The Treasury warns by letter to businessmen who earn less than their competition

These are restaurants, butchers or hairdressers who earn less than their competitors.

For the third consecutive year, in 2019, the Tax Agency has launched, since May, a plan to send massive letters to small businesses, with direct sales to the public, in order to attack the underground economy. This new wave of the 'VAT Plan' has been launched coinciding with the income tax declaration campaign, although in reality it is focused on revealing fraud in value added tax and corporation tax. According to sources from the Tax Agency, the letters are addressed exclusively to legal entities.

The AEAT refuses to specify which sectors are receiving these letters this year, nor in previous ones, "so as not to criminalize any of them," he points out. However, it is known that in addition to hairdressers, butcher shops and restaurants are sectors that are being the subject of these letters.

In 2017, this sending of letters was followed by making 14,500 visits, managing to spontaneously increase the VAT income from these establishments by 10% in the following quarters until reaching 256 million, according to data from the AEAT.

The Agency informs them of what their competition receives

The Tax Agency is informing them of what its jurisdiction earns because it suspects that discrepancies with the sector may hide fraud against the Treasury. In the letters, which are attached to this information, they are warned: "If the inconsistencies persist, the risk they represent may give rise to the necessary procedures."

The Treasury suspects that when a businessman brings in much less cash than his competitors, what he is really doing is not declaring that income.

Therefore, for the first time it is informing entrepreneurs who sell directly to the public (hairdressers, restaurants, butcher shops or nightclubs, among others) of the data on the sectors in which they work. The letters do not require a response and, according to sources from the Tax Agency, their only objective is to tell businesspeople "you are on their radar."

The letters seek to get those who have hidden cash to regularize voluntarily as part of a three-step plan: sending letters, in-person visits to businesses and formal inspections.

That warning began to be sent in early May. The treasury has not yet evaluated whether voluntary regularizations with these warnings work but is confident that they do.

Our experts in labor and tax matters can help you regularize any issue with the Tax Agency and resolve any doubts that may arise in the management of your business. Ask us.