Accountancy experts are also concerned that the proposals have not been given enough time for proper consultation.
The warnings came as the proposed measures were published in a Treasury report on the shadow economy which lays out new incentives for tax compliance and sanctions for those who deliberately defraud the state.
The new offence would cover fraud involving smaller sums that would be tried in magistrates’ courts when normally only large-scale tax fraud is dealt with using criminal proceedings.
Precise details of the new offence, suggested in Lord Grabiner’s report, The Informal Economy, will be announced in the budget on 21 March but many remain convinced more time is required to consider the measure.
John Gwyer, director of tax investigations at Parnell Kerr Forster, said: ‘My real concern is that individuals would lose their right of trial by jury in crown court if the offence is tried in a magistrates court. It would represent a dumbing down of the legal process.’
Gwyer also fears magistrates may not be qualified to judge the subtle issues involved in a fraud case and has equal worries about the competency of advice given to defendants.
Francesca Lagerberg, technical manager of the English Institute’s Tax Faculty, claims the report has been produced too close to the budget for its measures to be given full consideration.
She said: ‘Whilst not condoning tax evasion in any form, I do think the new rules appear to offer wide-ranging powers to the tax authorities over and above what is necessary.
‘They therefore could be detrimental to an honest taxpayer.’She said ‘representative bodies’ should be consulted before the measure is enacted.
Grabiner’s report also concludes that increasing the fines for those evading income tax is no solution. He reports that he does not recommend any kind an amnesty for offenders, despite rumours in the press that the measure might be included on the Budget. Grabiner does however suggest setting up a confidential phone line offering advice on how to leave the shadow economy.
Chancellor to reveal details of tax dodge clampdown in Budget