In the UK, a gang suspected of being behind a multimillion-pound global fraud that uses software to hide till sales was targeted with the arrest of five people by HM Revenue and Customs (HMRC).
The businesses targeted over the week are suspected of using an Electronic Sales Suppression (ESS) tool to manipulate their takings to evade paying tax and HMRC has used data to identify thousands of potential users.
These businesses can now make a voluntary disclosure to correct their records and pay the right tax. HMRC will follow up with those who don’t come forward, which could lead to more severe penalties.
It is suspected the system was designed and sold by a group based in Staffordshire. Sales are put through the till as normal, but the system allows records to be manipulated by deleting sales and routing card payments through an offshore bank.
The group is also suspected of selling the system to businesses in the US and Australia.
Operations were carried out in Australia and the US during a week of action co-ordinated by the groundbreaking operational alliance — The Joint Chiefs of Global Tax Enforcement (J5).
The latest operation followed an HMRC investigation in May into a different ESS system. Three people were arrested and investigations are ongoing.
HMRC’s director of fraud investigation, Simon York, said this was a highly sophisticated, truly global attack on the UK and our international partners.
“The group behind this activity is suspected of enabling thousands of businesses to evade tax in what is a large-scale, technologically enabled fraud,” he said.
“HMRC’s ground-breaking response, with internationally co-ordinated action, marks a significant moment in our efforts to close the net on those we suspect of designing, supplying and using electronic sales suppression software.
“Most businesses pay the tax that they owe. HMRC is on the side of this honest majority and our action helps to ensure they are not being under-cut by tax-evading competitors.
“This is just the beginning of our work in this area, and we already have other suspected suppliers in our sights. We are urging all users of these types of systems to come to us, before we come to them.”
Details of the arrests:
- A 35-year-old man from Newcastle-Under-Lyme, Staffordshire, was arrested on suspicion of various tax fraud and money laundering offences.
- A 49-year-old man from Warwick, Warwickshire, was arrested on suspicion of various tax fraud and money laundering offences.
- A 38-year-old man from Stoke-on-Trent, Staffordshire, was arrested on suspicion of various tax fraud and money laundering offences.
- A 36-year-old man from Stoke-on-Trent, Staffordshire, was arrested on suspicion of various tax fraud and money laundering offences.
- A 56-year-old woman was arrested in Luton on suspicion of various tax fraud and money laundering offences.
- Nine premises were searched across the Midlands as part of the criminal investigation.
HMRC has a voluntary disclosure facility and would encourage anyone using ESS to contact them. By making a disclosure now those deliberately misusing their till system could see their financial penalties reduced. Information on making a disclosure can be found on GOV.UK
