HMRC leads global probe into major till fraud

A gang suspected of being behind a multi-million pound global fraud, that uses software to hide till sales, has been targeted with the arrest of five people by HM Revenue and Customs (HMRC).

An extensive investigation and intelligence operation, led to an international probe with enforcement action taken in the UK, US and Australia. More than 100 HMRC officers visited 90 businesses across England, Scotland and Wales in a week of coordinated action.

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.

These businesses can now make a voluntary disclosure to correct their records and pay the right tax. HMRC will follow up with those who don’t come forward, which could lead to more severe penalties.

It is suspected the system was designed and sold by a group based in Staffordshire. 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.

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.”

Details of the arrests:

•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.

HMRC has a voluntary disclosure facility and would encourage anyone using ESS to contact them. By making a disclosure now those deliberately misusing their till system could see their financial penalties reduced. Information on making a disclosure can be found on GOV.uk.

Notes to Editors

1. ESS users will either have access to specialist software or will configure their Electronic Point of Sale (EPOS) device in a specific way that allows them to consciously hide true sales and the resulting tax that is due.
2. New powers to tackle ESS in the UK were included in the Finance Act (2022) introduced in February this year.
3. Businesses involved in making, supplying, or promoting Electronic Sales Suppression (ESS) systems now face fines of up to £50,000. Find out more about ESS penalties on GOV.uk.
4. As part of investigations into ESS HMRC can also recover tax evaded and launch investigations that could result in criminal convictions.
5. HMRC has a voluntary disclosure facility and would encourage anyone using, making, supplying, or promoting ESS to contact them. By making a disclosure now those using or benefitting from ESS could see their financial penalties reduced. Information on making a disclosure can be found on GOV.uk.
6. The latest operation follows an investigation earlier this year into ESS. Three people were arrested.
7. HMRC is a founding member of the J5, which includes tax authorities from Australia, US, Canada and the Netherlands. The operational alliance is dedicated to tackling transnational tax crime and money laundering.
8. Anyone with information on ESS is encouraged to report it online.
9. Find out more about HMRC's approach to tax fraud at GOV.uk.
10. Follow HMRC’s Press Office on Twitter @HMRCpressoffice.