Fast food operator loses €342k tax battle with Revenue

Appeal rejected claims that staff members 'had a tendency simply to press the wrong buttons'

Revenue commenced its inquiry into the fast food operator following a ‘cold call’ visit to the outlet. Picture: PA

A fast food operator has lost his income tax and Vat battle with the Revenue Commissioners over a disputed tax bill of €342,321.

This follows the Tax Appeals Commission (TAC) dismissing the fast food operator’s appeal against the Revenue assessment made up of €256,168 in income tax and €86,063 in Vat.

Revenue commenced its inquiry into the fast food operator following a ‘cold call’ visit to the outlet on November 24, 2006, where Revenue personnel conducted an examination of the operator’s till readings.

At the end of the Revenue visit, the fast food operation immediately shut up shop for that night, where it would usually operate until 3am on Friday nights/Saturday mornings.

Revenue found that till reports for the November 24 night amounted to €3,223 and Revenue highlighted that this compared to average weekly declared income for 2004 was €5,425 and €282,150 across that year.

At a hearing, the fast food operator ascribed the high level of sales made on that night to a concert held that evening at the nearby university by a well-known group.

The fast food operator said that the business was “never a great success” due to competition nearby and the establishment of a McDonald's.

He said that the great bulk of the business’s sales involved the selling of takeaway meals, primarily burgers, fish, and chips. The appellant ceased operating his business in 2011.

As part of its investigation into the fast-food operator’s tax affairs for 2005, 2006, 2007, and 2008, Revenue informed the operator that it had discovered sales income for 2007 of €99,998 that had not been included in the business’s accounts for that year or in his tax return.

'Honest error'

In response, the fast food operator said that this was due to an honest error by a clerical officer employed by his former accountants. 

The exclusion of this income had the effect that the appellant’s tax bill fell by over 90% from the preceding year.

In his findings, Appeals Commissioner, Conor O’Higgins, stated that it was not possible to conclude that the non-declaration of €99,998 of sales recorded on till receipts, which was only discovered by Revenue on foot of its audit inquiries, was an inadvertent mistake when the appellant opted not to call any representative from his former accountants.

The fast food operator’s new agent calculated that the additional tax from the non-declaration to be €50,992 and as of the date of the hearing of the appeal the considerable majority of the additional income tax liability calculated as owed had been paid by the operator.

Mr O’Higgins also found the fast food operator’s explanation unconvincing as to why the till reports were at variance with the level of fast food delivery trade.

The fast food operator stated that staff members "had a tendency simply to press the wrong buttons”.

Mr O’Higgins said: "This did not account for why staff members would press different buttons seemingly at random for different transactions, with the effect that particular persons were recorded as having carried out delivery sales."

Dismissing the fast food operator’s appeal, Mr O’Higgins stated that in short, the appellant came with nothing to permit the Commissioner to conclude that the sums assessed by the respondent were wrong.