TaxPersonal TaxRevenue ‘heavy-handed’ on PAYE fraud

Revenue 'heavy-handed' on PAYE fraud

Revenue slammed for 'heavy-handed' tactics used in rounding up PAYE fraud suspects and urged to improve technical expertise.

Inland Revenue inspectors are becoming increasingly heavy-handed in their approach to prosecuting individuals or companies which fail to operate PAYE schemes, a leading tax expert said this week.

Will Heard, tax investigations specialist at Levy Gee, said the Revenue was failing to analyse situations properly from a technical point of view.

‘Inspectors do not take into account that they must prove beyond reasonable doubt that PAYE should have been deducted before they can prove that someone deliberately failed to make a deduction,’ he said.

‘Consequently, they go ahead blindly, often using very heavy-handed tactics to extract convenient statements from workers who are afraid that if they do not say what the Revenue wants to hear, then they will get a tax bill for all the payments they have received gross of tax.’

In the five years up to 5 April 1997, the Revenue prosecuted 75 cases of people accused of business tax fraud and only had an 8% failure rate. But, of 88 prosecutions in cases of PAYE fraud, the failure rate was more than three times that, at 25%.

Revenue officials refuted Heard’s claims. A spokesman said: ‘Everybody who is appointed as an inspector will be fully trained in dealing with all aspects of such PAYE cases. It is a specialist area and they are fully trained before they can go into a prosecution.’

But Heard added: ‘The Revenue should apply the legislation that it already has on a much more extensive basis than currently. This enables the Board of Inland Revenue to order the ultimate user of labour to deduct tax from payments made to a contractor who has supplied that labour.

‘The Revenue should also legislate to make the owners of businesses personally liable for PAYE, which they have deliberately failed to deduct even if the wages to which it relates belong to their workers and not themselves.’

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