Warning over new Revenue powers

NEW powers being sought by HM Revenue & Customs for investigating tax offences would exceed those of the police, a senior East Anglian accountant has warned.

NEW powers being sought by HM Revenue & Customs for investigating tax offences would exceed those of the police, a senior East Anglian accountant has warned.

HMRC, formed through the merger of HM Customs & Excise and the Inland Revenue, has published a list of new criminal investigation powers it would like to have, including the right to make arrests and take fingerprints without police offers being present.

The proposals are contained in a consultation document, “Modernising Powers, Deterrents and Safeguards”, the claimed purpose of which is to harmonise the investigatory powers of officers from the previously separate Revenue and Customs teams.

Many of the powers proposed are already available to the police under the Police and Criminal Evidence Act 1984 (PACE).


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However, Peter Harrup, tax partner at the East Anglia office of PKF, based in Ipswich, had accused HMRC of seeking to “pick and choose” from among its existing powers and those contained in PACE, rather than relying on those contained within the Act.

For example, he says, HMRC wants to retain its existing power to search any person on the premises it is raiding without having an arrest warrant for that person, which exceeds the powers available to the police under PACE.

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“HMRC is trying to take this opportunity to 'level up' the powers of its officers so these proposals would see a substantial increase in HMRC's powers in dealing with the individual taxpayer,” said Mr Harrup. “No one objects to HMRC becoming more efficient but giving it draconian powers to investigate taxpayers carries significant risks.

“The consultation makes no distinction between the powers used to investigate a sole trader that HMRC suspects, based on limited information, may be under-reporting income and the powers it uses to tackle a known team of organised tax fraudsters. It even suggests that the 'seriousness' tests applied under its current powers should be removed.”

Mr Harrup continued: “I have repeatedly called for HMRC's powers to be in proportion to the seriousness of the offence. This proportionate approach should be enshrined in law, not left to the discretion of overstretched and, possibly, overzealous tax investigators seeking a quick win against suspected tax fraudsters.

“HMRC claims it will use the new powers proportionately but our experience suggests its officers often take an unnecessarily heavy-handed approach with some taxpayers who are eventually proven to be innocent.

“It would not need such sweeping powers if parts of the tax system, such as Tax Credits, were better designed in the first place,” he added.

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