Monday 8 August 2011

The Knock

The Knock
HMRC is determined to "up its game" and to ensure that those it suspects of evading taxes are dealt with sternly.

All very well, if it uses its powers sensibly and responsibly.

The question is, based on this recent query raised on AccountingWeb, is HMRC using its powers sensibly and responsibly?

Is it justified for HMRC to send round inspectors to a chip shop (hardly a multi billion dollar enterprise) unannounced at 9PM?

Actions like this will not garner respect from the hard-pressed taxpayer.

Here is the query (unedited) from AccountingWeb.

"Hi everyone.

Just had a telephone call from a very upset client who had an unannounced visit by 2 HMRC inspectors to her fish and chip shop at 9.00pm last night. She was at home at the time and received a telephone call from a member of staff saying she was needed immediately.

Both myself and my client had no notice of this visit and she was very distressed by it all. They asked lots of questions as to how she ran her business, how many times she banked, how she paid her suppliers etc etc etc. She was very open with them and answered all their questions. They then waited for her to cash up the till when the shop closed at 9.30pm to make sure it agreed with the till receipt, which it did. They then left leaving my client with no idea what would happen now.

My first reaction was one of shock as I have never had this happen before and I immediately wanted to telephone HMRC to find out exactly what was going on but then I thought I would post here first to see if anyone else has any experience of this process and exactly why it has happened.

I have looked at one of HMRC helpsheets but it says as to why they do unannounced visits is when: you have chosen not to allow us to carry out (not the case here), we have made previous appointments to visit but you weren't there (not the case here) we tried to contact you (not the case here) or we have identified concerns that can only be dealt with by an unannounced visit. If this is the case will they tell me the concerns?

I look forward to hearing from you lovely people!!
"

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28 comments:

  1. Q) Is it justified for HMRC to send round inspectors to a chip shop (hardly a multi billion dollar enterprise) unannounced at 9PM?

    A) Yes. Small businesses also evade tax. This helps them undercut other small businesses. Sometimes in order to stop people breaking the law you have to catch them doing it.

    Ken - Whether you like it or not part of HMRC's responsibility is to police the tax system.

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  2. http://www.caterersearch.com/Articles/2011/07/13/339297/Taxman-targets-tax-dodging-fast-food-restaurants.htm

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  3. Why 9PM tho?

    The law prevents the police from rolling up to your house outside of 8AM-8PM, unless a serious criminal offecne is suspected.

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  4. If someone is not happy and unable to confirm the identity of the visitors then they should simply ask them to leave the premises.

    If they refuse to leave then it becomes a police matter and the police should be called.

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  5. This is nothing new - Customs and Excise used to do this with what were called "Cash Teams" and large amounts of underdeclared takings were identified regularly; it an extremely effective way of detecting underdeclared income and taxpayers generally should be grateful that HMRC is policing the cash trade sectors where the risk of evasion is greatest

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  6. @8 August 2011 17:21

    Valid points but there needs to be a way to confirm the identity of the inspectors or as I said @12:50 it should become a police matter if the people being visited are not happy about the visitors.

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  7. I bet this tactic was thought up as part of the customer centric business strategy!

    After all isn't it part of "the vision" to treat people as honest!

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  8. Ken.

    The police can also come unannounced if they think there is a threat to your life regardless of whether you report it or not.

    WRT to the rest of it. You would think that HMRC would need a very good reason to turn up at 9:00pm to investigate this 'small fry' (pun intended) as it would cost the department more money to send people out at that time (unless it's built in to that persons shift)

    But you are right this does not place any obligation on the taxpayer to comply and in fact their 'insistence' (if proven) may be in violation of the European Convention of Human Rights.

    Why? It's outside of their business hours so that person would have no reason to be there. A possible error or even a deliberate 'hiding of income' on a tax return isn't exactly an 'emergency'. Otherwise B4rcl4y5, V0daf0n3, T0p $hop and the rest would be getting a visit wouldn't they?

    As Ken has said, unless they were suspected of some kind of serious crime e.g. fraud.... but then it would be a slightly heavier tactic than what has been implied here... and there are Revenue staff who are empowered to act as such but would need serious cause to do so

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  9. Someone's home is different to business premises.

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  10. @8 August 2011 20:04

    Exactly. A business owner doesn't monitor their business premises over the entire opening hours. Neither should the enquiry officer expect them to be so.

