HMRC have created yet another taskforce to seek out businesses owners who are believed to be paying less tax than they should. The new team will be concentrating on holiday businesses in certain areas of the UK.

Initially, the tax investigation teams will be active in: Blackpool; the Lake District; North Wales; Devon and Cornwall. No doubt if their investigations reveal serious irregularities in the holiday industry, they will consider widening their net to other areas of the UK.

Hospitality traders in the affected areas should take steps now to get their house in order. It is likely that HMRC will want to see that businesses are compliant across a range of taxes. Including:

  • PAYE – payroll
  • VAT
  • Business record keeping

Certain trades, for example restaurants, should ensure that they understand and are compliant with regards to tips and gratuities paid to staff or collected from customers on the bill – are they taxable or tax free receipts? How are they treated for VAT purposes?

Hotels and boarding houses will not only need to present a decent set of books to the tax man, but also reconcile these financial records with other records – for example does the income declared for room letting reconcile with the number of room bookings?

As HMRC is setting up teams to cover specific industries it is likely they will know what to look for. Be ready…

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