Electronic sales suppression (ESS) is the term for when a sales till is programmed to hide or reduce the value of individual sales.
For example, the electronic point of sale (EPOS) software installed on the till may deliberately exclude certain items from the sale records. Alternatively, the EPOS software may be set to operate in a training mode, allowing the sale to be rung up, but excluding it from the daily takings.
In December 2022 HMRC raided 90 businesses that were involved in the design and marketing of ESS software, and as a result, HMRC has a list of the names and addresses of businesses that bought that software. Using this information, HMRC is issuing traders who have purchased ESS software with a notice to remove the software within 30 days. If that notice is ignored HMRC can impose a penalty of up to £50,000.
HMRC has recently issued a warning that businesses that have used ESS software need to come clean and disclose what sales have been missed from tax returns. It has set a deadline of 9 April 2023 (Easter Sunday!) for voluntary disclosure of the taxes due.
A disclosure for ESS can be done online but please talk to us before launching into this disclosure process as it may be better to use another method.
HMRC views the act of using ESS software as tax fraud, and it will prosecute under criminal law for large and serious cases. However, in most cases HMRC will agree with a civil settlement to recover the tax underpaid but penalties of up to 100% of the tax due plus interest will also be payable.