HMRC have published 'Electronic sales suppression - summary of responses'. This follows its 2019 consultation on Electronic Sales Suppression (ESS). ESS is a growing problem and it occurs where businesses manipulate electronic sales records, either during or after the point of sale, in order to hide or reduce the value of individual transactions.

The 2019 ESS consultation invited views from a wide group of stakeholders including individuals, businesses, tax professionals, Electronic Point Of Sale (EPOS) providers and anybody with knowledge or experience of the impact of ESS on UK tax compliance. It incorporated real-life examples of ESS in practice, including 14 cases where software allowed for EPOS till data to be remotely manipulated and sales deleted without a trace, by the use of an associated mobile phone application.

The government has suggested two potential options for tackling ESS:

  • Exploring technological measures such as mandatory software or hardware for businesses which conforms to technical requirements that reduce the opportunity for ESS.
  • An encrypted, unalterable and complete transaction log containing details of every transaction and adjustment.

The government's conclusion is that ESS results in a loss of money for public services and has the potential to give non-compliant businesses an unfair market advantage over their competitors.

It does not provide any detail as to what its chosen solutions may be in relation to the two potential options. It notes that "The responses received have enhanced the government’s understanding of potential policy options to tackle ESS. The government has assessed the responses to the call for evidence along with additional evidence obtained on ESS. This includes external research, Organisation for Economic Co-operation and Development reports, discussions with stakeholders and evidence uncovered from ongoing investigations."

It now plans to use this evidence base to explore the issue further and develop more effective policy options for tackling ESS, in conjunction with other measures to tackle non-compliant activity.

Links

Making Tax Digital for Income Tax
Start here to learn about when you need to sign up for the new scheme and who will need to file under the new scheme.

Sales/turnover: Tax compliance
A guide to reporting sales in your accounts and the tax rules.

Making Tax Digital: VAT 
How to sign up to Making Tax Digital. When to sign up. What you need to do. Who needs to sign up, What are penalties for error? What are the issues with digital links?

External links

Electronic sales suppression - summary of responses

 

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