Sandwich bar tax swindlers caught... because HMRC staff are customers

Note well: next time you're trying to claim that your business doesn't make a profit, make sure that there aren't HMRC staff amongst your best customers.

It's a mistake that's caused John Baker to go to jail for two years and brought his partner Tracey Walmsley and their daughter Amy Baker suspended sentences.

Amy, 27, ran Amy's Sandwich Bar in Hull, after her father bought the business in 2006. But when in 2011 HMRC asked her why she hadn't declared any income from the cafe, she made a big mistake, by telling the tax inspectors that she'd only been trading since 2010.

And, as prosecutor David Dixon explained in court, "The difficulty for her was the local revenue staff had an office around the corner and they had been using the shop before that date."

An investigation revealed that annual sales of £71,000 and gross annual profit of £44,973 hadn't been recorded properly. Documents were also found relating to John's Sandwich Bar, owned by 62-year-old John Baker, which revealed that he hadn't paid tax for almost 20 years.

And in the meantime, the family had lived well, owning a Mercedes E Class and Mercedes SLK coupe, and taking regular luxury holidays abroad.

Sentencing, Judge Michael Mettyear told Mr Baker: "You were at the forefront of this cheat. It was longstanding, it was deliberate, you knew exactly what you were doing, and your family became involved."

To his daughter, he said: "You told a number of lies but you're young and I understand it may be difficult for a person of your age not to go along with what has happened."

And Walmsley, 50, was told she should have known better.

Despite the fact that the family is believed to have defrauded the taxpayer by as much as £1 million, the family has little left, according to the Hull Daily Mail, and will now have to sell their home.

Over the last couple of years, HMRC has been cracking down on small businesses that it suspects aren't declaring their full income, with special task forces focusing on groups as diverse as plumbers and health professionals.

As Baker's lawyer told the court, "detection was inevitable": but even those businesses that don't number HMRC staff amongst their lunchtime customers should be wary of cooking the books.

Read more on AOL Money:
Taxman cracks down on health professionals

HMRC crackdown on tax-dodging southerners

Accountants warn on new HMRC money-grabbing powers