29 NOVEMBER 1999 POWERS TO COMBAT SERIOUS TAX FRAUD

Proposals to modernise the Inland Revenue’s powers for the criminal investigation of suspected serious tax fraud were published today as part of the Government’s commitment to a fair tax system.

The proposals in an Inland Revenue Technical Note would enable tax investigators, in cases where they have reasonable grounds for suspecting serious tax fraud, to apply for a judicial order requiring people to supply them with relevant documents. This would reduce substantially the need to enter and search premises for evidence.

As background to these proposals the Technical Note sets out the Inland Revenue’s selective prosecution policy.

The Revenue welcomes comments on these proposals, by 31 January 2000.

DETAILS

1. The Technical Note sets out context of these proposals and explains why the Inland Revenue’s powers for the purpose of its criminal investigations need to be modernised. It also contains draft legislation with a detailed commentary. The Inland Revenue’s prosecution policy is set out in an annex.

2. The proposed new power requiring the production of documents would only be used in criminal investigations of suspected serious tax fraud. It would be for a stipendiary magistrate or a circuit judge (or equivalent authorities in Scotland and Northern Ireland) to decide whether to make an order requiring a person to supply the Inland Revenue with documents relevant to its investigation.

3. As the Technical Note explains, this proposal should be helpful to banks, lawyers, accountants and other third parties who have business connections with a person suspected of serious tax fraud but no knowledge of the suspected fraud. At present, in order to obtain the evidence needed for the purposes of a criminal investigation, the Inland Revenue sometimes finds it necessary to obtain warrants to search their premises, as well as those of the suspect, to seize evidence. The use of a search warrant can be a source of considerable commercial embarrassment to them as well as a cumbersome procedure for the Inland Revenue. The availability of the proposed power would nearly always avoid the need for searches of this kind.

4. In addition the Technical Note contains a proposal to clarify the Inland Revenue’s right to print-outs of relevant documents stored on computer both under the proposed power and under the existing search power.

5. As background to these proposals the Technical Note sets out the Inland Revenue’s policy of bring prosecutions in a small number of serious cases across the range of tax offences and in all the areas of law for which the Revenue are responsible. The focus is on cases where prosecution will do most to promote and assist compliance with the law by deterring fraud, and to reinforce the overall enforcement strategy. The emphasis on serious cases is reflected by the fact that a guilty verdict usually results in a custodial sentence.

6. This Technical Note is available on the Internet at: www.inlandrevenue.gov.uk

Copies can also be obtained by post from
Inland Revenue Information Centre
Ground Floor
South West Wing
Bush House
Strand
London WC2B 4RD

Telephone 020 7438 6420/6425

Personal callers can obtain copies between 9.00am and 5.00pm.

7. Comments are invited by 31 January 1999. Please send them to

Ian Maitland-Round
Inland Revenue Compliance Division
Room 429
22 Kingsway
London
WC2B 6NR

Alternatively they can be sent by e-mail to

[email protected]

NOTES FOR EDITORS

1. In a Press Release of 9 March 1999 (Budget Day) the Chancellor announced his intention of bringing forward in Finance Bill 2000 measures to modernise the Inland Revenue’s powers for the criminal investigation of suspected serious tax fraud and promised that draft clauses would be issued as the basis for consultation on the proposals.

2. Most of the Inland Revenue’s enquiries are not conducted on criminal lines and, where appropriate, lead to civil financial settlements. But every year a small number of investigations into suspected serious offences are conducted with a view to prosecution. These investigations are carried out under the appropriate criminal procedures and in accordance with the Police and Criminal Evidence Act 1984 including the associated Codes of Practice.