The Australian Taxation Office (ATO) announced that 35 properties across Australia were searched as part of an international operation against businesses suspected of utilising technology to deliberately understate their sales and dodge taxes.
The national raids were undertaken by the Australian Taxation Office (ATO) supported by the Australian Federal Police (AFP) in Victoria, New South Wales, Queensland, Western Australia, and Tasmania.
Labled Operation Flutter, a coordinated global probe by the Joint Chiefs of Global Tax Enforcement (J5), swooped into action in a national crackdown on businesses suspected of supplying and using illegal electronic sales suppression tools (ESST) or software to avoid paying tax.
In a combined effort, the Australian Tax Office and the Australian Federal Police cooperated with the United States and the United Kingdom to orchestrate the international sweep and seizure.
ESST gives businesses the ability to erase commercial operations completely, lower sales figures, or distort transactions in various ways.
Investigators have gathered a significant amount of information. However, at this stage of the investigation no charges have been laid.
ATO Deputy Commissioner John Ford says these tools allowed retailers to keep a separate set of books and launder the money in one transaction.
“A point-of-sale system with ESST enabled may permanently delete transactions, re-sequence transactions, reduce sales values, misrepresent transactions, and consequently, produce fake records.”
“So what might happen is that the customer orders a $60 steak and a $100 bottle of wine and the ESS tool then puts it through the point-of-sale system as a $10 bowl of chips and a $4 bottle of soft drink,” said Ford
“We’ve seen ESST appear in hardware connected to the point of sales system, cloud-based software and capability built directly into the software,” he said
Globally, the coordinated action by the ATO, IRS and HMRC involved the collection of evidence, intelligence gathering, search warrants, notices to produce, interviews, taxation assessments, and subpoenas.
“Through the international collaboration, we have access to a global network of intelligence analysts and investigators – it’s only a matter of time before you’re caught by us, or one of our partners,” Mr Ford said.
“We’ve seen ESSTs appear in hardware connected to the point of sales system, cloud-based software, and capability built directly into the software.”
Mr Ford clarified that the vast majority of businesses do the right thing and do not use ESS tools or software.
The ATO is encouraging other businesses using ESST to come forward voluntarily rather than hope they won’t be discovered by ATO investigators.
