Suppressed takings on sole trader’s VAT returns

The taxpayer operated as a sole trader until 28 February 2013 and then incorporated the business from 1 March 2013 to become the sole director and shareholder of Hill Catering Ltd.

HMRC carried out a compliance visit in 2015 and had concerns about the declared takings on past VAT returns – the computerised till system only produced a ‘Z’ reading of takings every month which made errors likely in the declared figures. HMRC told the taxpayer to keep 14 days of trading records and carried out invigilation checks on a Wednesday and a Friday. These days were deliberately chosen to include a quieter trading day (Wednesday) and a busy day (Friday). The takings on each day exceeded £3 000 which was a higher figure than was declared on any day for the VAT period ended 30 November 2015.

Due to being on a secondment the officer...