HMRC pub stock inspection: what you need to know

Last updated: 26 June 2026

HMRC doesn’t send inspectors to count your beer. They send them to check whether your till and your stock tell the same story—and if the gap between what you say you sold and what’s actually gone from the cellar is hiding undeclared takings.

Most pub licensees assume an HMRC inspection is about finding tax evasion. It isn’t—not primarily. It’s about checking whether your records are trustworthy enough to prove what you’ve declared, and whether cash flow reconciles to physical stock movement.

If you’ve been running on spreadsheets and rough estimates, an inspection will expose that immediately. Licensees who keep disciplined weekly counts and reconcile them against till data pass inspections cleanly. Those who don’t end up facing reassessments, penalties, and interest charges that cost far more than the tax in question.

This article walks you through exactly what HMRC is looking for, how they conduct pub stock inspections, what records you need to have in place, and how to protect yourself before an inspector ever walks through your door.

If you’re serious about running a compliant pub, this matters more than your accountant’s advice—because the records you keep now are what you’ll be defending in six months’ time.

What HMRC Actually Checks During a Pub Stock Inspection

HMRC inspectors arrive with till records and bank deposits already analysed. They’re checking whether your reported takings match your stock depletion.

Here’s what happens in practice. The inspector will:

• Compare your declared turnover against your purchases from suppliers
• Calculate what stock you should have consumed based on till data
• Request your physical stock counts and variance records
• Look for patterns in waste, spillage, and stock adjustments
• Cross-check cash deposits against till readings and invoiced stock

The goal is simple: if you say you sold £50,000 of beer and spirits last quarter, they want to see that £50,000 of stock actually left your cellar. If there’s a gap—especially a consistent gap—they’ll want an explanation for where it went. Theft, over-pouring, poor line cleaning waste, or measurement error all look the same to the till: missing revenue.

Most licensees panic at this point because they’ve never actually counted their stock properly. They’ve estimated. They’ve guessed. They’ve adjusted the numbers to “look right” at year-end. And now they’re facing an inspector who has already done the maths.

Why Stock Accuracy Matters to HMRC

Stock variance is a proxy for hidden takings. If your stock records don’t reconcile to your till, HMRC assumes the missing value was sold but not declared.

Think about it from their perspective. You tell HMRC you sold £100,000 of beer. Your till shows £100,000. But you also ordered £110,000 worth of stock and only have £5,000 left. Where did £5,000 go? Waste, theft, measurement error, or undeclared sales—HMRC doesn’t distinguish. They reassess upward and charge you tax on the missing £5,000 plus interest and penalties.

This is why the spirits behind the bar are the most dangerous blind spot in most pubs. A 25ml measure that pours 32–35ml in a free-pour operation—which still happens in plenty of pubs—costs you 30% margin. Multiply that across 500 pours a week and you’re losing £200–£300 a week in margin. Over a year, that’s £10,000–£15,000 of unexplained variance. HMRC will ask for it back, with interest.

Draught beer is equally exposed. Poor cellar temperature, poorly maintained lines, or simple negligence in checking line waste can hide 2–3% of turnover. Add that to the spirits loss and your “normal” stock variance looks like systematic evasion to an inspector.

The number that actually matters to HMRC is wet GP by line, not a single headline stock figure. They want to see that your spirits, draught, keg, bottled beer, and cider each reconcile sensibly to till data. One line with a 15% variance and no explanation is a red flag. A pattern across multiple lines with no supporting records is a reassessment.

Records You Need to Have Ready

HMRC will ask for the following. If you don’t have them, you’re already in trouble:

• Stock count sheets: Weekly or monthly physical counts, dated and signed. These need to show opening stock, purchases, closing stock, and variance. A tangle of undated spreadsheets or scribbled notes won’t satisfy them.
• Supplier invoices: Every delivery receipt. They’ll cross-check quantities against your purchase ledger.
• Till reconciliations: Daily or weekly till readings matched to cash in bank and stock depletion. If you’ve never done this, HMRC will calculate it for you and reassess.
• Waste logs: Any significant spillage, breakage, or stock write-off. “Normal waste” without evidence is a red flag.
• Temperature and line cleaning records: For cask beer, these prove you’re maintaining cellar standards and that line waste is normal, not negligent.
• Bank statements: Three years minimum. They’ll match deposits to till readings and look for gaps.

The weakness in most pub records is the first one. A proper StockTap pub stock app counts every partial keg and open bottle, dates every entry, and flags variances immediately. Spreadsheets are better than nothing, but they’re also where errors compound and get hidden.

If you’re asked to produce stock records and you pull out three years of inconsistent, undated, handwritten notes—or worse, you can’t find them at all—HMRC will treat that as evidence that you haven’t been monitoring your stock. They’ll then reconstruct your liabilities using their own assumptions, which are never in your favour.

How to Prepare for an HMRC Inspection

You don’t know when HMRC will visit, but you should be ready now. Here’s the sequence:

Immediate (This Week)

Start a proper count routine. Don’t wait for a notice. Weigh open spirit bottles, dip every cask and partial keg, and reconcile against till data the same day. This does three things: it gives you accurate numbers, it creates audit-trail evidence, and it catches problems early.

