HMRC’s crackdown on shops suspected of tax fraud and illegal activity

With HMRC pledging to carry out more than 30,000 interventions this year to tackle tax fraud and illegal activity, some so called ‘dodgy shops’ (in HMRC’s words) are apparently now in HMRC’s crosshair.

Between 2024 to 2025, the UK’s estimated tax gap sat at £59.2 billion, up £6.4 billion on the previous year, according to HMRC.

HMRC has identified high street tax evasion as one of the contributors to the tax gap and is now making it easier for the public to report suspected fraud and criminal activity.

Dan Tomlinson, Exchequer Secretary to the Treasury, said: “Owners of dodgy shops that are evading tax: we are coming for you.”

What are the suspected ‘dodgy shops?’

With the UK’s high streets becoming emblematic of economic decline, the increasingly common vape shops, American candy stores and barbers have raised questions over their legitimacy.

These concerns have prompted Andy Burnham to crack down on illicit activity to make our high streets the “symbols of Britain’s renaissance.”

Lord Bichard, Chair, National Trading Standards, said: “criminal networks undercut honest businesses, draw money away from local economies and expose consumers to unregulated and potentially unsafe products.”

“They are also often linked to wider offending, including money laundering, exploitation, and violence,” he added.

The Home Office has launched a new £30 million High Street Organised Crime Unit, integrating HMRC with other Government departments.

What could HMRC’s crackdown mean for businesses?

Businesses that HMRC views as high risk of tax avoidance may face greater scrutiny, including requests for information, tax enquiries and compliance checks.

While HMRC normally uses its own data, such as discrepancies in tax reporting, investigations may increasingly be prompted by intelligence gathering and anonymous tip offs.

Some investigations may also involve unannounced visits, seizures of goods or wider organised crime investigations where HMRC suspects serious non-compliance.

While a HMRC investigation doesn’t automatically imply wrongdoing, businesses will need to ensure their record keeping is robust and information is accessible to prepare.

HMRC’s actions may well catch some who are committing tax fraud, but by casting the net wide HMRC may also put perfectly innocent parties under the spotlight.

Either way, an HMRC enquiry should be treated with proper care and professional attention.

This is especially true for cash intensive sectors, like vape shops or barbers, as HMRC is wary of businesses that may be associated with hidden income.

Speak to a specialist

Receiving notices of a HMRC enquiry or compliance check can be daunting, especially where there are allegations of tax fraud and illegal activity.

Every HMRC intervention requires a considered response to protect your business and unfair penalties and assessments are challenged.

As HMRC investigations can be triggered with little or no warning, seeking proactive advice can help ensure your records and response strategy is prepared for any HMRC contact.

You can get in touch with our friendly and experienced team on: 0203 675 8122 or email info@intaxltd.com.

inTAX is a specialist tax disputes firm. We deal with disclosures, investigations, and tax enquiries of all descriptions, including COP9, fraud investigations, VAT fraud, tax avoidance, let property disclosures and tribunal appeals. However, we don’t just deal with the serious end of tax investigations; we are also happy to handle smaller enquiries, disputes and problems that can be equally as worrying for our clients.