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Power check

21 August 2006
Categories: News , HMRC powers
A consultation document setting out how the powers and accompanying safeguards used in the investigation of tax crime could be updated has been published by HMRC.

They are seeking views on applying the relevant provisions in the Police and Criminal Evidence Act (PACE) across all their activities. Currently, those powers and their associated safeguards are only available for specific taxes and duties. Having the same law apply across the board will be clearer for those under investigation and will increase the effectiveness of HMRC's investigations, say HMRC.
As PACE does not apply in Scotland, views are also sought on the provisions that would provide an effective and fully integrated regime that is appropriate for Scotland's legal system.
Currently HMRC relies on provisions inherited from its predecessor departments, i.e. the Inland Revenue and Customs. Existing powers for investigating suspected tax crime can be cumbersome and require duplication of effort where different law applies for different taxes. Modernising these provisions would give trained officers harmonised powers to apply for search warrants and production orders, and powers of arrest across all taxes, all of which would be subject to the important safeguards which attach to criminal investigations generally.
This consultation is part of a wider public consultation on modernising the powers, deterrents and safeguards HMRC needs to work effectively. An earlier consultation document suggested making certain powers from PACE more widely available to HMRC, while developing appropriate powers for use in Scotland.
It is anticipated that, in the light of responses to this latest consultation, specific proposals will be worked up in detail, on which there will be a further opportunity to comment.
'Criminal Investigation Powers: A Technical Consultation Document' is available on HMRC's website at The deadline for submitting comments is 1 November 2006. Contributions may be made by e-mail to: or by post to: HMRC and Criminal Investigation Powers, Room 1C/03, 1st Floor, 100 Parliament Street, London SW1A 2BQ or by fax to: 020 7147 2460.
It is important that the revised powers are proportionate. PKF's John Cassidy says that 'as originally suspected, HMRC are trying to take this opportunity to “level up” the powers of their officers' and that the proposals would see 'a substantial increase in HMRC's powers in dealing with the individual taxpayer'. He adds that while greater efficiency is desirable, the latest 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 they use to tackle a known team of organised tax fraudsters'.
Agreeing that the old Revenue would want to upgrade its powers 'to coincide with those of Customs and VAT officers such that there will be easier powers of search, arrest and prosecution for income tax and company tax evasion', Will Heard of Shaw & Co says that under the old regime, 'the discovery of major direct tax fraud used to result in the payment of financial penalties with little fear of bad publicity or imprisonment'. He adds that the new HMRC and Revenue and Customs Prosecution Office 'are determined to show that crime does not pay … and the Revenue Customs merger has provided the means to achieve the change'.
HMRC press release dated 9 August 2006

Categories: News , HMRC powers
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