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The Tax Agency searches thirty establishments that use programs to conceal sales

Operation ‘Scarpe’

  • Companies in the footwear and textile sector may have hidden up to 30% of their real turnover
  • A 'dual-use software' allowed each establishment to alter its accounting records on a daily basis, reducing the number and amount of transactions recorded.
  • Fraudulent practices were concentrated in cash sales, with card transactions accounting for up to 95% of all declared sales.
  • The operation, carried out by the Inspection Department, involved the IT Audit Unit of the ONIF and nine Inspection units, with the participation of 107 officials.

 

June 13, 2014.- The Tax Agency has completed a large-scale operation in relation to establishments in the footwear and textile sector that used computer programs to conceal a significant portion of their sales, which could reach up to 30% of actual turnover. The companies under investigation concentrated their fraudulent practices on cash transactions, which they partially removed from their accounts on a daily basis and at their own discretion, in order to significantly reduce their income for the purposes of corporate tax.

The operation, carried out yesterday simultaneously in nine autonomous communities (Andalusia, Aragon, Balearic Islands, Cantabria, Castile and Leon, Catalonia, La Rioja, Madrid and the Valencian Community) within the framework of Operation Scarpe, has led to the search of the computer systems existing in 29 establishments belonging to 11 companies.

By means of this direct access to the computer equipment of the registered establishments, it is hoped to obtain the real data on the activity and sales of the companies in recent years in order to determine the amounts defrauded thanks to the use of computer programs that allowed double accounting with partial concealment of the operations.

 

How 'dual-use software' works

The Inspection Department had already analyzed programs with similar characteristics that produced this accounting change. The software used, known as 'dual-use', allowed the actual billing figures to be modified to record a lower number of sales and a lower amount in the accounting records. At the end of each day, establishments had a breakdown of declared and undeclared cash sales.

The amounts declared to the Tax Agency were significantly lower than those that corresponded to the actual turnover of these companies, to the point that some of them declared losses in some years, or very low profit margins, while the annual turnover also declared was between one million and 10 million euros.

Likewise, and according to the investigations carried out, it has been possible to determine the disproportion between the operations with credit and debit cards that these companies accounted for, even reaching 95% of the declared sales, and those carried out in cash, a circumstance motivated by the concentration of all the concealment of activity in cash collections. It has also been established that both the companies and their partners had comfortable financial situations and high sums in bank accounts.

The actions, directed by the Tax and Financial Inspection Department of the Tax Agency, have included the intervention of the Central Computer Audit Unit of the National Fraud Investigation Office (ONIF), and the Inspection units of nine delegations of the Agency. In total, 107 officials from the Tax Agency participated in the operation.

 

Fight against black market sales

Operation 'Scarpe' ( shoes in Italian) is part of the guidelines of the Tax Control Plan designed by the Tax Agency for 2014, which considers as a priority, in its fight against the underground economy, actions against the use of computer means to conceal economic activity and the performance of face-to-face actions with the support of personnel specialized in computer auditing techniques, in order to detect situations of double accounting or partial concealment of activity.

Specifically, the software used to mask or conceal sales transactions generates a significant level of tax non-compliance and the black economy. Although the Tax Agency is trying to regularise these behaviours, the possibility now arises of seeking a more global solution to the problem, within the framework of a future control and information plan that will allow undeclared sales to be restricted as much as possible.