Businessman loses €266,000 tax ruling

A businessman has lost out in a €266,547 income tax and VAT battle with Revenue.

The Tax Appeals Commission (TAC) found the businessman is liable for the bill, which arose from discrepancies between a retailer’s Electronic Point of Sales (EPOS) system used to record sales to customers and sales records provided by the retailer to his accountant who filed the business’s tax returns

The information provided by the businessman to his accountant took the form of handwritten cash sheets, which set out a daily summary of the business’s sales.

In her findings, Appeal Commissioner Clare O’Driscoll found the businessman did not correctly return his sales for the relevant years of 2008, 2009, 2010 and 2011 and “this in turn led to the appellant making incorrect returns for the relevant years”.

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The 49 page TAC report found that the sales record by the EPOS Phorest system in 2010 recorded sales of €770,560 while the retailer declared revenue of €664,627.

In 2011, Revenue found that the EPOS Phorest system revealed sales of €780,998 while the revenues declared to Revenue were €677,851.

The investigation process undertaken by Revenue included a criminal investigation, which resulted in a decision by Revenue not to prosecute the businessman.

The investigation included two Revenue officers receiving and paying for services in June 2012, one in each of the businessman’s two outlets. The business charged customers for treatments.

As part of an investigation process initiated by Revenue in 2012, Revenue removed some of the businessman’s computer and cash register as well as till hardware, along with documentation.

Arising from its audit, Revenue estimated that the additional income tax due was €210,774 and the additional VAT due was €55,773.

Revenue told the TAC that the businessman’s explanation for the discrepancy between the EPOS system, Phorest – commonly used by businesses here – and records provided by the retailer to his accountant was not credible.

Revenue told the TAC that the explanation that the discrepancy resulted from loyalty scheme transactions being incorrectly maintained as sales is not supported by documentation.

The businessman submitted that the Phorest system was not used by him or his accountant as a mechanism to recognise or record sales data, during the tax years 2008 to 2011.

As part of his appeal against the 2017 Revenue assessment, the businessman submitted that the assessments raised are excessive and submitted that Phorest was not an EPOS system used in his business during the tax years 2008 to 2011.