Your adviser starts the meeting by warning you that under the Proceeds of Crime Act 2002, he has to report suspicions or knowledge of tax evasion, or reasonable grounds for this, to the National Criminal Intelligence Service.
You ask what all this is about. You’re told the warning has to be given before the discussion starts – whatever the subject of the meeting. If it was given after you had disclosed possible tax evasion, the tax adviser could be committing the offence of tipping off and be liable to up to five years’ imprisonment.
You thought you were going to talk about sorting tax errors out. If that is automatically equated to evasion and criminal consequences are in the air, perhaps you’ll stay silent and chance it.
It’s a likely scenario. In the next few weeks the Proceeds of Crime Bill goes before Parliament with provisions that could have the above result.
So what? Tax evasion is a crime; people are prosecuted for it. Yes, but usually only in serious cases where they have deliberately concealed matters or lied under investigation; in 1999/2000 there were only 55 Revenue prosecutions.
Others reached settlements.
The Proceeds of Crime Bill puts the future of such settlements – the ‘Hansard’ procedure – in doubt. Many people will think twice before ‘confessing’ if they believe a policeman rather than a tax inspector will come to call.
Of course the Bill is aimed at much more. The prime target is preventing criminals laundering the proceeds of their offences. Especially after the events of 11 September, no-one disputes the need for tough legislation here. Nor do reputable tax advisers wish to see financial crimes treated with leniency.
But the fact remains that we have a very complex tax system where it is easy to get something wrong. The Revenue’s policy of voluntary disclosures recognises that.
If taxpayers don’t have the confidence that disclosure means no prison, either more errors – and evasion – will escape detection, or the Revenue will have to devote more resources to prosecutions. If this happens, our tax system will have shifted massively and disastrously towards confrontation, with tax inspectors, sadly, becoming policemen.
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