The use of “electronic sales suppression software,” which are programmes that misrepresent point-of-sale data to assist businesses in avoiding paying taxes on their actual revenue, has been the subject of a joint investigation by tax officials from Australia, Canada, France, the UK, and the USA
The Joint Chiefs of Global Tax Enforcement (also known as the J5) announced on Friday that the investigation “resulted in the arrest of five individuals in the United Kingdom who are allegedly responsible for designing and marketing electronic sales suppression devices abroad.”
Those allegedly responsible started to export their wares during the COVID-19 pandemic.
“These dodgy sales suppression tools allow retailers to keep a separate set of books and launder the money in one transaction,” explained J5 chief and Australian Taxation Office deputy commissioner John Ford.
“They conceal and transfer this income anonymously, sometimes offshore.”
“So what might happen is that the customer orders a $60 steak and a $100 bottle of wine,” Ford explained, at which point the software changes the transaction so it is recorded in the point of sale system as “a $10 bowl of chips and a $4 bottle of soft drink.”
Customers, who continue to pay the entire amount, are unaware of such pranks. However, the shop is left with $14 in recorded revenue and $146 to clean up.
According to the J5’s statement regarding its investigation, ESS was created in the UK and afterwards exported by its creators to the USA and other countries.
“This was a highly sophisticated, truly global attack on the international tax system,” said Simon York, director of His Majesty’s Revenue & Customs (HMRC) Fraud Investigation Service. “The group behind this activity is suspected of enabling thousands of businesses to evade tax in what is a large scale, technologically enabled fraud.”
York added: “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.”
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