The owner of a sandwich firm in Hull has been sent to prison after failing to declare any income for several years.
John Baker, aged 62, bought the business in 2006. Officers from HM Revenue & Customs (HMRC) contacted his daughter Amy, who was running Amy’s Sandwich Bar, as she hadn’t declared any income from the firm. In response, Amy said that the business hadn’t commenced trading until 2010. Unfortunately for her, HMRC had an office around the corner and officers bought from the sandwich shop on a regular basis.
John Baker and his partner, Tracey Walmsley, had allegedly lived an extravagant lifestyle, taking luxury holidays and driving sports cars, although John Baker had not paid any tax for 20 years. According to Baker, he did this because he hadn’t received any assistance from the Government when he had been in a “time of need”.
HMRC officers had discovered that sales of £71,000 a year had been incorrectly recorded and that gross annual profits were £44,973. During the course of the investigation, documents were discovered that referred to ‘John’s Sandwich bar’ which had been owned by John Baker. He hadn’t registered to pay tax since the year 1995. Due to there being no accurate accounts or business records, the prosecution had to estimate the amount of fraud at £1,066,081.
Judge Michael Mettyear sentenced all three members of the family, with John Baker being sentenced to two years in jail. The family will be expected to sell their home as they have just £45,000 available to pay back the amount.
Registering a business
You must inform HMRC of any new business as soon as possible. Once you have registered the new venture, you will be given a self-assessment reference number, called a Unique Taxpayer Reference number. This is your own and should be used in all correspondence. If you think your turnover might exceed the threshold for VAT, you need to register for VAT too. If you have set up a limited company, inform Companies House.
There are different rules for keeping and recording business records, depending on the structure of the enterprise. If you are not sure what type of records you are required to keep, contact HMRC for advice. You must account for income and expenditure so that you have the figures required to complete your self-assessment tax return at the year end.
If you would like some guidance regarding business records, contact us here at The Accountancy Partnership.
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