Member Article

Cheque Mate?

Cheque Mate?

HMRC has recently created a new team in its Sheffield office which aims to tackle undeclared income obtained through cashing cheques at high street money service bureaus.

There are some legitimate reasons why both small businesses and sole traders choose to cash cheques rather than paying it into a bank account: Receiving cash instantly rather than waiting the usual three days can help to ease pressure on cashflow. But if the income isn’t declared in your accounts, you could find yourself facing tough penalties.

Its ongoing bid to reduce tax avoidance and the creation of the new service sends out a clear intention from the Inland Revenue that they are planning to clamp down on what’s perceived by some as a relatively easy way of bypassing the tax system.

After all, it’s perfectly legal to cash a cheque using a money service bureau, provided that the income is declared. However, if you’re cashing cheques regularly and not declaring the income, then you could find yourself facing tough penalties.

So why has HMRC chosen to target cheque cashing at money service bureau in a new bid to clamp down on both money laundering and tax avoidance?

It’s a little known fact, but all businesses providing cheque cashing services are overseen for money laundering compliance by HMRC, enabling officers to check a money service bureau’s records for what they consider to be unusual activity: This is typically large one-off transactions or alternatively regular transactions of a similar amount. This link between HMRC and money service bureaus means you are more likely to be caught out if income isn’t declared.

It is imperative any money obtained in this way is declared properly. If you are in any doubt, then always consult an accountancy professional. At Thorntons we help business owners and self-employed individuals to manage their financial affairs. Our flexible services range from filing your annual returns and VAT documents to delivering a comprehensive bookkeeping service.

We will help you to keep your accounts in order, meaning that if HMRC decide to investigate any cheques you may have chosen to cash, you can be assured that you are fully compliant with law.

To find out how Thorntons Accountants can help you, contact the team on 01226 716 793

This was posted in Bdaily's Members' News section by Thorntons Accountants .