Operation ‘Presunto’

• A total of 330 Tax Agency staff, with the support of 45 police officers, have searched 73 companies throughout the sector's production and wholesale chain in 15 autonomous community regions
• The visits, which involve the Agency's IT Audit staff, represent the commencement of inspections on all the companies and on 25 related individuals
• The companies inspected have a declared profit margin that is notably lower than the sector average and, in some cases, sales in cash represent more than 90% of the total
• In some of the partners, the deposit of large quantities of cash into accounts, the possession of assets abroad and the maintenance of high standards of living not justified by their regular incomes have been detected

 

February 19, 2016.- The Tax Agency has started a major operation against black sales that affects the entire production and wholesale trade chain of the meat sector. The so-called operation ‘Presunto’ (‘Alleged’) represents the commencement of inspection activities, by means of entry and search, on a total of 73 companies in 15 Autonomous Community regions of the common area and also the opening of inspections on 25 individuals linked with these companies.

The use of entry and search has required the deployment of a total of 330 staff of the Tax Agency, including staff from the IT Audit Units, with the support of 45 police officers. The searches began last Tuesday and concluded yesterday, now giving way to the subsequent inspection phase.

The activities have been carried out by means of visits by the Tax Inspection department at the headquarters of the tax-paying companies, in order to directly access the actual documentation and accounting or auxiliary information, including the information processing computer systems. The operation, coordinated nationwide, has involved all the Regional Inspection Units of the Tax Agency.

Serious mismatches between declared and real activity

Operation ‘Presunto’ has its origin in the constant evaluation that the Tax Agency carries out in relation to the fiscal behaviour of Spanish economic sectors. In the particular case of the meat sector, retail prices usually reach four or five times those generated at source, which implies very high profits for the slaughter, cutting and meat processing business.

The earning of such profits by meat wholesalers, industrial companies and dealers does not constitute, in itself, any criminal activity whatsoever. However, the Tax Inspectorate has detected that, in the case of some companies of the sector, made up of nearly 3,000 companies, those price differences are not duly reflected in the profits recognised in their Corporation Tax returns.

​In addition to this first visit, other much more specific evidence was subsequently added, in a prior investigation phase, regarding the reality of some businessmen of the meat sector: deposits of large sums in cash into the current accounts of companies and of the businessmen themselves, possession of assets abroad, high standards of living not justified by the partners' regular incomes, etc.

Such circumstances were, in turn, corroborated by inspection activities carried out at various points around the country, which highlighted the existence of undeclared sales, especially in the sub-sector of the wholesale meat trade, where it has been decided to focus the bulk of the entry and search actions of operation ‘Presunto’.

In turn, the fact that the recipients of these sales are sometimes businessmen that pay taxes under the simplified system of VAT (modules), making payments in a large number of cases in cash, notably increases the fiscal risk, in view of the possibility of these operations being concealed.

Prior analysis

In view of the information and documentation available on the meat sector, and within the framework of Tax Monitoring Plan, the Inspection Department of the Tax Agency carried out the pertinent selection analyses and crosschecks in relation to companies dedicated to cattle trading, the slaughter and cutting of cattle in general and the wholesale of meats, meat products and derivatives, eggs, poultry and game.

The study included an analysis in the Corporation Tax returns of the gross sales margins, net margins, cash movements (mostly deposits made into the bank accounts held by the companies) and other indicators of financial capacity observed in the directors, individuals authorised in the companies' accounts or the partners.

Up to 94% of sales in cash

Following this analysis, the Tax Agency confirmed that among all of the companies on which the inspection has now been initiated, which total an annual turnover close to 650 million euros, the operating margins (profits over revenues) were barely 1% on average, well below the sector average. In fact, nine of these companies had been declaring systematic losses.

In turn, these companies managed a volume of cash of around 11% of their total turnover, in several cases the proportion of cash was above 50% and in two particular cases cash even reached 85% and 94% of their turnover, respectively, meaning it could be understood that they practically only sold in cash.

The entry and search actions are of an administrative nature and do not involve arrests. Operation ‘Presunto’ has involved staff from the Tax Agency's Inspection department, including the IT Audit Units coordinated by the Central IT Audit Unit (which falls under the National Fraud Investigation Bureau, or ONIF, of the Inspection Department), and supported by technicians of the Tax Agency's IT Division, as well as the Tax Agency's Customs Surveillance staff. The operation has also involved the collaboration of Mossos de Esquadra in Cataluña, and the Police and Guardia Civil in the rest of the country.