Scots press Revenue to soften investigation powers for serious cases of tax fraud

The institute said the powers given to Revenue inspectors to obtain documents from third parties suspected of fraud were extensive. To protect individuals from abuse by the system, the institute said the powers should only be used where information cannot be obtained by another means.

It also suggested that circuit court judges be authorised to issue orders rather than sheriffs. And the proposed legislation did not provide a mechanism for appealing against the Notice or requesting an extension to the time limit, the institute said.

James Robertson, convener of the Taxation Practices Committee said: ‘We support the need for the Revenue to have powers which ensure that everyone pays the correct amount of tax, and which can be used to combat fraud. These proposals lack the appropriate safeguards for the general public.

No appeal system is proposed nor is the relevant third party to be invited to the hearing before the sheriff. Innocent third parties could find themselves subjected to onerous and time consuming retrieval of documents without any financial recompense.

‘Moreover, failure to comply within the relevant timescale, which may be seven days or less, can leave the third party open to a possible custodial sentence. These powers are a substantial extension to the existing armoury of the Inland Revenue and it is essential that these are balanced by proper safeguards.’

The institute has already suggested the cost of producing documents should be borne by the Revenue and that provision be made for this in the primary legislation.

Taxman given new powers to probe taxpayer affairs in search for fraud evidence

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