Hand operating touchscreen electronic till system

HMRC letter tackles Electronic Sales Suppression

7 June, 2024

HMRC are writing to businesses they suspect of having used Electronic Sales Suppression (ESS) tools in order to reduce their tax liabilities. 

ESS occurs when a business either acquires or gains access to software that will assist it to under-report its sales, while still providing an apparently reliable audit trail. It can also apply where a business misuses their legitimate software to reduce apparent takings – for example recording sales while the software is in ‘training mode’ so that any sales recorded don’t reach the business’s records. Whichever approach, the result is an understatement of turnover in the business records, and an evasion of tax. 

HMRC's latest letter addressing the use of ESS tools will not be copied to businesses' agents or tax advisers, but we are able to share a copy with permission from HMRC. 

As with previous ESS campaigns, HMRC are encouraging recipients who have underdeclared sales to make a disclosure via a bespoke online disclosure service. 

Using ESS tools constitutes a deliberate effort to suppress sales in order to avoid tax. Since this amounts to fraud, a more appropriate disclosure method may be the Contractual Disclosure Facility, which is the only disclosure route guaranteeing protection from prosecution where a full and complete disclosure is made.  

Recipients of HMRC's letter would be advised to consider their disclosure options carefully, and seek professional advice before proceeding.