The government has bowed to pressure from accountants, and opened formal talks on the future powers of the merged Inland Revenue and Customs & Excise.
A consultation was launched last week by executive chairman of Revenue and Customs David Varney, who reacted to concerns that the Revenue could take on some of the strong-arm powers of its new partner.
John Whiting, tax partner at PricewaterhouseCoopers, said the document was ‘good as a statement of intent’ and that it struck the right note. ‘Powers used to catch a fraudster should not be used when you are late with your tax return,’ he said.
The bill to formally merge the two departments is due its third reading in the House of Lords next week, although the departments are already well on their way to becoming a single entity, and share new offices.
The review will also consider the relationship between businesses and the new department, the area of greatest overlap. It is hoped that the merger will result in fewer points of contact for businesses on tax issues.
It also outlines proposed principles, including the recommendation that any ‘deterrent measures should adequately reflect the seriousness of any contravention, the risk to the exchequer and the circumstances of those they penalise’.
Customs received further powers this week as Varney set up a special investigations office with the police to extend an ongoing inquiry into the London City bonds scandal.
Paymaster general Dawn Primarolo announced a £5,000 token budget to cover costs in running a joint team with the Metropolitan Police, which will handle investigations into allegations of widespread money laundering by money service bureaux.
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