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EXCLUSIVE: HMRC tells retailers ‘play by the rules’ or face the consequences

HMRC has warned convenience retailers to “play by the tax rules” or face the consequences as new stats show a disproportionate amount of tax evasion is committed by convenience stores.

HMRC has warned convenience retailers to “play by the tax rules” or face the consequences as new stats show a disproportionate amount of tax evasion is committed by convenience stores.

While accounting for less than 1% of businesses, convenience stores and newsagents now account more than 6% of all incidents published by HMRC – a quarterly increase of 50%.

A spokesperson from HMRC told Retail Express: “We expect convenience stores to play by the tax rules, just like any other business, and will take action where that’s not the case.”

The tax authority added that a crackdown on non-compliant convenience retailers will create “a level playing field” for honest store owners.

One retailer listed as having committed more than £30,000 of tax fraud over five years told Retail Express they were unaware that VAT evasion was being committed, stating that family members were committing the offence in the store by not putting transactions through the till.

In two other instances, the fraud was related to retailers caught with illicit goods. One retailer was bankrupted after being hit with more than £100,000 in fines, fees and legal costs. The retailer’s accountants claimed the retailer had unknowingly purchased illicit alcohol over a four-year period from an unregistered wholesaler, even keeping a full invoice trail that was used by HMRC as the basis for the prosecution.

Speaking to Retail Express, the accountant added: “The owners failed to do their due diligence and have paid a heavy price. Despite a repayment plan agreed with the court, the debt keeps building up and their store has been forced into liquidation.”

The average amount evaded by convenience stores caught by HMRC is just under £50,000 – the equivalent to £1,000 per month when the fraud was being committed.

The average fine demanded in relation to these cases is just over half of the evaded amount. Regardless of the circumstances, HMRC said it will always fight to get whatever is owed. “We don’t do deals, with anyone. The tax due under the law is the tax the business or individual must pay,” they said.

James Turner, managing director of tax avoidance consultants Turnerlittle.com described the scale tax avoided as "astronomical" and warned retailers that spending pressures on the government are likely to renew their focus on tax evaders.

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