Economia: - HMRC turns up heat on restaurant industry
A helpful article from Danny McCance at the ICAEW Economia Magazine around HMRC and the restaurant industry.
The Revenue is targeting restaurants and takeaways as part of a crackdown on tax evasion
They account for 26% of businesses “named and shamed” by HMRC. Restaurants and takeaways account for 200 of 775 on HMRC’s current list of deliberate tax defaulters, according to accountancy firm BDO.
The firm says that restaurants are at higher risk of under-declaring taxes due to the high volume of cash transactions they deal with.
HMRC is thought to be particularly focused on taxes lost through tips and can pursue businesses with incorrect tips schemes for unpaid taxes, plus interest and penalties.
Some examples include a Chinese takeaway in Bangor that defaulter on £158,000 of tax between 2012 and 2016, which has been given a £77,000 fine, or an Indian restaurant in Luton facing a £310,000 for defaulting on £413,000 worth of taxes.
Dominic Arnold, partner at BDO said that HMRC’s crackdown on tax evaders “continues with gusto” and pointed to “a range of task forces now focused on investigating the restaurant industry”.
“The use of task forces has proved very effective in the past and businesses need to be aware HMRC is going to continue to throw this kind of concentrated effort at the sector,” he added.
“We will continue to make sure that every business, no matter their size or industry, pays all the taxes due under UK law and we won’t settle for less," an HMRC spokesperson said.
Meanwhile, Kingston Smith have also warned young entrepreneurs using social media platforms to to make money to ensure they don't unwittingly fall foul of tax legislation.
“Young people who have found ways, or more likely have been shown ways, to monetise their role as influencers on Instagram or entertainers on YouTube should be wary of the taxman,” said Guy Sterling, tax partner at Kingston Smith.
He said that it may come as a surprise to many but HMRC is monitoring such sites.
"Earnings from what teenage tyros might view as fun endeavours need to be declared. Failure to do so will end in tears," Sterling said.
Economia: - HMRC turns up heat on restaurant industry.