A car wash is among businesses that have fallen foul of tax rules after a clampdown by HM Revenue & Customs (HMRC) in Essex on businesses and people who try to stay outside the tax system.

An HMRC Hidden Economy Team swooped on businesses in Southend on May 15 and uncovered a car wash which had failed to register for tax and is estimated to owe over £250,000, including £120,000 in Income Tax and National Insurance for its employees and £78,000 in VAT.

In addition a fast food premises was found to be owing more than £30,000 in respect of its employees’ PAYE contributions and potential VAT arrears of £45,000.

Caroline Benbrook from HMRC’s Hidden Economy Team said: “The vast majority of businesses pay their taxes in full and on time. But there is a small minority who blatantly flout the rules and think that they can operate outside of the system. This not only deprives public services of much needed funds but also gives them an unfair edge over honest businesses who do the right thing.

“Business owners who were caught out during our activities in Essex will have to pay substantial penalties and interest on top of the money they owe to HMRC. We will continue to carry out regular unscheduled checks to flush out those who are not paying their fair share to protect money for public services and give a level playing field for honest local businesses.

“If you know of anyone trading or working and not paying their dues, please tell us using our 24 hour hotline on 0800 595000. Alternatively you can make a report by going to our website, at www.hmrc.gov.uk/hotline.”