Inland Revenue Slammed By Lords Over Corporate Tax Avoidance

by Jason Gorringe, Tax-News.com, London

07 February 2003

Following the publication of an interview in the Guardian at the weekend, in which former Inland Revenue director, Peter Back condemned the tax agency's non-compliance programmes and slammed the new 'customer friendly' culture adopted by chairman Sir Nick Montagu, questions have been raised in the House of Lords as to the competence of the Revenue.

In a Parliamentary question submitted on Wednesday, Lord Glentoran asked the government 'whether they agree with the view expressed by Mr Peter Back, a director at the Inland Revenue until 1995, that the Inland Revenue's compliance programmes and investigations into tax evading companies are 'in disarray'.'

According to the Guardian report, the extra tax secured from all of the Inland Revenue's non-compliance investigations in 2002 was £3.8 billion, down from £4.8 billion in 2001, and £5.5 billion in 2000. The newspaper also revealed that the Revenue's large business division, tasked with tackling corporate tax evasion, collected £600 million less last year than in 2001.

However, responding to Lord Glentoran's question, Lord McIntosh of Haringey defended the tax agency, arguing that:

'The thrust of the Inland Revenue in recent years has been to encourage compliance - in other words, that people should pay the right tax and receive the right benefits the first time, rather than requiring enforcement action. It has been generally agreed that this is a successful policy - but of course, it does not show up in the enforcement statistics.'

He added: 'The chairman of the Inland Revenue has made clear that where taxpayers - including large business taxpayers - are not willing to cooperate with the compliance procedures, the Revenue will be aggressive and ruthless in following up.'

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