    They could of course say "well alright then we'll wait until the morning" and there would be no problem but they cannot insist on acquiring records at unreasonable hours.

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  11. Got to agree with Old Codger on this one. Generally I like your posts Ken because, in the main , HMRC are shite but, to re-iterate, this is it an extremely effective way of detecting under declared income especially with the cash trade sectors where the risk of evasion is greatest. A small fish & chip shop doesn’t automatically equate to 'small fry'...

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  12. Many of the fish & chip shops and other fast food places near me open at night but not during the day. Some of them are only open at weekends. 9PM is their normal business hours so that is when these type of checks need to be done.

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  13. As per article "the shop closed at 9.30pm". Therefore it is reasonable to assume it was open before 9PM.

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  14. Do HMRC staff get paid overtime?

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  15. @15.30 - no, not for this type of work.

    @12.30 - any Hmrc officer not showing their ID under such circumstances would probably be sacked. Also, if the trader asked them to leave the premises and they refused it would probably lead to the same outcome.

    @ 19.26 - it's a scandal that they don't have the political will to do anything about Vodafone etc etc, but as @12.28 says,"whether you like it or not part of HMRC's responsibility is to police the tax system. "

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  16. CASH TRADE RISK OF EVASION GREATET?

    WTF WAS VOO DAH FOON ALL ABOUT THEN?

    JUST WHAT WAS THAT AMOUNT OF INTEREST WRITTEN OFF AGAIN?

    REALITY CHECK PLEASE!

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  17. We'd show our ID as we asked to speak to the owner. And the very idea that HMRC would send Inspectors - do you think the department is made of money?

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  18. @20.04

    You illiterate ape.

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  19. If the shop closes at 9.30 that's why they rocked up around 9 then isn't it?! I'm sure the shop owner would love it if they turned up in the middle of the shift and asked the staff to cash up and produce till rolls when they are busiest.

    Have a think before jumping on the nearest passing bandwagon. LL

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  20. I am a bit confused as to what they expected to achieve by being present for cashing up. They (one would hope!) had some reason to think there was a risk of evasion which was related - at least in part - to the cashing up.

    Surely, though, if the proprietor (or staff) had been fiddling the books while cashing up, the one time they'd be sure not to do so would be when two HMRC people are looking over their shoulder?

    Can someone with experience of VAT and/or full enquiry-type work shed light on what attendance at cashing-up is supposed to achieve.

    Stew G

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  21. A better approximation of the true Daily Gross Take, but of course its a snapshot.
    There are 2 types of invigilation, the other is to request the proprietor to undertake it - self-invigilation.

    BTW 00:10 I'm neither illiterate nor a simian, I would not wish to insult our close cousins in nature. You however, continue to deprive some village of its idiot, I am sure the only reason anyone would follow you is out of idle curiosity.

    Are you a whiteboard monitor by any chance, let alone a toadie?

    But hey, lets not get personal eh?

    Semper Fi buddy, by strength and guile and the only easy day was yesterday, take your pick pal.......LOL :-D

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  22. Whiteboard = $hiteboard

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  23. 9th @ 15:13 "Do HMRC staff get paid overtime"?

    Basic answer - yes.

    Other answers -
    not all, not for this (as already stated), not if they are getting other additional remuneration, sometimes, never (depending where you work), no as given time off in lieu.

    Its the same for most organisations.

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  24. Plus it's a good way to see how many employees are really there, who they really are etc. to check if PAYE obligations are being fulfilled. And often it's the only way to find out who really operates/owns a business.

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  25. @17.49

    Last para. You confused, illiterate ape.

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  26. Lengths of wood (defined as boomerangs that don't come back)and small pieces of carboniferous limestone or even bits of granite might fracture the odd parts of my skeleton but I am immune to audible rantings.
    LOL :D

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  27. What probably happened here is that the shop was under observation for a period of time and then the tills were checked to see what had been keyed in.
    Used to do it all the time with restaurants. I think they were called "test eats" (to check if the bill went through the books).

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  28. And of course one assumes that RIPA was complied with and a DSA authorised with suitable consideration re. collatereal intrusion with all relevent risk assessments current and signed, not forgetting that all alternative methods had been considered/tried.
    Just to ensure compliance with a take-away/restaurant.
    No wonder the tax gap is so big HMRC have both hands tied behind their back when it comes to enforcement.

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