Merged tax authority sharpens the Revenue's bite. By Will Heard

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The Inland Revenue merger with Customs & Excise, barely a year ago, is now producing enormous changes within the new department. Her Majesty's Revenue and Customs promises to have a sharper bite than its two predecessors not least in the way in which tax investigations will be carried out. HM Customs' historical role in combating smuggling and drug running has brought with it powers far in excess of those used by tax inspectors to investigate income tax evasion. Search and seizure happens daily in the investigation of VAT fraud. In my view it will not be long before tax inspectors will be given search and seizure powers to tackle income tax and company tax evasion.

That view is based on a number of events that have combined to produce a powerful setting for fundamental change in the way t...

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21st Aug 2006 16:55

yes, but...
Isnt the point that giving such powers to HMRC, which I agree seems somewhat inevitable, will promote far too many instances of sledgehammers being used to crack nuts.

And then how long before this becomes standard practice at the expense of dialogue and a more considered approach?

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21st Aug 2006 15:47

Equal status for all crimes??
'income tax or company tax fraud are now regarded as crimes of equal status with drug smuggling and money laundering'?????

That's only true if you also say VAT fraud has the same status as drug smuggling and money laundering, and why shouldn't income tax or company tax fraud have the same status as VAT fraud? I personally cannot see why the investigators of income tax or company tax fraud shouldn't have the same powers as those who investigate VAT fraud. It may take a while to bed down and for acceptable limits to be established, but that doesn't mean it's wrong.

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By Anonymous
21st Aug 2006 22:30

Andrew B - I did not express an opinion that elevating direct tax fraud to serious crime status was wrong - direct tax fraud has always been a serious crime but the point I am making (within the confines of a short article that could not cover all the angles completely) is that in my view there is now no distinction to be made in HMRC's mind between the indirect and direct tax fraud when it comes to prosecution policy. I agree with your comment that it may take some time to bed down but in the mean time I express the view that HMRC (or at least the new prosections arm) will be "trigger happy" - in this context I certainly concur with Duncan Harvey's comment.

Rob Kernohan - Rob, it is great to hear from you - I do not know whether you have yet experienced a CIF opening but if not you will be happy to hear that it is on all fours with the old Hansard approach (the thorough exhaustive questioning old school variety rather than the abbreviated interview under caution variety)and that the officers handling it have been trained properly(at least in the Midlands and North West).

The prosecution comes from failure to make a full and complete disclosure rather than any misdemeanour admitted as part of a complete disclosure so specialist representation by an experienced professional is vital.

I agree that direct tax searches will be (and are)subject to the same stringent safeguards that apply for other serious crimes but I still feel that the new Revenue Customs Prosecutions office (which is largely independant of the non prosecutions arm of HMRC as opposed to being a rump adjunct of/to it)is going to want to make some examples on the direct tax side quickly. The actions noted in my article (carpet layer etc)do seem to indicate a somewhat heavy handed approach as suggestd by Duncan Harvey.

Trevor Scott - Yes you are correct that failure to make a carousel fraud prosecution stick was due to bad management of the case that I had in mind when I made that comment - that is one of the reasons why the new prosecution authority will make sure it will make its mark but the main point of my article is that procedures and powers that have been the domain of the police and Customs will soon be applied in direct tax cases from the outset of the case.

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By Anonymous
24th Aug 2006 13:33

Read the Con Doc
I encourage everyone to read and respond to the con doc. Don't complain if you don't like the changes but haven't contributed!

For me the lack of a clear distinction between [legal]tax avoidance and evasion or fraud in the collective minds of HMRC officers is the biggest concern. How can you give such powers to people who are happy to give the impression that there is not a clear dividing line between legal and illegal activities?

Also I have to say there is a lot of worrying stuff in the detail. I, for one, don't understand why HMRC should ever have the need to fingerprint someone, or how it is possible to think it could be necessary to arrest someone on suspicion of tax fraud "before the relevant tax return has been submitted".

Read it and worry...

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