The proposals were to form part of the Criminal Justice and Police Act, but a spokesperson for the Home Office admitted there had not been enough time to pass the measures before the dissolution of parliament.
The plans met with severe criticism when announced last December and tax experts fear this is only a temporary delay before the proposals are re-introduced in the next parliament.
Robert Maas, chairman of the technical committee of the ICAEW tax faculty, said: ‘The proposals have only been dropped to get the Bill through. The battle has not been won and we will still fight.’
The act introduced far-reaching measures relating to law enforcement.Under the ditched proposals, both the Revenue and Customs would have been able to pass details to the police if they suspected criminal activity.
Maas added: ‘The proposals mean there would only need to be a suspicion to report to the police which would cause a lot of aggravation and the taxpayer would be landed with the cost.’
At the time, the tax faculty said they would damage the Revenue’s obligation of taxpayer confidentiality that underpinned the tax system. The Conservatives have given their support for the principle behind the proposals, but believe more time is necessary to debate the legislation.
The proposals would also have had implications for overseas taxpayers as both the Revenue and Customs would have been able to report suspicions to foreign authorities.
Plans to allow the tax agencies to forward suspicions to the police were initially raised in the government’s ‘Recovering the Proceeds of Crime’ report.The report highlighted the loophole that allowed drugs dealers to declare profits for tax purposes but left the Revenue unable to report such gains to the police.
KPMG’s tax investigations partner Richard Hall said: ‘This shows how something that on the face of it is reasonable and simple can become very complicated.’
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