- VAT receipts to be matched against sales to catch possible tax evaders
- HMRC’s Big Brother approach leaves no hiding place for businesses
HMRC has started to analyse ‘chip and pin’ data from small businesses’ and restaurants’ credit and debit card sales as part of its tax investigations toolkit. The ‘Big Brother’ technology is being used to unearth any discrepancies between businesses’ actual sales and what they are declaring for VAT purposes.
Using the new ‘Connect’ computer system, HRMC will be able to analyse retail businesses’ chip and pin transactions without them knowing, and without the need for a court order, as the data will come straight from their payment services firm.
This will be the first year in which HMRC will have free rein to scrutinise the surge in chip and pin spending generated from Christmas shopping sprees and office Christmas parties at restaurants and bars.
In light of HMRC’s recent announcement, some retailers may feel under even more pressure than usual to make sure their VAT payments are spot on.
HRMC have recently undertaken a well-publicised clampdown on tax evasion, saying that they suspect that tax evasion and the hidden economy cost the taxpayer £9 billion a year.
As the UK increasingly becomes a cashless society, with contactless payment technology making it convenient to use debit cards for even very small purchases, HMRC’s new chip and pin surveillance capabilities will become an extremely powerful tool in investigating businesses it suspects of trying to hide revenue.
Although HMRC has said it will be targeting businesses that have been identified as potential ‘high-value’ tax evaders, there is a risk that honest businesses could get caught up too. Because of HMRC’s powerful new investigation tools, the New Year could see businesses facing the most unexpected and thorough VAT tax investigations to date.
HMRC’s aggressive approach means that tax investigation insurance cover, such as that provided by PFP, the experts in tax investigation insurance, should be a must-have on any business’s list for Santa this year.
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