He already has the power to arrest, and as of today, the British taxman will also be able to intercept phone calls, emails and letters, as well as bug residential premises and private vehicles. The powers were granted to HMRC in the Serious Crime Act, which gained Royal Assent in October, but did not come into force until the relevant statutory instrument is issued today, the 15 February 2008.

“Customs officers have always had these powers because of their criminal investigations into drugs and guns,” said an HMRC spokesman. “Now they will be granted across the board. We could use it purely in tax matters. Tax offences are quite often combined with other forms of criminality.”

HMRC has stated that all surveillance will be conducted in compliance with the Regulation of Investigatory Powers Act and the Wilson Doctrine, and subject to checks by the Office of Surveillance Commissioners and the Interception of Communication Commissioners Office. However, the department will not need to seek external authorisation for any of its surveillance activities.

The move flies in the face of assurances given when the Inland Revenue and Customs and Excise merged in 2005 that integration would not necessitate an alignment of powers. Professional bodies such as the Institute of Chartered Accountants of England and Wales will be further disappointed that HMRC has yet to draw up its own code of conduct regarding the new powers.

“It seems clear to me that HMRC used the merger to push for greater powers,” said Harry Travers, partner at leading law firm BCL Burton Copeland and a member of the Institute’s Tax Investigations Practitioners Group. “There is no evidence that bugging powers are needed in relation to direct tax fraud, and HMRC did not even attempt to provide any.”

A number of Customs and Excise prosecutions have spectacularly and famously collapsed in recent years due to the abuse by officers of their powers. The prosecution for Operation Venison, which led to accusations of VAT fraud for five Manchester businessmen three years ago, fell through due to “muddle, incompetence and lack of frankness" said Mr Justice Crane. A prosecution in Liverpool Crown Court six years ago lead to a judicial inquiry into customs investigations techniques after a £30 million trial collapsed, and after a spate of spectacular court failures in 2000 the then Attorney General called for Customs an Excises’ investigatory powers to be reviewed entirely.

“Broadening the choice of powers available for HMRC to abuse does not seem to me to be a sensible legislative development,” Travers added.

The news comes shortly after the publication of the Chilcot Report, which recommended that intercept evidence should be used in court.

Source:AccountingWEB.co.uk AccountingWeb.

15-Feb-2008

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