HMRC spies on shopkeepers to catch cash-in-hand crooks

THE taxman is spying on credit card records in a £100 million crackdown on small firms it believes are fiddling their bills.

HM Revenue & Customs has revealed that it is studying the number of card payments recorded by such companies as newsagents, restaurants and garages to see if they match up with the profits that they declare on their tax return.

It estimates around 30 pc of sales made at most small businesses are paid for in cash. It believes many companies may not be declaring these payments on their returns.

HMRC is tapping into card data to match up the percentage of a firm’s payments made on card.

If it then finds that a firm has recorded 90 pc of its transactions as card payments, it could raise a red flag and trigger further investigations. At a conference last week, John Lyon, senior tax consultant at HMRC, said that there were no current plans to monitor individuals in this way, but would not rule it out.

Experts say that HMRC’s new approach could result in innocent business owners being investigated needlessly.

Chas Roy-Chowdhury, of the Association of Chartered Certified Accountants, says: ‘This Big Brother approach is concerning. HMRC has made it clear it is not 100 pc sure how good its data is. The taxman needs to be sure business owners don’t end up being wrongly vilified.’

An HMRC spokesman says: ‘The majority of taxpayers have nothing to worry about because they play by the rules.’