Jail threat for advisers who refuse to co-operate

Tax advisers could be jailed for refusing to answer questions about serious
fraud cases, under new powers that took effect on Saturday.

The powers, contained in the Serious Organised Crime and Police Act 2005,
mean HM Revenue & Customs and the new Serious Organised Crime Agency can
force third parties to answer questions where they believe that a fraud has been
committed over the value of £5,000.

The new powers can be exercised on the say-so of the HMRC prosecution office,
the independent prosecution unit that deals with tax cases.

Up to now, third parties could not be required to answer questions put to
them in the course of an investigation by HMRC.

Experts at McGrigors, the law firm, said the move was rushed through before
the general election and not subject to wide scrutiny.

James Bullock, head of tax litigation and regulatory at McGrigors, said:
‘Targeting serious organised crime is a laudable intention, but the act also
contains a sweeping extension to the information-gathering powers of the tax
authorities with minimal scrutiny and draconian penalties for non-compliance.’

Advisers, as well as IFAs and bankers, could find themselves doorstepped and
forced to answer questions on the spot. If they fail to comply, they face up to
51 weeks in prison and/or a £5,000 fine. False or reckless responses attract a
possible sentence of two years, and/or an unlimited fine.

A spokeswoman for HMRCPO said the use of the powers were conditional on the
outcome of the HMRC powers consultation.

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