A new offence of the fraudulent evasion of capital gains tax could follow new powers to prosecute income tax fraud in magistrates’ courts, it emerged in the Commons this week. It came during Finance Bill committee debates after paymaster general Dawn Primarolo announced the Inland Revenue is setting up a 50-strong taskforce to mount criminal investigations and it is likely ‘prosecutions will reach the low hundreds.’ Primarolo revealed she considered ‘there could be an argument for applying the measure to the other tax areas.’ But she said in her view it was important to focus on fraudulent income tax evasion but made it clear ‘we are not saying one form of tax fraud is more serious than another.’ Primarolo added, to a question on capital gains tax fraud prosecution, the standard Treasury phrase keeping the door open: ‘We always keep the tax system under review.’ She made it clear accountants and tax advisers could only themselves fall foul of the new form of prosecution if they were ‘knowingly and personally dishonest.’ Choosing her words carefully, she told shadow chief secretary and accountant MP David Heathcoat-Amory, who asked if professionals who gave advice on a tax avoidance scheme that failed could be caught: ‘A failed scheme whose details are not hidden from the Revenue amounts not to tax evasion, but tax planning.’ Heathcoat-Amory said he was ‘concerned about lawyers and accountants falling foul of this if there are increasing areas of greyness in tax law and something that they advised their clients to do is ruled to be tax evasion.’ – The Commons will complete discussions on the Finance Bill next week, concluding Report and Third reading stages on Wednesday and Thursday. Finance Bill debates www.parliament.the-stationary-office.co.uk.
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