Electronic sales suppression (ESS) is the use of software or hardware tools to manipulate the sales recorded by an electronic point of sale (EPOS) device, such as a shop till.

Traders may think that HMRC won‘t find out about the sales hidden using ESS tools as the transactions are put through the till as normal, but selected sales are not recorded or are deleted.

To ensure the trader‘s bank receipts match the total amount of sales recorded by the till, the card payments for those missing sales are routed through an offshore bank account. In this way both the record of the sale and the revenue disappears. The use of ESS is the modern equivalent of cash-in-hand sales which are never put through the business‘ books.

You should check that your EPOS software used in your tills is legitimate and doesn‘t include a facility to manipulate the sales recorded.

If HMRC discovers that your business uses or possesses an ESS tool you will receive a letter asking you to remove the ESS tool and prove that you have done this. If you do not remove the ESS tool when requested you may be charged up to £1,000 as a fixed penalty, and additional penalties of up to £75 per day until you can convince HMRC that the ESS tool has been removed.

HMRC will also charge penalties for any inaccuracies and late tax payments where tax has been underpaid due to the operation of ESS tools.

From 6 January to 28 February 2023 HMRC will be inviting businesses to make a disclosure that they have used till systems (such as ESS) to reduce their tax liabilities. If you make a notification in this way any penalties will be reduced.

Last month HMRC‘s fraud department raided 90 businesses in the UK and arrested five people connected with ESS software sales. The penalty for supplying ESS tools can be up to £50,000, and that applies for each copy of the ESS tool supplied.