MPs say HMRC should use terror legislation on evaders

MPs have urged HM Revenue & Customs to trap tax evaders
by employing new powers intended for the fight against terrorists and money
launderers. The new powers use information supplied by accountants and other

The demand came from members of the Commons Public Accounts Committee after
HMRC acting chairman Dave Hartnett made it clear he had no intention of doing
battle with the professional bodies who took action in the courts to limit the
purposes for which information obtained in the anti-terror fight can be used.

The PAC report strongly criticised the tax authorities for doing too little
to crackdown on black economy losses which ‘might be over £2bn a year’

The report revealed that the department has raised £27m out of £74m expected
from investigating Suspicious Activity Reports (SARs) made to the Serious
Organised Crime Agency indicating significant numbers of people with undeclared

The money stemmed from information coming from reports between April 2004 and
March 2007 to complete 7,150 investigations. The ruling was in 2006.

The PAC demanded: ‘The Department should consider whether to seek alternative
powers to strengthen this work.’

Hartnett confirmed in evidence to the committee that ‘our compliance people
might wander around a harbour and take a note of all the larger sized boats and
trace them’ along with helicopters and private planes and use the information in
data matching exercises to ensure tax was paid on the money used to purchase

The committee demanded that more is done to investigate and prosecute
suspicious cases, after more than 120,000 calls in 2006-07 to a tax evasion
hotline – but only 2,000 investigations completed yielding £2m from an expected

MPs said not enough use is made of the power to impose penalties and
prosecute the worst offenders and urged a similar exercise to the offshore
disclosure arrangements under which last year 45,000 people with funds in
overseas bank accounts came forward to pay £400m to fight other forms of

Chairman Edward Leigh clamed HMRC said: ‘HMRC must also do much more to
publicise both the benefits of joining the formal economy and the potentially
serious consequences of not doing so… backed up by resolute action by the
department to complete more investigations, apply the full range of new
penalties available and ramp up the number of prosecutions.’

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