Want to catch a tax cheat? Order six Thai curries
- armchairlawyer
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Want to catch a tax cheat? Order six Thai curries
A tax-dodging restaurant owner was caught out after undercover tax inspectors ate curries at his restaurant six times.
They popped in for dinner after becoming suspicious that the West Midlands restaurant was failing to disclose takings from customers who paid in cash. In one case they ordered a £23.90 meal and left a £1.10 tip, on a second visit the meals cost £45.20.
The HM Revenue & Customs (HMRC) inspectors discovered that some orders were not recorded in the restaurant’s sales figures when they paid in cash on one visit, while the restaurant records for that day showed only three card transactions.
They then examined the owners’ bank records and found that the money in his account did not match what was being declared.
The restaurant owner was landed with a £70,000 tax bill covering four years. He appealed to a first-tier tax tribunal but a judge ruled in the taxman’s favour in a verdict published on April 1.
Judge Fairpo said: “I have found that he had a second bank account into which takings were paid that were not disclosed to HMRC and further that he understated his cash takings in his tax returns.
“I consider that, as he was a sole trader and stated that only he ran the business, the behaviour which led to the understatement of tax cannot be anything other than deliberate. I see no reason to disturb HMRC’s reduction percentages and so find that the penalty has been correctly raised and is upheld,” she said.
Scrutiny of the restaurateur’s accounts found that he had made a £10,000 payment to a VW dealership for a car and was withdrawing £250 a week.
He initially denied the account existed. He also said that the restaurant never opened at lunchtime, even though the officers had eaten lunch there.
An HMRC source said that test meals were a routine part of a secret restaurant inspector’s job, but that they would “never dine out expensively. They’d always order something cheap, like Thai green curry and tap water”.
Sian King, a tax manager at the accountancy firm RSM, said: “These types of visits to hospitality businesses are conducted by HMRC officers relatively regularly, and it is likely that if HMRC asks questions about reported turnover, there is already evidence that suggests the numbers may not add up.
“These enquiries can run on for a long time and be costly in terms of tax, penalties, time and, in this example, court costs. A free meal for an HMRC inspector can be anything but for restaurant owners.”
In September a tax tribunal found that HMRC had unfairly calculated the revenue of a Chinese restaurant in Abergavenny after visiting on Chinese New Year — one of its busiest days. The restaurant owner was sent a demand for almost £200,000 of VAT, corporation tax and fines for “deliberate concealment” of the restaurant’s true turnover. A judge said that HMRC’s assumptions had been “entirely unreasonable”.
https://www.thetimes.co.uk/article/want ... -dxvhbhhkh
They popped in for dinner after becoming suspicious that the West Midlands restaurant was failing to disclose takings from customers who paid in cash. In one case they ordered a £23.90 meal and left a £1.10 tip, on a second visit the meals cost £45.20.
The HM Revenue & Customs (HMRC) inspectors discovered that some orders were not recorded in the restaurant’s sales figures when they paid in cash on one visit, while the restaurant records for that day showed only three card transactions.
They then examined the owners’ bank records and found that the money in his account did not match what was being declared.
The restaurant owner was landed with a £70,000 tax bill covering four years. He appealed to a first-tier tax tribunal but a judge ruled in the taxman’s favour in a verdict published on April 1.
Judge Fairpo said: “I have found that he had a second bank account into which takings were paid that were not disclosed to HMRC and further that he understated his cash takings in his tax returns.
“I consider that, as he was a sole trader and stated that only he ran the business, the behaviour which led to the understatement of tax cannot be anything other than deliberate. I see no reason to disturb HMRC’s reduction percentages and so find that the penalty has been correctly raised and is upheld,” she said.
Scrutiny of the restaurateur’s accounts found that he had made a £10,000 payment to a VW dealership for a car and was withdrawing £250 a week.
He initially denied the account existed. He also said that the restaurant never opened at lunchtime, even though the officers had eaten lunch there.
An HMRC source said that test meals were a routine part of a secret restaurant inspector’s job, but that they would “never dine out expensively. They’d always order something cheap, like Thai green curry and tap water”.
Sian King, a tax manager at the accountancy firm RSM, said: “These types of visits to hospitality businesses are conducted by HMRC officers relatively regularly, and it is likely that if HMRC asks questions about reported turnover, there is already evidence that suggests the numbers may not add up.
“These enquiries can run on for a long time and be costly in terms of tax, penalties, time and, in this example, court costs. A free meal for an HMRC inspector can be anything but for restaurant owners.”
In September a tax tribunal found that HMRC had unfairly calculated the revenue of a Chinese restaurant in Abergavenny after visiting on Chinese New Year — one of its busiest days. The restaurant owner was sent a demand for almost £200,000 of VAT, corporation tax and fines for “deliberate concealment” of the restaurant’s true turnover. A judge said that HMRC’s assumptions had been “entirely unreasonable”.
https://www.thetimes.co.uk/article/want ... -dxvhbhhkh
Re: Want to catch a tax cheat? Order six Thai curries
Schoolboy error. You record the cash takings from random strangers walking in, and you don't record those from regulars.
Re: Want to catch a tax cheat? Order six Thai curries
My favourite Thai restaurant is SingBuri, in Leytonstone, London was a CASH ONLY place. A Thai husband and wife team with random Thai girls doing some service. The food was better than anything I ate in Thailand which was a terrible disappointment.
It was little more than a Thai cafe, and it's business model was:
no bookings under 6 people (and only if she knew you);
Bring your own booze;
And cash only - no cheques or cards;
From the recent reviews the cash only policy is still in force.
https://www.google.com/maps/place/Singb ... d0.0086662
It was little more than a Thai cafe, and it's business model was:
no bookings under 6 people (and only if she knew you);
Bring your own booze;
And cash only - no cheques or cards;
From the recent reviews the cash only policy is still in force.
https://www.google.com/maps/place/Singb ... d0.0086662
Re: Want to catch a tax cheat? Order six Thai curries
Any place offering a discount for cash use is almost always not counting all the cash take.
Cheers
- Clutch Cargo
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Re: Want to catch a tax cheat? Order six Thai curries
I had a funny story related to me a long time ago..
Background: Australia had a bit of a culture of tax evasion via the 'cash economy' in the 80's and early 90's and even some to this day..
Anyway the story goes that the then Tax Commissioner of Australia wanted some kitchen reno quotes back in the 80's. So one tradie romps up and gives the (unbeknown to him) Commissioner 2 quotes for the job: 1. for cash, and another 2. for invoice and receipt.
Dunno whether the Commissioner dobbed him in or not but I recall this was quite common back then.
Background: Australia had a bit of a culture of tax evasion via the 'cash economy' in the 80's and early 90's and even some to this day..
Anyway the story goes that the then Tax Commissioner of Australia wanted some kitchen reno quotes back in the 80's. So one tradie romps up and gives the (unbeknown to him) Commissioner 2 quotes for the job: 1. for cash, and another 2. for invoice and receipt.
Dunno whether the Commissioner dobbed him in or not but I recall this was quite common back then.
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