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Last updated: 4 Jan 2023

Electronic Sales Suppression (ESS) disclosure facility - New Year deadline rapidly approaches

HMRC recently launched a new disclosure facility, specifically for users of ESS tools. Find out more about the disclosure facility, what it means for you (or your clients), and what action needs to be taken.

HMRC announced the new ESS disclosure facility in early December with a closing registration deadline of 5 January 2023. Those who register will also have a short window to complete their disclosure; by 9 April 2023.

About the author

Barbara Bento

+44 (0)20 3972 6606
bentob@buzzacott.co.uk
LinkedIn

What’s an ESS tool?

An ESS tool is any physical device, software, code, digital data or any other tool that can suppress “relevant electronic sales” records. An example of this is till software that only ‘records’ one in every three sales. The business will receive payment for all three sales, but when the sales records are collated, two-thirds of the sales won’t be accurately recorded.

During COVID-19, HMRC became aware of several businesses using ESS tools to facilitate Coronavirus Job Retention Scheme (CJRS) fraud and issued new powers to tackle the perceived threat of these in February 2022.

What’s happening?

HMRC recently launched a targeted operation following the arrest of five individuals suspected of designing and supplying ESS tools. In early December, more than 100 HMRC officers visited 90 businesses across the UK that were suspected of using ESS tools to artificially lower their takings.

This was part of a joint operation between HMRC and other leading tax authorities, known as The Joint Chiefs of Global Tax Enforcement or J5.

Users of these ESS tools are now being given a limited window of opportunity to register for a voluntary disclosure facility before HMRC follow up.

What should I do?

Any users of ESS tools to reduce their takings should urgently seek appropriate advice from a tax investigations specialist. Coming forward now before HMRC open their own investigation will likely lead to a more favourable penalty position.

While in some cases the new disclosure facility will be appropriate, for others where the ESS use has been over a significant period, or covering a large volume of sales, consideration should be given to a disclosure under Code of Practice 9 and the Contractual Disclosure Facility (CDF). Acceptance into the CDF process is the only way to guarantee protection from criminal prosecution in serious cases.

How we can help

Our award-winning Tax Investigations and Dispute Resolution team can guide you through the disclosure process, ensuring that the tight deadlines of this disclosure facility are met.

Our disclosure experts have a proven track record of assisting clients with ESS matters. We’re able to:

Conduct a review of your tax affairs to identify any issues that need to be disclosed.
Register you for the appropriate HMRC disclosure facility.
Prepare and submit a disclosure that minimises your exposure to unnecessary tax, interest and penalties.
If needed, negotiate a time to pay arrangement that is affordable according to your needs and personal circumstances.

Get in touch

Get help today

Call us today on +44 (0)20 7710 3389 or fill in the form below and a member of our team will be in touch. All communications are in the strictest confidence.