In a letter to government ministers, the tax think-tank urged them to reconsider their decision to implement reforms proposed in a report by Lord Grabiner QC, which include a new criminal offence of fraudulently avoiding income tax.
The tax faculty described the Grabiner report as ‘shoddy, hurried and untroubled by lack of evidence to support its proposals,’ and insisted in the letter that public consultation must be carried out before the Treasury applies the proposals. The faculty condemned the proposals as ‘no more than an Inland Revenue wish list’.
Robert Maas, chairman of the faculty’s technical committee, added: ‘The report was produced in a mere three months and it shows. The lack of detailed analysis, the absence of serious evidence to support most of its conclusions and an apparent indifference to the likely effect of some of the proposals destroys Grabiner’s credibility as a serious basis for legislation.’
Maas warned, among other issues, that Lord Grabiner’s proposals allow no leeway to distinguish between fraud and neglience, indicating that innocent people could face unnecessary penalties, besides the potential infrigements on civil rights that could result from the new powers.
An Inland Revenue spokeswoman denied the suggestion that the report was an Inland Revenue wish list, saying that Grabiner had prepared the report independently. She added that the the tax faculty’s views would be considered.
The report recommends, among other things, the introduction of a new criminal offence of fraudulently evading income tax. This would be triable in a magistrates’ court, avoiding the current situation where only major cases of evasion are prosecuted and most others are settled with the taxman.
Under the new measures, Revenue investigators would also get powers to make routine ‘reverse searches’ of the telephone directory to help identify people running businesses from home without paying tax or while claiming benefit.
Chancellor Gordon Brown announced his intention to implement the proposals in the March Budget.
It is estimated that some 120,000 people are claiming benefits while working, costing the taxpayer £500m a year.
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