Alleged suppressed sales

The case of Quality Convenience Store Limited (TC08530) provides a good example of how HMRC should go about the task of assessing whether a retail business is suppressing sales, and to what extent they are suppressed. In this example, HMRC’s approach lacked realism and sophistication.

The initial suspicions in HMRC’s mind were aroused when they carried out test purchases, and observed that the till was opened by staff by pressing the ‘no sale’ button. When HMRC reviewed the records, they found that the no sale button was pressed many times each day.

From this they deduced the probability that payment was being taken without sales being recorded, and therefore that there was suppression, which affected both VAT and corporation tax.