To understand the whole story we must have some fundamental knowledge of tax avoidance and tax evasion.
Many people ask the following questions:
From simple understanding, we see that the restaurateurs are very busy with their daily life, family life and workload. Sometimes they leave behind the important work of record keeping which creates problems for them in long term.
In various situations, we have witnessed that communication problems can arise due to some restaurateurs speaking very little English which acts as a barrier for communication with both their accountant and HMRC. They also struggle to understand their Statutory legal requirements as a Sole Trader or a director of a company.
At some points, we have faced people who are not really bothered or concerned about the whole accounting and taxation issues.
We look at the past cases where the restaurateurs were doing tax evasion, they all had very similar patterns. We can list few of the symptoms below;
In some experts opinion;
In this case we look at Gurvinder Luthra, director of a restaurant in London’s Covent Garden, was disqualified from acting as a director for 10 years for submitting false VAT returns. This was due to him failing to keep records and filing incorrect accounts.
During the investigation it was found that from 1st September 2010 to the liquidation of the company, at least £334,456 (including VAT refunds adding up to £97,687) and £334,461 of payments were not made to HMRC. Another essential reason that Mr Luthra got banned was that the investigation found that the director failed to keep adequate accounting records.
Cheryl Lambert, Chief Investigator at the Insolvency Service, has stated that this should be a "warning to directors that they need to consider and take seriously, their duties and obligations" (HMRC, 2015). This means that HMRC does not take lightly the filing of false documents or accounting statements.
So in conclusion, this case shows that there is an increased crack down on restaurant owners to provide clear and concise accounting records in order to avoid prosecution by HMRC.
How can Taj Accountants help?
As accountants we understand that not everybody understands or has a financial or accounting background which can potentially lead to inaccuracies and miscalculations when completing or inputting financial information.
Taj Accountants is a firm that specializes in helping individuals and businesses to avoid a situation like that of Mr Luthra.
Many people ask the following questions:
- Is Tax avoidance legal?
- Is Tax evasion legal?
- What is legal between tax avoidance and tax evasion?
From simple understanding, we see that the restaurateurs are very busy with their daily life, family life and workload. Sometimes they leave behind the important work of record keeping which creates problems for them in long term.
In various situations, we have witnessed that communication problems can arise due to some restaurateurs speaking very little English which acts as a barrier for communication with both their accountant and HMRC. They also struggle to understand their Statutory legal requirements as a Sole Trader or a director of a company.
At some points, we have faced people who are not really bothered or concerned about the whole accounting and taxation issues.
We look at the past cases where the restaurateurs were doing tax evasion, they all had very similar patterns. We can list few of the symptoms below;
- Failing to keep records
- The directors submit the dormant accounts when they have been trading
- False VAT return
Channel S News Report on 24 February 2013.
Why do the restaurants and takeaways face investigations?
In some experts opinion;
- Some restaurants do not declare the trading on time
- Failure to keep, provide and submit adequate accounting records or statements
- Clear fraudulent financial activities
Consequences of prosecution and if found guilty;
- Loss of money to lawyers and tax accountants helping you fight your case
- Payment of a huge fine
- Could lead to prison sentence and have a permanent criminal record
If we take an example of HMRC case then we can come to a conclusion:
In this case we look at Gurvinder Luthra, director of a restaurant in London’s Covent Garden, was disqualified from acting as a director for 10 years for submitting false VAT returns. This was due to him failing to keep records and filing incorrect accounts.
During the investigation it was found that from 1st September 2010 to the liquidation of the company, at least £334,456 (including VAT refunds adding up to £97,687) and £334,461 of payments were not made to HMRC. Another essential reason that Mr Luthra got banned was that the investigation found that the director failed to keep adequate accounting records.
Cheryl Lambert, Chief Investigator at the Insolvency Service, has stated that this should be a "warning to directors that they need to consider and take seriously, their duties and obligations" (HMRC, 2015). This means that HMRC does not take lightly the filing of false documents or accounting statements.
So in conclusion, this case shows that there is an increased crack down on restaurant owners to provide clear and concise accounting records in order to avoid prosecution by HMRC.
How can Taj Accountants help?
As accountants we understand that not everybody understands or has a financial or accounting background which can potentially lead to inaccuracies and miscalculations when completing or inputting financial information.
Taj Accountants is a firm that specializes in helping individuals and businesses to avoid a situation like that of Mr Luthra.
Taj Accountants help their clients by keeping outstanding bookkeeping records, paying VAT returns on time and ensuring that all of our clients tax returns are calculated and submitted on time. All work is completed using HMRC approved software.
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Disclaimer: The information provided in this blog is brought to you by Taj Accountants. As you are reading this blog of your own free will, any information taken from this blog is at your risk. Before using the information provided to apply, to your business seek professional or legal advice. Taj accountants will not be liable for any damages.
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