Till fraud

The scope of tax fraud seems to be taking on new forms according to a recent press release issued by HMRC.

The latest attempt involves the use of software to suppress sales recorded at point of sale. The systems even warrant a new acronym, ESS.

Electronic Sales Suppression (ESS)

Businesses involved in making, supplying or promoting 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 investigators hit the road

On 18 May 2022, thirty businesses were visited, 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 was seized. All three suspects have been released under investigation.

How does ESS work?

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.

Further information

New powers to tackle ESS were included in the Finance Act (2022) introduced in February this year.

HMRC recently visited businesses suspected of being associated with ESS practices in Derby, Nottingham, Alfreton, Ashbourne, Stoke, Chesterfield, Nuneaton, Warwick, Pershore, Leeds, Hull, Scarborough, Whitby, Cleethorpes, Canvey Island and Ashford.