ACCA - The global body for professional accountants
Zappers and similar software that supress sales data for tax advantage is of no benefit to anyone other than those using it. HMRC’s crackdown on this is welcomed, and should be welcomed by all consumers. Unlike some evasion where the consumer might gain, or think they’re gaining, from colluding in the crime, they probably won’t even realise it has happened
—Chas Roy-Chowdhury, head of taxation, ACCA

‘Zappers’ and ‘phantomware’ - devices designed to delete or modify records in the sales recording systems used by most retail businesses – will be targeted by the Government as part of its tax evasion crackdown set out in the Budget, but accountants have been encouraged to keep on tax planning for the benefit of their clients at an ACCA (the Association of Chartered Certified Accountants) post-Budget Breakfast

Mark Garnier MP, a member of the Treasury Select Committee, told ACCA members at the post-Budget Breakfast meeting that they should keep on tax planning, but that it was evasion and tax abuse the Government needed to keep on top of.

In its paper ‘Levelling the tax playing field’ accompanying last week’s Budget, HMRC allude to the growing use of Zappers and other software by some businesses aimed at altering sales records to avoid paying tax. A recent OECD paper revealed that HMRC investigators trained in spotting these types of tactics found such devices were used in 68 per cent of their investigations.

Chas Roy-Chowdhury, ACCA head of taxation, said: 'Zappers and similar software that supress sales data for tax advantage is of no benefit to anyone other than those using it. HMRC’s crackdown on this is welcomed, and should be welcomed by all consumers. Unlike some evasion where the consumer might gain, or think they’re gaining, from colluding in the crime, they probably won’t even realise it has happened. 

'This kind of tax dodge is a far cry from legal tax planning, which is based on tax incentives designed to encourage reinvestment, job creation or some other advantage which is passed onto society in general. Deliberately stripping money out of the legitimate economy and siphoning it into the hands of criminals should not be overlooked and the fact HMRC is arming itself to tackle the issue shows how serious it can be.'

ACCA points out that changes to HMRC’s administrative powers allow it to inspect the bulk records of credit and debit card transactions held by the processing companies who handle a business’s accounts. Fed into Connect, the £40m system which mines data from public records, business databases and the internet, HMRC can profile better than ever before precisely which businesses have anomalous records profiles.

Chas Roy-Chowdhury, who chaired the ACCA post-Budget Breakfast event, said: 'This is a global issue. We have seen the OECD shine a spotlight on the scale of the issue and in Canada, a world leader in tackling this kind of evasion, it is estimated that annual suppressed sales amount to $2.4 billion (Canadian) in the restaurant sector alone. Businesses and their finance teams should look to existing, above board, legally sound financial planning measures to make tax savings which can be used more effectively.'