Taxation – Be careful what you say, walls have tapes

I suspect most readers of this journal are not also avid students of Hansard and will not have read the proceedings of the finance bill standing committee.

I am therefore reproducing below an exchange that caused me disquiet, albeit that Mr Clifton-Brown (Conservative, Cotswold) seemed to welcome the government’s proposal and no other member of the committee either expressed concern, or sought to probe their implications.

Mrs Helen Liddell (economic secretary to the Treasury): ‘… all telephone calls to the Inland Revenue will be recorded … If there is a dispute about the content of a telephone call or whether it took place, the Revenue will be able to check its records.’

Mr Clifton-Brown: ‘We are breaking new ground in dealings between the Revenue and taxpayers. This issue is not whether a call is received, but the contents of the call and the agreement reached.’

Trouble with the dog and bone

Mrs Liddell: ‘I can easily answer that question. The call will be recorded, so there will be a record of it.’

Mr Clifton-Brown: ‘This is a positive discussion and a very useful one.’

Mrs Liddell pointed out that recording all telephone calls ‘is not unusual in financial-service businesses here and across the Atlantic’. True. But there is a world of difference between my stockbroker or insurance broker recording my telephone calls, having warned me on its engagement letter that it proposed to do so, and the State recording my telephone calls without me having the slightest hint of its intention – other than reading it in Hansard for Standing Committee E, something not readily available to the vast majority of the citizens.

I have no strong views about whether the Revenue recording telephone conversations is or is not a good thing, particularly as I have no information about precisely what is intended.

I do feel strongly, though, that this is the kind of change that ought to have undergone the ‘widespread public consultation’ the government constantly tells us it favours.

Many people will feel this has serious civil liberties implications.

I certainly feel it is something that readers of this newspaper ought to have an opportunity to consider – especially whether in light of this proposal it is wise to deal with the Revenue on the telephone, or whether it might be safer for all communications to be in writing so that you, as well as the Revenue, have a record. In the event of any dispute you are in a much stronger position if both you and your opponent are in full possession of the facts, than if only your opponent has this information and you are reliant on memory.

This particularly applies in a situation where the law assumes your opponent is right unless you can disprove it, as is the position in most tax disputes.

There are several important questions that opposition MPs did not ask, but that will undoubtedly spring to the minds of most readers. How accessible will the tapes be to Revenue staff generally? Will they be consulted only in the event of a disagreement over what was said, or will an inspector be able to refer to them to check his recollections before responding to a letter from you?

Will the Revenue only record telephone calls, or does it intend to tape meetings as well? Is it only the Revenue, or are Customs & Excise and the Contributions Agency also intending to record calls?

Can I ask for a transcript of a call that I have made to the Revenue, or a call that a client has decided to make on their own behalf, preferring not to waste my time on a simple matter?

When access for all is not fair

How widely is the tape available to staff within the Revenue? Could Special Compliance Office, for example, decide to review all telephone calls by the firm over a six-month period?

I hasten to say I have no particular worry if they do, but I suspect many will. In the event of a dispute, will the Revenue send me its note of the call, as in the past, or a transcript of what was actually said?

It is disappointing that MPs did not ask these questions. The government should find a suitable opportunity to answer them.

Robert Maas is a partner with Blackstone Franks.

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