Clause 33 - Offence of fraud
Tax Credits
9:45 am
Mr Paul Boateng (Financial Secretary, HM Treasury; Brent South, Labour)
The best evidence of determination to tackle fraud is not ratcheting up the maximum sentence, but activity on the ground to bring to justice those who would defraud the public purse and undermine the integrity of the Revenue. The commissioners are possessed of such determination and they will not hesitate to prosecute in cases of serious or organised fraud. In decisions on whether to prosecute, the criteria include evidence of collusion or corruption, or of the use of forged documents. Those criteria are published by the Revenue and are in line with those used in cases relating to tax or national insurance contributions for many years, including the period in which the Revenue was under the stewardship of the Conservative Government. There is therefore nothing new about the provision, nor is
there evidence that the Revenue is not treating such matters seriously.
On the question of whether some people are more likely than others to be prosecuted for fraud, the Revenue applies the criteria equally to all people, but it is more likely to prosecute someone who works in the tax credit or judicial system—for example, Inland Revenue personnel who collude in fraud would be likely to face prosecution. The scale of the alleged fraud is not of itself a determining factor when considering prosecution, but the board's view is, quite properly, that the more extensive and substantial the alleged fraud, the more likely prosecution is.
I doubt whether the hon. Member for Hertsmere, even at his most bullish, would suggest that the most cost-effective approach to dealing with fraud and non-compliance is anything other than the use of civil penalties, backed up by selective prosecutions to act as a deterrent against fraud. The hon. Gentleman shakes his head. This is somewhat surprising and constitutes a departure. Perhaps he has been influenced by the shadow Chief Secretary to the Treasury, the hon. Member for Buckingham (Mr. Bercow), who is calling for a different image for the Conservative party. I hope that the hon. Member for Hertsmere shares his hon. Friend's view that the Conservatives' approach to the criminal justice system should be rational, reasoned and evidence based.
The evidence suggests that running an effective revenue system requires the use of selective prosecution, rather than a scattergun approach. Civil penalties should be used where appropriate, but one should not take the view that everyone who falls foul of law should be prosecuted. Such an approach does not make sense. One should condemn fraud or negligence and ensure that appropriate powers exist to deal with such matters, and that they are used by the Revenue in an appropriate way. One should also ensure that the courts are armed with the sentencing powers necessary to do the job.
Experience shows that, in practice, it is unlikely that any court will pass a sentence for tax fraud or tax credit fraud that exceeds, or is even close to, seven years; therefore the amendment would have little material effect. However, in a case of tax credit fraud so exceptional or extreme that a sentence in excess of seven years seemed appropriate, the prosecuting authorities would be able to ensure that the perpetrator was charged with the common law offence of cheating the public revenue, rather than the specific offence of tax credit fraud. Therefore, if the accused were convicted, the court would be able to impose a sentence of whatever period of imprisonment it felt appropriate. As the hon. Gentleman knows well from his experience of the criminal justice system—on the right side of it, I hasten to add after hearing a snigger from the Liberal Democrats—the use of such common law offences is standard practice.
What is important is that the powers exist. Our argument is that they do exist, in the form of common law offences. The statutory powers are as outlined in
the Bill. We well understand the hon. Gentleman's intentions, but think that his zeal for yet higher maximum sentences is misplaced in this instance. I hope—forlornly, I fear—that he will reflect on my comments and withdraw the amendment.