While few would have a problem with the prosecution of tax evaders, has the taxman caused itself trouble by using allegedly stolen evidence?
IT’S A MORAL QUANDARY. Is it right to do something good on the back of information gleaned through illegal means?
On the one hand, you are doing something positive and – ostensibly – decent, but on the other, you have validated an act of wrongdoing.
That is a situation in which the taxman potentially finds itself at the moment.
Back in 2010, a disgruntled IT worker named Hervé Falciani stole a disc from HSBC in Geneva containing the details of 6,000 UK customers. His flat was later raided by French police, who confiscated the disc. It was then passed on to the French revenue, which went on to share the details with its opposite number this side of the Channel, instead of returning the information to the Swiss.
That evidence was used to find property millionaire Michael Shanly guilty of tax evasion, after he held his late mother’s money in an offshore account and chose not to disclose it to HM Revenue & Customs. Eventually, he pleaded guilty and was hit with an £800,000 bill.
It is at this point that things start to get tricky. The issue of whether evidence gleaned through a separate criminal activity is admissible is a source of contention for the courts, and in this case there is the added complication of the crime’s occurrence abroad.
There is a compelling case to be made for not permitting its use. Given the illegal way in which this information came to light, its use, in the eyes of many lawyers, is not lawful.
However, much to the shock of some experts, including BCL Burton Copeland’s Harry Travers, HMRC are seriously pressing ahead with the utilisation of the data.
The taxman shouldn’t have been allowed to use the data as the key plank of their case against Shanly, because it should be treated as inadmissable.
Of course, the counter-argument – which in itself is also relatively strong – is that the information demonstrates that a crime has been committed, and money that may otherwise have been withheld is due to the Revenue and can be recouped.
It would also appear that HMRC’s use of the data put the onus on other parties to challenge its admissability.
Indeed, as some point out, it represented the ideal opportunity for the taxman to bare its teeth and demonstrate it will prosecute evaders – just as it said it would.
There will be few that have sympathy for Shanly in light of the circumstances of the case. As such, it is not hard to not to see why the Revenue might have taken the chance.
There are likely to be circumstances in the near future where the taxman will have to answer the questions, moral or legal, about its use of stolen information.