HM Revenue and Customs (HMRC) have announced a probe into under-recording of takings and cash tips at restaurants of all sorts, commenting that payments made in cash for sales and tips make tax evasion a high risk.

The move forms part of HMRC’s plan to raise an extra £7 billion from tax evaders.

HMRC officers will conduct a series of clandestine visits to restaurants and take-away businesses which will then be followed up by checks to ensure that the payments made are accounted for correctly. When evasion is suspected, a ‘margins exercise’ is often conducted. This compares the declared takings with the takings HMRC think should have been recorded based on the purchases and assumed portion sizes.