UK Taxman May Be Given New Investigative Powers

by Robert Lee, Tax-News.com, London

13 December 2004

The UK’s newly merged tax authority, HM Customs and Revenue, may be given new powers to investigate and punish tax evaders as the result of a governmental review of compliance due to commence in the coming weeks, the Financial Times has revealed.

The review comes alongside a fresh crackdown on tax evasion in the corporate sector and on City bonuses, announced in the pre-Budget report earlier this month. It is also likely to examine the penalties and other sanctions open to Revenue and Customs officers, in addition to the appeals system.

According to Treasury minister Dawn Primarolo, measures are already in the pipeline aimed at strengthening compliance, and she revealed that a 100-strong anti-avoidance team is being set up within Customs and Revenue.

However, she added that any measures involving the new super tax department are unlikely to come on stream before 2006, and revealed that the findings of the review will not be known before the general election, expected midway through 2005.

Justifying the review and the need for new investigative powers for tax inspectors, Primarolo claimed that the tax profession itself has been calling on the government to increase its powers to fight tax evasion.

"There are some people outside of government, in the very professions we're talking about - legal, tax advice, accountancy - that consider some of our powers should be stronger,” she remarked.

However, accounting trade body ACCA (the Association of Chartered Certified Accountants) disagrees, fearing that the more robust compliance methods used by Customs officers may spread across the new department.

“ACCA remains concerned that Customs' traditionally more draconian investigative powers may be used for direct tax issues,” Chas Roy Chowdhury, ACCA Head of Taxation noted recently.

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