Impact assessment

Electronic Sales Suppression screening equality impact assessment

Published 16 October 2023

Project objectives

Electronic Sales Suppression (ESS) occurs when a business deliberately manipulates electronic sales records in order to hide or reduce the value of individual transactions. This action is undertaken to reduce the recorded turnover of the business and the corresponding tax liabilities, while providing what appears to be a credible and compliant audit trail.

The government announced the introduction of powers to make the possession, manufacture, supply, and promotion of ESS software and hardware an offence. There are also ESS-specific information powers to allow HMRC investigators to identify developers and suppliers in the ESS supply chain and access software developers’ source code. The measure is a key part of HMRC’s Tackling The Tax Gap workstream. The powers support fair competition by helping to ensure that all businesses meet their true tax liabilities. 

This screening Equality Impact Assessment (sEQIA) is in relation to customer groups impacted by the operational delivery of ESS.

Customer groups affected

The customer groups impacted by these changes are:

• ESS possessors
• ESS enablers, including:
  • makers
  • suppliers
  • promoters

What customers will need to do

What customers need to do as a result of the change

The law gives HMRC ‘information powers’ that allow us to ask for certain information and/or documents. To do this, we issue an ‘information notice’. This is a document that legally requires a person to give us certain information and/or documents.

Schedule 36 to the Finance Act 2008 allows us to issue an information notice and is extended to the use of ESS tools by Schedule 14 to the Finance Act 2022. Schedule 14 to the Finance Act 2022 allows us to issue an information notice for ESS. This means we can ask for certain information that only applies to ESS.

If we send a customer an information notice, they must give us the information and/or documents that we ask for, if they do not we can charge penalties. 

We can charge an ESS penalty if a customer: 

• is ‘in possession’ of an ESS tool
• has made, supplied, or promoted an ESS tool

If there’s something that the customer does not agree with they may request an appeal. If agreed, they may appeal by: 

• sending new information to the officer dealing with the check and asking them to look at it
• having their case reviewed by an HMRC officer who has not been involved in the matter
• arranging for an independent tribunal to hear the appeal and decide the matter

Customers can avoid a future penalty by: 

• not installing an ESS tool to any device owned at any time
• not changing or configuring settings within electronic point of sale (EPOS) system that creates or activates an ESS tool
• not accessing, or attempting to access, an ESS tool that is held on a device owned by someone else
• not using functions available on EPOS system to reduce sales unless there is a legitimate reason to do so

How customers will access this service

Customer are notified via the ESST1(form) that they may be in possession of an ESS tool and they should remove it if so. Factsheet CC/FS68, ‘Electronic Sales Suppression’ will also be issued alongside any ESS letter, providing the customer with further information.

HMRC will write to the customer to inform them of the penalty raise, alongside details on how to pay penalty amounts. Further information is also available at GOV.uk

Customers are asked to contact HMRC via the contact details provided on the letter, if they have any questions or wish to appeal the decision. A customer must write to HMRC within 30 days of the letter issue date, telling us why they disagree with the letter. Further information about how to appeal the decision can be found in factsheet HMRC1 ‘HM Revenue and Customs decisions – what to do if you disagree’. You can get a copy from GOV.UK or you can phone our order line on 0300 200 3610.

When customers need to do this

Timeframes are clearly stipulated within each letter, usually action is required within 30 days of the letter issue.

Assessing the impact

We assessed the impact on those in protected characteristic groups in line with the Equality Act and Public Sector Equality Duty and section 75 of the Northern Ireland Act. 

There is no evidence to suggest any specific impacts on customers within the following protected characteristic groups:

• racial groups
• sex
• gender reassignment
• sexual orientation
• pregnancy and maternity
• marriage and civil partnership
• people with dependants and those without (carers)
• political opinion (in Northern Ireland only)

Disabled

Impact on customers

Some customers, due to their disability, may have difficulty engaging with the changes delivered as part of ESS.  This includes understanding penalty notices and following penalty payment instructions. Some customers may need additional support and time to comply. 

Proposed mitigation

Customers are required to respond to ESS letters in writing to the address given on the letter. If customers require further support, they are able to contact HMRC using the details provided on the letter. There is further information available on GOV.UK.

Customers will receive an ESS2 penalty letter if applicable, where they are advised to pay penalty fees to HMRC digitally with further information on how to do so available on GOV.UK by searching ‘penalties and enquiry settlements. If they are unable to pay digitally, they are able to pay using a cheque, with the address and reference given on the letter.  If customers are unable to pay, they are able to contact HMRC to discuss their circumstances or contacting us via our Payment Helpline. This provides the customer with a variety of options that will meet their specific needs.

Existing guidance/forms can be requested in alternative accessible formats. Formats include Braille, audio, and large print.

HMRC offers an Extra Support Service which can be accessed by those customers who cannot, for whatever reason, interact with HMRC digitally or who need additional support and reassurance.

Customers also have the option of appointing someone else to deal with HMRC on their behalf, such as an agent. Once a trader registers a third party to act on their behalf, correspondence will be issued to the third party, unless stated on HMRC letter than a copy will also be sent to the customer.

All GOV.UK web content including guidance adheres to national and international standards such as W3C.

Age

Impact on customers

Insight suggests varying levels of digital capability and confidence across differing age groups, with some groups being more likely to contact HMRC for further support. 

Proposed mitigation

Customers can contact HMRC via the contact details provided on the letter and will be supported by a Compliance Officer if they have extra support needs.

Customers also have the option of appointing someone else to deal with HMRC on their behalf, such as an agent. Once registered, correspondence will be issued to the registered third party. 

Religion or belief

Impact on customers

The intrinsic values of some religions can potentially limit the times of day or week when customers in this group can interact with HMRC services.

Some religious groups follow rules related to computer use that may affect access to digital services.

Proposed mitigation

An individual will can appoint an intermediary to submit information on their behalf if their belief restricts them from doing so. Once registered, correspondence will be issued to the registered third party. 

People who use different languages (Including Welsh Language and British Sign Language)

Impact on customers

There may be some impacts for customer whose first language is not English or Welsh. 

Proposed mitigation

For any customers whose first language is not English, alternative arrangements can be made for friends and family to interpret or speak on a customer’s behalf. HMRC staff can access interpretation service via ‘Big Word’ to support customers. British Sign Language services can be provided via the Extra Support Services available to customers. HMRC offer a Welsh language service to customers, where proportionate, in line with HMRC protocol.

Opportunities to promote equalities

We have considered opportunities to promote equalities and good relations between people in each of the protected characteristic groups and those outside of that group.

No such opportunities have been identified with this change.

A full Equality Impact Assessment is not recommended.