Business had under declared cash takings

The taxpayer operated a restaurant. HMRC officers made several test visits during 2016 paying for meals. Afterwards HMRC raised assessments for four tax years on the grounds that cash takings were being under declared. At meetings with HMRC the taxpayer explained the business had no cash register but recorded sales by totalling the meal tickets and writing the total on an analysis sheet. Cash was kept in a locked drawer and used to pay suppliers and employees and provide his drawings. HMRC said only some of the test meals appeared in the records. Further there was evidence of a second bank account belonging to the business. The taxpayer said the account had nothing to do with him and that HMRC had no clear evidence that he had under declared sales.

The First-tier Tribunal said the taxpayer’s argument that there was no other bank account was ‘not sustainable’....