Inland Revenue taking a closer look at businesses in the hospitality industry
Inland Revenue are taking a closer look at how businesses in the hospitality industry are keeping their books. Cafes, restaurants, bars and takeaways are the focus on their renewed “sleep easy” campaign as this sector has a higher risk of cash sales not being reported, discrepancies between supplies bought and sold and employees being paid under-the-table.
Recently a national restaurant chain owner was prosecuted and jailed for tax evasion and money laundering. A Waikato baker was also sentenced to prison for failing to declare cash sales. An Inland Revenue spokesperson advised that instead of including income in tax returns, the funds were used to buy rental properties, repay loans and fund household living and overseas travel. The offending was found to be premeditated and persistent.
Inland Revenue will be contacting hospitality businesses and may visit premises (unannounced) to ensure that tax obligations are being met. They may request till records and staff work rosters to compare with employee details on their system. Inland Revenue will be looking closely at cash flow, under reporting of sales, paying under-the-table wages or underpaying GST as these business practices break tax laws and may result in prosecution.
Inland Revenue are encouraging business owners to put their records right, including anything that may have been left off past tax returns. Most hospitality businesses are doing the right thing, paying the right amount of tax and have good bookkeeping practices. However, if you are concerned about anything please get in contact and we can assist you to make a full voluntary disclosure.
If you are in the hospitality industry and would like guidance on how to better manage your financial reporting, please contact our office. Knowing that your records are in good order can take a huge weight off a business owner’s shoulders.