Electronic Sales Suppression: HMRC's New Penalty Rules Explained

What Is Electronic Sales Suppression?

Electronic sales suppression, or ESS, is when a till, point-of-sale system, or piece of connected software is used to hide or reduce the value of sales transactions after they've been rung through, so a business's records understate its real turnover. HMRC has had powers to tackle this since the Finance Act 2022, but a newly published compliance factsheet (CC/FS68A) has sharpened exactly how the penalties work - and it catches more businesses than you might expect.

The Penalty Applies Even If the Tool Was Never Used

The key point in the new factsheet is a strict one: HMRC doesn't need to prove that suppression software was ever switched on or used to cut a tax bill. Simply possessing an ESS tool - owning it, having access to it, or even attempting to get hold of one - is enough to trigger a penalty.

An "ESS tool" is defined broadly. It covers:

• Dedicated sales suppression software

• A till or point-of-sale system that has been reconfigured or set up in a way that hides transactions

• Add-on hardware, sometimes called a "zapper" device, that alters sales records

• Computer code or scripts built for the same purpose

How the penalties stack up:

• HMRC issues a notice requiring the tool to be removed

• A fixed penalty of up to £1,000 follows if it isn't removed to HMRC's satisfaction

• Daily penalties of up to £75 can then apply until the tool is removed

• Anyone penalised for ESS in the last five years who is caught again faces the full £1,000 immediately, with no warning notice first

There's no reduction for disclosure once a penalty has been charged. The only way to stop penalties accruing is to satisfy HMRC that the tool has genuinely been removed.

Who This Affects

This isn't aimed only at businesses deliberately hiding cash sales. Because the rules catch possession rather than intent, it's worth checking your systems if your business:

• Takes cash payments regularly - cafes, takeaways, hairdressers, barbers, market traders, taxi firms

• Uses an older or third-party-modified till or EPOS system, particularly one bought second-hand or set up outside the manufacturer's own support channel

• Runs an online shop or marketplace account using software sold with "sales management" features that sound like they minimise recorded turnover

• Has inherited a till system from a previous owner when taking over a business

Even if none of this sounds like your business, it's a sensible moment to have someone independent check exactly what your till or point-of-sale software does, and how it's configured, rather than assuming it's fine because it always has been.

What to Do Now

• Ask your till or EPOS provider directly whether any part of the system has "sales suppression", "training mode", or similar functionality that permanently alters what's recorded

• If you've bought or inherited hardware from a previous owner, get it checked before relying on it

• Keep receipts and correspondence for any system changes, so you can show HMRC exactly what was installed and when, if ever asked

• If in doubt, ask before HMRC asks first

At Jackson Lee Accountants, based in Bury, we work with a good number of local hospitality, retail, and personal-care businesses where till systems are central to day-to-day record keeping. If you're at all unsure whether your point-of-sale setup is clean, or you've taken over a business and inherited someone else's system, it's a quick and worthwhile conversation to have with us.