HMRC has, for many years, looked to target businesses that deliberately undertake electronic sales suppression (ESS). ESS happens where a business deliberately manipulates its electronic sales records in order to hide or reduce the value of individual transactions. 

This type of fraud is hard to spot as it tries to reduce the recorded turnover of the business and the corresponding tax liabilities while providing what appears to be a credible and compliant audit trail. This can be done by misusing built in till functions or installing software specifically designed to suppress sales.

HMRC officers are continuing to target businesses across the country that are suspected of being involved in making, supplying or promoting ESS systems. These businesses can face fines of up to £50,000 and criminal investigations. HMRC is also actively targeting users of these systems who will also face having to pay back tax evaded, financial penalties and possible criminal convictions. HMRC has confirmed that they will continue to contact and target till fraud throughout 2024.

HMRC is also urging affected businesses to voluntarily come forward and use the online portal to disclose their undeclared sales and stop using ESS software immediately. If businesses do not come forward, HMRC may issue an assessment and open an investigation, and harsher penalties will apply.

In a recent press release the government confirmed the following policies to support household incomes from 1 April 2024.

1. The National Living Wage has officially risen from £10.42 an hour to £11.44. This marks a £1,800 annual boost to full-time workers’ pay packets. This means nobody over 21 will earn less than two-thirds of the average hourly wage increase – putting more money in the pockets of around 3 million of UK’s lowest paid workers.
2. Households will also save around £250 a year on average thanks to a drop in energy bills introduced by Ofgem. This marks a 12.3% fall from the previous quarter, which brings prices down to their lowest since Russia’s invasion of Ukraine in February 2022.
3. An increase to the Local Housing Allowance means some of the poorest families on either Universal Credit or Housing Benefit will gain around £800 a year on average. 
4. Additionally, these changes run alongside the roll out of 15 hours of free childcare, which will save working parents an average of £3,450 a year – the first stage in the £8 billion childcare package that was announced by the Chancellor last year.

Clearly the recent increases in inflation have had a major impact on spending power and although the above measures are welcomed, the real increases in purchasing power are to some extent reduced by the continuing increase in prices.

HMRC has been forced into an embarrassing climbdown on plans to close the Self-Assessment, VAT and PAYE helplines from early April until September this year. HMRC has now confirmed that these helpline changes have been abandoned following feedback from many concerned stakeholders, including MPs, accountants and members of the public. This means that the helplines will remain open as usual for the time being.

However, these moves indicate that a significant shift towards online self-service options will become the norm in the longer term. HMRC has also said that they will continue encouraging customers to self-serve where possible and access the information they need more quickly and easily by going online or to the HMRC app, which is available 24/7.

HMRC’s Chief Executive said:

‘Making best use of online services allows HMRC to help more taxpayers and get the most out of every pound of taxpayers’ money by boosting productivity.

Our helpline and webchat advisers will always be there for those taxpayers who need support because they are vulnerable, digitally excluded or have complex affairs.

However, the pace of this change needs to match the public appetite for managing their tax affairs online.

We’ve listened to the feedback and we’re halting the helpline changes as we recognise more needs to be done to ensure all taxpayers’ needs are met, whilst also encouraging them to transition to online services.’

HMRC has issued an updated ‘news story’ to confirm that, where possible, new legal proceedings and pre-action letters can be served on the department using email instead of post. This measure was originally introduced in April 2020 in response to the COVID-19 pandemic. The update confirms that this is a permanent change and not just limited to COVID-19 arrangements.

New legal proceedings in England and Wales to be served on the Solicitor for HMRC should be emailed to: newproceedings@hmrc.gov.uk. If you use email instead of hard copy, you must send the relevant documents to the same email address – whether or not an HMRC lawyer, paralegal or litigator has already been assigned to the case. HMRC may challenge any attempt to serve new legal proceedings on the department using a different HMRC email address.

Correspondence required to be sent to the Solicitor for HMRC in compliance with any pre-action protocol to the Civil Procedure Rules, including the Pre-Action Protocol for Judicial Review, can be emailed to: preactionletters@hmrc.gov.uk.

There is a different email address (expertadviceservice@hmrc.gov.uk) for the service of employment law claims on HMRC.

These email addresses are for the service of new proceedings and pre-action letters only. There is separate guidance if you wish to request a review of a tax decision by HMRC or appeal to the First-tier Tribunal (Tax Chamber).