Targeting household cash registers: Tax authorities launch nationwide series of inspections

The cash register is a real time bomb for the Hungarian SME sector. In recent decades, many companies have used this item as a “parking lot” to avoid unpaid wages, private expenses or dividend tax. However, in the age of digitalized data services, the closing cash register balance is no longer an isolated piece of data for the Tax Authority. It can be compared to sales revenue, bank turnover, dividend payments, member loans. If these numbers do not add up economically, the cash register immediately becomes a risk signal.

According to the news, the tax authority is launching a targeted, algorithm-based inspection program to check the cash registers of small and medium-sized enterprises. According to the expert, where there are tens of millions on paper, but the coffers are empty, managers can expect fines of millions and criminal proceedings.

Artificial intelligence in the hands of auditors

“Many people believe that auditing is a kind of Russian roulette: either it’s their turn or it’s not. But the Tax Authority is now specifically looking for those groups where the tax base can be increased the most. Auditing a single company struggling with a deficit of 50-100 million brings more revenue to the state than inspecting a hundred convenience stores,” warns Zoltán Bereczky, an expert specializing in household cash management. “The tax authorities now use modern algorithms to compare bank cash withdrawals, incoming cash accounts and annual balance sheet data. If the mathematical intersection of the numbers shows a deficit, the audit is almost guaranteed,” says the expert.

The biggest trap: employer and member loans

Many company managers are unaware that the company’s money is not their own, and they often use the cash register for personal expenses or fringe benefits, which often only exists on paper. A significant number of entrepreneurs and accountants try to “loan” the deficit accumulated in the cash register to the owner on paper. According to Zoltán Bereczky, this is the most dangerous strategy today.

“According to the legislation, employer and owner loans must be paid by transfer. If this is done in cash, the authority immediately rejects its legality. An irregular loan payment is classified by NAV as not having been made, the amount is returned to the cash register, and the deficit is immediately determined,” explains the expert from hazipenztar-doktor.hu. “To this day, some accountants prefer to recommend that the deficit be recorded as an owner or employer loan!”

When the security of the Kft. is lost

Many people are lulled into the misconception that their company’s limited liability protects them. At the same time, Zoltán Bereczky points out that as soon as suspicions of embezzlement, mismanagement or budget fraud arise (which is an immediate risk in the case of an empty cash register), the limited liability of the managing director ceases. In such a case, the manager is liable for the debt with all his private assets, house and cars. In the event of a cash shortage, the penalty that can be imposed can range between 50 and 200 percent of the missing amount.

How can companies prepare?

The expert emphasizes that the cash register is not an accounting responsibility, but a management responsibility.

“The ‘accountant will solve it’ approach often only deepens the problem. According to the expert, the cash register can be resolved using legal methods in as little as one day if the entrepreneur acts in time. A legal and tax expert background is important, as accountants often cause trouble for entrepreneurs with incorrect advice”

– emphasizes Zoltán Bereczky.

According to the expert, many businesses and families can go bankrupt due to omissions and huge fines.

“I have already seen a deficit of 200 million that was legally settled before the authorities came knocking. The goal is not to cheat, but to keep businesses alive and protect families from total financial bankruptcy”

– said Zoltán Bereczky.