excluding 4 March).
HMRC said it had listened to feedback from stakeholders and has selected these dates to avoid key events on these lines, including the VAT peak.
Based on current plans, HMRC expects to see a significant improvement in service levels in these critical areas.