Theft of Goods by An Employee

I recently discovered that my employee has been selling expensive stock items for cash and not putting this through the till. As the money gone has never been recorded, do I have to account for VAT on it?

1st October 2009

You are liable to account for output VAT if a supply has been made.  If the goods had been stolen, then as no sale was made, there would be no liability for the output tax.  As the goods were sold from your business premises, it is not a theft of stock, but would be deemed to be a theft of cash. Unfortunately you will therefore be liable for the output tax.

If the goods had been sold at below the marked price and the monies placed in the till, then output VAT would have been due on this lower amount.  If you could satisfy HM Revenue & Customs that the customer and employee colluded to deprive you of the goods, then HM Revenue & Customs would accept that there was a theft of goods not cash and thus no output tax would be due.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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