Companies suspected of using illegal software to cheat the tax man will soon have “nowhere to hide” as private sector experts have been roped in to conduct in-depth forensic audits, the Times of Malta has learnt.
VAT Department sources, who have been involved in months-long undercover investigations into suspected tax dodgers, said they had partnered with the experts after raids came up dry.
This newspaper reported last month that unscrupulous business operators were using software to delete records of sales in a scam that is believed to be costing the public coffers millions of euros in unpaid VAT.
READ: Undercover agents being used to catch VAT tax cheats
Some businesses are known to be using a type of software that allows them to manipulate sales records through the digital point of sale system. This newspaper has also reported that covert operations were ordered at companies suspected of erasing sales through the software adapted to tamper with digital cash registers.
This approach was reaping fruit and sources close to the investigators yesterday confirmed that a restaurant had been caught in an undercover operation.
The sources said the business owner admitted tampering with records to under-declare sales. He faces a €10,000 fine and a review of his sales records that could see him paying several thousands more.
A number of other companies are expected to face similar fines and audits in the coming weeks after investigators caught other tax dodgers red-handed.
But not all investigations have been as successful.
“One guy admitted it, but many don’t and it can be very difficult to pin them down,” an investigator, who spoke to this newspaper on condition of anonymity, said. That was why the forensic experts were needed, he added.
“This software is a slippery fish. You know the company is using it but there is no trace of it on the system,” he noted.
Forensic audits, however, would identify whether the software had ever been used, meaning companies no had “nowhere to hide”.
A career VAT investigator told the Times of Malta the suspect software was widely used and particularly useful for business owners whose staff could not simply be told not to register all sales.
“In small, family-run businesses it’s easy to not declare sales. You have your wife or son at the cash and they don’t punch in a sale,” he said. In larger enterprises, however, this was practically impossible to do.
“They can’t instruct staff not to register a sale for they’ll get caught in no time. That is where this technology comes in. It allows for the same under-declaring we see in smaller businesses to be done by big operators too – resulting in huge illegal ‘savings’,” the sources said.