{"id":1718,"date":"2020-06-18T07:27:00","date_gmt":"2020-06-18T07:27:00","guid":{"rendered":"https:\/\/srcadvisory.com\/?p=1718"},"modified":"2020-06-23T07:34:10","modified_gmt":"2020-06-23T07:34:10","slug":"vat-checks-in-the-catering-industry-survival-guide","status":"publish","type":"post","link":"https:\/\/srcadvisory.com\/vat-checks-in-the-catering-industry-survival-guide\/","title":{"rendered":"VAT Checks in the Catering Industry- Survival Guide"},"content":{"rendered":"\n

HMRC has Task Forces across the UK targeting cash businesses, and in particular those involved with catering.  Since catering has been largely inactive due to the COVID-19 pandemic, HMRC believes that the resumption of trading will allow effective VAT checks to be carried out on the sector.

The potential issues HMRC are looking for include under-declarations of sales; incorrect liability; standard-rated\/zero-rated apportionments on eat-in and take-away foods, and the VAT treatment of tips and gratuities.

As well as carrying out scheduled visits to discuss the business and review records, HMRC are also likely to carry out test purchases. This involves officers attending the premises as a paying customer without declaring themselves, paying for their meals in cash and by payment cards, and then later visiting to review the business records after submission of the relevant VAT return to check whether their cash payments have been declared. In addition, where they hold the relevant authority, HMRC can make unannounced visits to the business to interrogate the till system, and verify the takings on a particular day.

The issue most businesses have is that the records they hold are insufficient to enable them to answer the questions raised by HMRC during these enquiries. Most traders are aware of their requirement to keep the audit trail of their Daily Gross Takings and other sales. For most businesses with a modern till system this will be in the form of a Z reading, which reports all the sales recorded in the till, at the various rates of VAT.

Many businesses do not however, appear to be aware that the till will also record any adjustments made to the till, e.g. credits, voids, no sale buttons used etc. The Z read can be set up to report all such transactions and the values attributed to them. If set up properly this provides valuable management reporting for the owner of a business; especially one not always present at the restaurant, and demonstrates to HMRC that the owner is exerting an element of control.

Even if not included within the Z read report, reports of transactions voided\/credited from the till can be downloaded with relative ease by the HMRC Till Interrogation officers. As well as an audit trail of transactions that have<\/strong> been included in the VAT reporting, a business needs to have an audit trail\/explanation for those transactions that have not<\/strong> been included in the VAT reporting. This could include<\/p>\n\n\n\n