Portugal - Treasury under fire for retail software crisis

Portugal’s Tax Authority has mounted a national operation involving the dedicated use of 356 Inland Revenue inspectors and 200 police officers.

Tuesday’s operation concentrated on shops when looking for evidence of the use of ‘fraudulent billing systems.’ The new style tills that are linked to the Tax Authority have had a software embarrassment as it seems that many canny traders have found a way to thwart the supposedly secure computerised reporting system.

In total 178 businesses were inspected, mostly retail shops, restaurants, hairdressers and jewelry shops.

The officers have identified 108 businesses that allegedly had illegally used the billing programme, among 'other offenses.'

With an eye for the bottom line the Tax Authority made no mention of the folly of authorising and certifying a computer programme that a man in a shoe shop could circumvent, but instead announced with a degree of satisfaction that the total amount of fines could be 'as much as €3.1 million.'

There were suspicions as far back as September 2013 that the reporting system was not robust, and in the past two months the Tax Authority decided there was enough evidence to pounce, referring to this delay as a period of "complex investigation and collection of evidence."

The Secretary of State for Fiscal Affairs, Paul Nuncio, suspended the license of the billing software on 24 April and, with the lound sound of a stable door slamming, started criminal proceedings against the company that had been selling the software.

Portugal’s Commerce and Trade Association said that the tax authorities really should take some of the blame and at least give shops, cafés and restaurants a period within which alternative software could be purchased, installed and staf trained in its use.

By making the current invoicing software illegal, Nuncio has caused havoc in the retail sector as companies trading over €100,000 a year must by law have an approved system installed, now tens of thousands of companies are in theory banned from trading until they have had a software changeover in a busy period in which two weeks have but 4 working days in each.

There are additional costs involved in training staff as well as buying a new software package, and all due to inadequate controls by the Tax Authority keen to launch a system that clearly had not been fully field-tested.

Nuncio is not having a good time. First, this abrupt action over a major software error which he has been aware of for months and secondly, the inability of the Finanças web portal to cope with the number of customers wishing to file their tax returns online before tonight’s deadline.

Perhaps not yet the time for Nuncio to be looking through the job ads, but certainly time for him to go a bit easier on those affected by the collateral damage of his decisions.

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