The new powers are expected to form part of chancellor Gordon Brown’s new crackdown on tax cheats, announced last week.
Those who fail to declare they are working and claim benefits face prosecution udner a newcriminal offence.
The precise detail will be unveiled in the Budget on March 21, andwill be based on a special inquiry report into the 80 billion a yearBlack Economy by the Labour peer Lord Grabiner QC.
It recommends the introduction of a new criminal offence offraudulently evading income tax, to be triable in a magistrates’court, to avoid the current situation where only major cases ofevasion are prosecuted and most others are settled with the taxman.
Inland Revenue investigators will also get powers to make routine“reverse searches” of the telephone directory to help identifypeople running businesses from home without paying tax or whileclaiming benefit.
There will also be stricter checkson birth certificates to prevent the so-called “Day of the Jackal”fraud where people copy Frederick Forsyth’s novel to build falseidentities by applying for the birth certificates of people bornaround the same time who died in childhood.
Welfare cheats convicted for a second time will face the loss ofbenefits in an American-style ‘two strikes and you’re out’ system.
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The firm says that the U-turn 'does not alter the need for a fundamental review of the way we tax work' and that the current tax system is in need of reform
Legislation on the NICs changes to be brought forward in the autumn following publication of 'the full effects of the changes to Class 2 and Class 4' in the summer
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