A fundamental and 'aggressive' change in the government's approach to tax investigations has been sneaked in by Gordon Brown, among a raft of anti-avoidance and anti-evasion measures aimed at raising #1.6bn for the Treasury over three years.
Link: Budget 2003 special
The Hansard procedure – a civil settlement offered by the Inland Revenue in the investigatory process – will no longer protect the tax payer from criminal prosecution. Evidence gathered in a Hansard procedure will now be admissible in ‘various hearings’, meaning criminal prosecutions.
Alastair Kendrick, a director at Ernst & Young, warned taxpayers to be properly advised the moment they are contacted by the Special Compliance Office. ‘Anything you say or offer the Revenue from the outset will be permissible in court. It is a major, major change,’ he said.
A package of reforms to tackle tax fraud and avoidance was also unveiled, which the Revenue claims will ‘deliver significant savings’. This includes an investment of £66m over the next three years, in order to raise £1.6bn for government coffers. A similar amount is expected to be raised each year by Customs.
A number of specific avoidance schemes were targeted, in a move the paymaster general Dawn Primarolo described as ‘designed to modernise the way risks to revenue are assessed and managed by the Inland Revenue’.
Experts believe the Hansard change may be in contravention of European law.
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