Electronic sales suppression is HMRC's name for manipulating till records to hide takings. Since 24 February 2022 merely possessing an ESS tool carries a penalty of up to £1,000, with up to £75 a day for continued possession, and making, supplying or promoting one carries up to £50,000. There is a disclosure facility, and using it reduces what you pay.
What ESS actually is
HMRC defines it as where a business "deliberately manipulates its electronic sales records in order to hide or reduce the value of individual transactions". Two routes are caught.
The first is purpose-built software that "deliberately excludes certain products or types of transactions from tax audit trail reports". The second is misuse of a legitimate system — HMRC's own example is "using a training mode in a till to exclude genuine keyed-in sales". Suppression can happen at the point of sale or afterwards.
An ESS tool is defined in Finance Act 2022 Schedule 14 as software, computer code script or hardware "capable of suppressing relevant electronic sales records where suppressing such records is a main function".
Note how wide "possession" is: it covers owning, accessing, or attempting to access an ESS tool — even without any actual use. A business that acquired a till system with a suppression feature it has never touched is still in possession.
The penalties
Schedule 14 creates separate liabilities for making or modifying a tool, supplying one, and promoting one. Promotion bites "on each occasion" it occurs, and there is a defence for a supplier who was unaware of the tool's nature. The penalty for any of the three is up to £50,000, at the amount an authorised HMRC officer considers appropriate.
Possession is dealt with separately, and the mechanics matter:
- First occasion. HMRC gives notice, and the business has 30 days to remove the tool to avoid a penalty. Written confirmation of removal or a system inspection is accepted;
- If the tool is not removed — a penalty of up to £1,000, then a further penalty of up to £75 for each subsequent day of continued possession, running from the day after the £1,000 is assessed and capped cumulatively at £50,000;
- Second or subsequent occasion within five years of a prior assessment — no 30-day window. HMRC charges up to £1,000 immediately plus the daily penalty. Beyond five years, the removal opportunity returns.
Penalty amounts depend on compliance efforts, and a special reduction is available. Assessment must be made within two years of HMRC having sufficient evidence of liability; payment is due within 30 days of notification, and there is a 30-day right of appeal to the tribunal.
The information powers
Schedule 14 applies the Schedule 36 information notice regime for ESS purposes, allowing HMRC to require information from a "relevant person" for a "relevant purpose" — including understanding how the tools operate and identifying who is liable.
One feature is worth flagging to anyone advising a till software business. For identity-unknown notices, "the requirement to seek tribunal approval to issue a notice under paragraph 5 of Schedule 36 is removed" — internally HMRC needs senior authorisation instead. That is a meaningfully lower bar than elsewhere in the information powers, and the ordinary Schedule 36 penalties apply for non-compliance.
The disclosure facility
HMRC operates a route called "Make a disclosure about misusing your till system", published in March 2024. It can be used by an individual, a nominated partner, an officer of a company, or an agent.
What you need to supply: name, date of birth, National Insurance number, business name and address, VAT reference, the declared and undeclared sales figures for each tax year, and the dates over which the till system was misused. On submission you get a disclosure reference number on screen and a confirmation email, and HMRC then raises a charge and tells you how to pay.
The incentive is stated plainly by HMRC: "By making this disclosure now, you could reduce the amount of penalties you receive", and "You do not have to wait for HMRC to contact you". Failure to disclose "could lead to more severe penalties", and if you do not come forward in time HMRC "may open an investigation into what your business owes".
One point of precision, because it is easy to overstate: there is no statutory ESS notification deadline. The disclosure facility carries no published cut-off date. The only 30-day periods in this regime are the removal window, the payment window and the appeal window.
The penalties that sit on top
The ESS penalty is not the main exposure. Suppressed sales mean understated VAT and understated profits, so the ordinary regimes follow — and the maximum penalty for an inaccuracy or a failure to notify is 100% of the tax, higher where offshore transfers are involved, with daily interest on the unpaid tax.
HMRC's own factsheet says that beyond the ESS penalty "you may face additional penalties for filing inaccurate returns or failing to notify tax obligations", and its manual notes supplementary penalties for failure to register.
And there is a criminal dimension. HMRC positions ESS alongside Code of Practice 9, the Contractual Disclosure Facility and its criminal investigation policy — which is to say it treats suppression as potential tax fraud rather than as a compliance slip. Schedule 14 itself creates civil penalties, not new criminal offences, but the conduct it describes can be prosecuted under the general law.
What businesses and advisers should do
Three things. If you operate an EPOS system, establish what its audit trail and training-mode functions actually do, and whether any feature could suppress records — this is a question for the supplier, in writing. Possession is the offence, and ignorance of a feature is not the defence people assume.
If takings have been suppressed, the disclosure facility is materially better than waiting. The penalty reduction is real, and the alternative is an investigation in which behaviour is characterised as deliberate.
And if you supply or resell till software, the making, supplying and promoting penalties reach up to £50,000 per occasion, with promotion assessed each time it happens. The supplier defence depends on not having known the tool's nature, which is an argument that needs contemporaneous evidence rather than hindsight. Our guides to voluntary disclosure and what triggers an HMRC investigation cover the wider position.
Acumon handles disclosures, enquiries and the records behind them through HMRC investigation, tax dispute resolution and forensic accounting work. If your till system has a training mode nobody has audited, that is the first thing to establish.