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.'

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For more information, please contact:

Steve Rudaini, ACCA Newsroom
+ 44 (0) 207 059 5622
+44 (0) 780113 3985
steve.rudaini@accaglobal.com 

Helen Thompson, ACCA Newsroom
+44 (0)20 7059 5759
+44 (0)7725 498654
helen.thompson@accaglobal.com

Notes to editors

  1. ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. 
  2. We support our 154,000 members and 432,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and more than 8,400 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence. 
  3. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.