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HMRC gets bugging powers

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15th Feb 2008
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He already has the power to arrest, and as of today, the British taxman will also be able to intercept phone calls, emails and letters, as well as bug residential premises and private vehicles.

The powers were granted to HMRC in the Serious Crime Act, which gained Royal Assent in October, but did not come into force until the relevant statutory instrument is issued today.

“Customs officers have always had these powers because of their criminal investigations into drugs and guns,” said an HMRC spokesman. “Now they will be granted across the board. We could use it purely in tax matters. Tax offences are quite often combined with other forms of criminality.”

HMRC has stated that all surveillance will be conducted in compliance with the Regulation of Investigatory Powers Act and the Wilson Doctrine, and subject to checks by the Office of Surveillance Commissioners and the Interception of Communication Commissioners Office. However, the department will not need to seek external authorisation for any of its surveillance activities.

The move flies in the face of assurances given when the Inland Revenue and Customs and Excise merged in 2005 that integration would not necessitate an alignment of powers. Professional bodies such as the Institute of Chartered Accountants of England and Wales will be further disappointed that HMRC has yet to draw up its own code of conduct regarding the new powers.

“It seems clear to me that HMRC used the merger to push for greater powers,” said Harry Travers, partner at leading law firm BCL Burton Copeland and a member of the Institute’s Tax Investigations Practitioners Group. “There is no evidence that bugging powers are needed in relation to direct tax fraud, and HMRC did not even attempt to provide any.”

A number of Customs and Excise prosecutions have spectacularly and famously collapsed in recent years due to the abuse by officers of their powers. The prosecution for Operation Venison, which led to accusations of VAT fraud for five Manchester businessmen three years ago, fell through due to “muddle, incompetence and lack of frankness" said Mr Justice Crane. A prosecution in Liverpool Crown Court six years ago lead to a judicial inquiry into customs investigations techniques after a £30 million trial collapsed, and after a spate of spectacular court failures in 2000 the then Attorney General called for Customs an Excises’ investigatory powers to be reviewed entirely.

“Broadening the choice of powers available for HMRC to abuse does not seem to me to be a sensible legislative development,” Travers added.

The news comes shortly after the publication of the Chilcot Report, which recommended that intercept evidence should be used in court.

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Replies (6)

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By mfbrown185
26th Feb 2008 09:26

Surprised?

Of course many of us suspected and even predicted this move.

Many of us did not believe assurances given that transfers of such powers were not necessary.

And................ as usual we will do nothing about this abuse!

I am sure that we have all had the occasional telephone conversation with clients that leaves us feeling uneasy. I have always seen these conversations as an opportunity to bring the client back in to line, explain the risks associated with his "misunderstanding", and, to try to correct the damage. Are we to assume that our roles in this should now be to blow the whistle to the regulatory authorities before they can launch their "Bond" like intelligence gathering operatives on us?

Also, I wouldn't take too much comfort from the "Serious Fraud" description attached to this piece of hoodwinking.

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By User deleted
22nd Feb 2008 14:29

Calm Down
To quote:

"The powers were granted to HMRC in the Serious Crime Act"

If you have a substantial number of clients likely to be affected by this then you should certainly worry - about the sort of people you are attracting.

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By User deleted
19th Feb 2008 17:57

No surprise!
Well , we all knew that there were a lot of buggers in the government and HMRC!

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By The Black Knight
18th Feb 2008 11:08

more bugs in the system
We should be informing our clients of this, so that they can make an informed decision when they vote! If we do still live in a democracy ?
The government seem to have their fair share of crooks in their ranks, can anyone name an MP not suspected of a reportable money laundering offence? Do they not read their own rules? In the meantime crime is a growing part of the ecomomy and perhaps without drugs, prostitution, gun sales, and vat fraud we would not have an economy.

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By Mark Hemmings
15th Feb 2008 14:39

Conflict of laws?
"He already has the power to arrest, and as of today, the British taxman will also be able to intercept phone calls, emails and letters, as well as bug residential premises and private vehicles. "

What will the European court of human rights make of this? Free country, free speech, not anymore. Big brother is watching you, without your consent.

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
15th Feb 2008 11:02

... and gets £60 million secure radio system from Airwave
...More evidence came through this week of HMRC's move to more police-like procedures in its fight against fraud, with the announcement that it had takeen out a 15-year, £60m contract with Airwave to provide a secure digital radio & data network for HMRC's Criminal Investigation and Detection teams.

According to Kablenet, the service will include a central control room and 4,000 connections over which staff will be able to communicate securely with each other and public services such as the police and port authorities.

With the sensitive information it handles and its responsibilities for frontier control and criminal investigation into fraud, drug smuggling and organised crime, HMRC needed an encrypted service, the department told Computer Weekly.

John Stokdyk
Technology editor
AccountingWEB.co.uk

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