Thousands of UK businesses 'use illegal software to dodge tax - gang behind huge global fraud'
THOUSANDS of UK businesses are suspected of using an illegal software to avoid paying tax on till sales through card and phone payments.
A British gang is suspected of being behind a multi-million pound global fraud, that uses the software to hide till sales.
It is believed the system was designed by a group based in Staffordshire suspected of selling the system to businesses in the US and Australia.
An extensive investigation led to an international probe with enforcement action taken in all three countries last week.
More than 100 HMRC officers visited 90 businesses across England, Scotland and Wales.
Five people suspected of involvement were arrested by HMRC in Staffordshire, Warwickshire and Luton during the operation.
An HMRC spokesman said: "The businesses 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."
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.
Businesses using the system in the UK are now being offered an amnesty to make a voluntary disclosure to correct their records and pay the right tax or face "severe penalties."
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 ground-breaking operational alliance - The Joint Chiefs of Global Tax Enforcement (J5).
The latest operation follows a 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.
“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.”
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.