Electronic Sales Suppression

Finance Act 2022 gives power to address threats to the UK tax system due to Electronic Sales Suppression (ESS), with thousands of letters being sent to those suspected of misusing till systems.

Significant penalties can be levied to those:

• in possession of an ESS tool, or
• making, supplying or promoting ESS tools.

The scale and impact of evasion is significant and has led to the launch of a specific disclosure facility aimed at those misusing their till systems.

Failure to make a disclosure will lead to a tax investigation and further penalties, with the possibility of a criminal conviction.

What is Electronic Sales Suppression?

ESS tools can be used by businesses to manipulate electronic sales records during or after the point of sale to dishonestly reduce their tax bill.

Software and hardware can be obtained that hides or reduces the value of individual transactions to shrink the recorded turnover of the business, while providing what appears to be a credible and compliant audit trail.

The types of businesses which are viewed as high-risk include takeaway outlets, hospitality and retail.

How to make a disclosure

A specific online disclosure service has been created for those who wish to report the tax owed as a result of using ESS tools. Caution is needed, as this route offers no assurance of immunity from prosecution for tax fraud and focuses only on ESS, whereas the taxpayer might have other issues to resolve.

The Contractual Disclosure Facility will be the most appropriate route for most, as this guarantees that a criminal investigation is off the table, assuming the relevant steps are taken.

How Crowe can help

Ideally, a voluntary disclosure will be made, rather than one prompted by an ESS nudge letter. Either way, all taxpayers in the spotlight can benefit from lower penalties by making high quality, timely disclosures.

Crowe's Tax Resolutions specialists can help taxpayers bring their historic tax issues up to date.

To discuss this further, please contact Hayley Ives, Tax Resolutions or call our helpline anonymously.