Two quite different and unrelated events in February and March have been linked by some accountancy professionals and in the columns of some specialist journals such as Accountancy Age, to suggest that taxpayer confidentiality rules and practice in relation to prosecutions have been altered.
Co-operation between accountants and the Inland Revenue, particularly in relation to resolving understated tax liabilities on the basis of the so-called ‘Hansard practice’, was said to be impossible.
In this article I shall describe briefly the background to, and the scope and effect of, the Prosecutors Convention.
It has no link with the judgment of the Court of Appeal in Regina v W and there is certainly no foundation for the suggestion that these developments, even if taken together, create a double jeopardy or ‘threaten to destroy relations with the Revenue’.
The Prosecutors Convention was signed on 11 February 1998. The background was a case in South Wales involving two fatalities last autumn after highly toxic chemicals had been split at an industrial plant and found their way into a sewer.
Two council workmen who entered another part of the sewer without proper protective equipment, and in breach of safety procedures, were overcome by fumes and died.
Questions arose as to manslaughter (Crown Prosecution Service), health and safety legislation (Health & Safety Executive) and water pollution (Water Authority).
The fact that the different prosecuting authorities took their decisions at different times, some deciding to prosecute and others not, created unnecessary uncertainty and anxiety for the relatives of those who had died.
I instructed my officials to take steps, so far as possible, to prevent situations where victims of crime had to learn piecemeal as to whether any prosecution would follow. The convention is therefore aimed at circumstances where two or more prosecuting authorities have to consider the question of proceedings against an individual or company for offences arising from a common set of circumstances.
It provides for a co-ordinated approach to the decision-making process and, wherever possible, the timing of any joint public announcement of the final prosecution decision.
Although both the Revenue and the CPS, among many others, are signatories to the convention, it was not created specifically with fraud or tax prosecutions in mind.
The Revenue is, and remains, the organisation responsible for enforcement of tax legislation, including by prosecution where appropriate.
The circumstances where both the CPS and the Revenue have an interest in the same individual or company are rare. A good example would be a fraud investigation into a collapsed company which reveals misappropriation of monies gathered from employees under the PAYE scheme.
The convention does not create any additional role for either the CPS or the Revenue, but it provides for more effective lines of communication where there is the type of overlap I have described.
Crucially, such co-operation must be within the limits imposed by any legal constraints on disclosure or information. Taxpayer confidentiality is therefore unaffected.
The ordinary rules do provide for the Revenue to pass information to the CPS where the Revenue is involved in a joint prosecution; but the Revenue would not, in any event, be using the ‘Hansard practice’ where the question of prosecution arose in accordance with its established practice.
It is perhaps unfortunate that the convention did not receive greater attention at the time it was signed, but a press release was issued in the usual way to the broadsheets and to the Press Association.
Although it was picked up by some parts of the legal press, the lack of interest shown by others was a matter of individual editorial discretion.
To suggest that it was ‘secreted away in the Library of the House of Commons’ is ridiculous. Copies are available to anyone who contacts my office.
As to the effect of the decision of the Court of Appeal in Regina v W, I have already explained in the House of Commons that the so-called ‘Hansard practice’ is unaffected.
The authors of the detailed and helpful commentary on the decision which appears in the 30 April edition of Accountancy Age (‘The Whole Truth’, page 20) agreed. As they are part of the team representing the taxpayer in the hearing before the Court of Appeal and the continuing prosecution, their views might attract some weight with your readers.
They also confirmed there was no suggestion in the case that the Revenue had disclosed any information concerning the tax settlements to the CPS.
The reported concerns are therefore misplaced.