Tax experts adding value to clients in the food Industry

Case Study – Indian Takeaway

The proprietor, Mr H, visited our offices and explained the circumstances following a recent unannounced HMRC visit to his takeaway one Friday evening.  The HMRC team had spent some time on the premises, observing the volume of trade, counting the cash in the till, checking and printing off the takings receipts from the PDQ (debit/credit card machine) and removing all restaurant order slips. After a period of time post-visit, Mr H then told us he’d received a formal notice of enquiry from HMRC, together with a (usual) request to see all his business books and records.

Interviews and meetings

Several weeks elapsed, until we were informed HMRC officers wanted to meet our client after identifying weaknesses in his takeaways business records.

Various exchanges of correspondence took place, culminating in a letter from HMRC, which asserted from their reviews, that our clients’ takings had been substantially under-declared. Officers were also seeking to add close to 100% of the declared takings (doubling the takeaway’s declared takings) for the last four years.

Situation

After explaining to our client what HMRC intended to do, he was understandably aghast. Although he had admitted during the meeting with HMRC that one part-time staff member had been paid in cash and no record had been kept; there was certainly no way the amount suggested had ‘gone astray’.  Of course, the significant additions to the takings had VAT implications as well.

Impact

Our team asked HMRC for the business books and records to be returned; and then considered the best tactics to counter HMRC’s arguments. After discussions with our client, we decided to use a business economics exercise about portion sizes and wastage.

Our findings

Our results were as expected. Takings had indeed been under-declared, but nowhere near the amount contended by HMRC.  Our findings were then submitted, to which HMRC officers then asked for a further meeting with ourselves and Mr H.

Successful client experience

Following further negotiations between ourselves, HMRC and our client, it was agreed additions had to be made to the declared takings, which amounted to about 15% of those declared. Both HMRC and Mr H were equally satisfied with the outcome and effort from us.

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