In my own pub, I was running stock on a tangle of spreadsheets and still losing track of partial kegs and spirit measures. I built a simple count routine around a dipstick and a set of scales, and the weekly variance went from guesswork to a number I could trust within a fortnight. The moment you stop guessing, you stop defending guesses to HMRC.

Collect and Organise (Next 2 Weeks)

Gather every stock count sheet you have. If they’re scattered across notebooks and loose sheets, consolidate them into a single document with consistent dates and format. Missing counts? Document that too—transparency beats gaps.

Pull supplier invoices for the last three years and file them by date. HMRC will ask for these. If you can’t produce them within five minutes, you’re already stressed.

Set up a simple till-to-stock reconciliation sheet. Column one: till reading. Column two: opening stock value. Column three: stock purchases. Column four: closing stock value. Column five: variance. This single document proves you’re monitoring the numbers.

Before the Inspector Arrives

Create a brief summary document: “Stock Variance Analysis, [Year] to [Date]”. Show monthly or quarterly variances by line. If variances are high, explain them. High waste in September? Document it. A line disconnect that cost stock? Show the repair record and the corrected count.

Prepare a brief note on your cellar management: temperatures logged, line cleans scheduled, any major stock write-offs. This proves you’re running to standard.

Brief your staff. If the inspector asks your bar manager about stock counts and they say “We never really count properly,” you’re sunk. Everyone needs to understand that counts are routine.

Common Mistakes That Trigger Deeper Investigation

HMRC inspectors have seen these patterns before. Any of them will lengthen an inspection and increase the risk of reassessment:

• No stock records at all: This is treated as non-compliance. HMRC will reconstruct your liabilities and you’ll have no evidence to defend against it.
• Wildly inconsistent variances: If September shows -2% and October shows +8%, HMRC will ask why. If you can’t explain it, they’ll assume it’s masking sales movements.
• Inability to reconcile till to bank: If your till says £10,000 but your bank deposit says £8,000 and you can’t explain the difference, HMRC will assume the £2,000 was diverted cash.
• High waste with no supporting logs: “The cellar was warm that week, we lost a lot of beer” is not evidence. Temperature logs, line cleaning schedules, and dated waste sheets are.
• Partial invoices or missing supplier data: If you can’t prove what you bought, HMRC will assume you bought more than you’re claiming and sold the difference undeclared.

The pattern that worries HMRC most is this: stock variance improves dramatically after they notify you of an inspection. If your February counts are messy but your March counts are suddenly tight, they’ll assume you’ve been hiding something. Consistency—even if it’s imperfect—is safer than a sudden shift.

How to Protect Yourself Year-Round

The best defence is a discipline you build before you’re inspected. Here’s the framework:

Weekly Counts (Non-Negotiable)

Same day, same time. Dip every cask, weigh every open spirit bottle, count every partial keg. It takes 20 minutes with the right system. No shortcuts. The data goes into a log with the date, your signature, and any notes on waste or adjustments.

Most pubs that move from a messy spreadsheet to a disciplined count claw back 1–2 GP points within a couple of months. That’s £3,000–£5,000 of margin you were leaking and didn’t know about. An HMRC inspection is expensive partly because you lose that margin too.

Daily Till Reconciliation

Till reading versus cash in hand. Write it down. If the till says £500 and the drawer has £480, document the £20 difference. Was it a float error? A refund? A staff member’s personal cash? Get clarity in the moment, not in a spreadsheet six months later.

Monthly Stock Variance Statement

Opening stock (at cost), purchases in, closing stock (at cost), variance (in pounds and percentage). By line. If any line is more than 5% out, investigate it before month-end. If you can’t explain it, document your attempt to understand it. That’s evidence of reasonable care.

Cellar Records

Temperature log, line cleaning schedule, any stock write-offs. A simple A4 sheet taped to the cellar door that you sign off weekly. This is not about perfection. It’s about proving you’re monitoring the space.

Supplier Invoice Filing

Every delivery receipt gets filed in date order. Quarterly, reconcile them to your purchase ledger and bank payments. This takes one hour per quarter. HMRC appreciates this work because it makes their job faster.

The point of all this is not to impress HMRC. It’s to make sure you know whether you’re making money or losing it. A 1% stock loss on wet sales quietly costs a typical pub £3,000–£5,000 a year. Most of that is measurement error and forgotten wastage, not theft. But if you don’t count, you don’t know. And if you don’t know, HMRC will count for you—and they’ll count in their favour.

Using the Right Tools to Stay Compliant

Spreadsheets work. But they’re slow, prone to error, and they don’t timestamp your entries or flag anomalies. A proper pub stock system is an investment, not a luxury.

SmartPubTools built StockTap pub stock app specifically for UK licensees. It records every count with a timestamp, calculates variance automatically, flags lines that are out of tolerance, and stores three years of data. When HMRC asks for records, you pull them from your phone. That’s the difference between a clean inspection and a reassessment.

You don’t need cloud storage or fancy reporting. You need a system that proves you counted, when you counted, and what the numbers were. That’s enough.