Clause 33 - Offence of fraud
Tax Credits Bill
3:00 pm
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
I want to be careful with the question of discretion because it is a specific term. The Inland Revenue must follow the procedures that are laid down in the Bill, and it has no discretion to vary those powers. However, if by discretion the hon. Gentleman means that, on the first assessment of an application that clearly contains something that is incorrect the official concerned should return the form or make inquires, they have the discretion to move the form on although it may be incorrect.
We would monitor where there were repeated errors of a similar type. One offence that would make an application high risk over a period of time would be where there was repeated concealment that was discovered and corrected, and it happened again. That might trigger a further investigation. As I understand it—I shall double check this—there is no discretion for the Inland Revenue to say that it will not proceed to an investigation if the criteria are met. Prosecution is a matter of evidence being sufficient and the legal advice being the same as that which the Crown Prosecution Service would apply with regard to the use of public courts. I am uneasy about using the word ''discretion'' because it has a specific meaning in this area. If the hon. Gentleman will forgive me, that is something at which I shall look more closely.
The most serious cases go forward for consideration for prosecution, and I can update the figures. Prosecution orders have been issued in 40 cases of which 22 have been concluded. A further 100 cases are in the process of consideration, preparation and investigation. Of the cases that have been concluded, custodial sentences have been imposed in five, and they range from three months to two and a half years. Non-custodial sentences were applied in the other cases. I cannot tell the hon. Gentleman how many people were involved in each case. He will understand that we are looking at cases where there is a systematic number of people. I do not accept that the policy that we are operating is not working. In serious cases, a custodial sentence has a far greater effect than going to court and getting away with it, or a conditional discharge.
I shall now deal with some specific points that have been made during today's sittings. I have an example that sheds some light on our belief that an increase in the maximum penalties is unnecessary. One of the most serious cases of tax fraud in recent years was when, in February 2001, a tax barrister was found guilty of cheating against the public purse. I remind hon. Members that, as well as the provisions within the Bill, it is also possible to take a case where the custodial sentence is unlimited, or limited by the courts' discretion. Such a case is called cheating against the public purse. That would apply here.
On the range of criteria we are considering for serious cases, I can give a list of the criteria used when deciding whether to prosecute. They are deliberate concealment or deception; false or forged documents; certificates, statements or claims prepared with the intention to deceive; conspiracy; corruption; a second or subsequent serious offence; additional books or records for accounting tax contribution or other tax credit purposes prepared or used with the intention to deceive; organised or systematic fraud against tax contributions or the tax credit system; unusual frauds of novelty or ingenuity—that is a very interesting category; theft or misuse of Inland Revenue documents; and assaults on, threats to or impersonation of Inland Revenue officials. Clearly, that is an impressive range. The Inland Revenue's care and management power in securing the collection of tax demonstrates its wide experience and expertise in ensuring that it manages the system well.
The hon. Members for East Devon and for Fareham both mentioned the collusion of employees. I think that I have dealt with that in terms of examining other types of information such as the profiles of companies. The Inland Revenue also policies the national minimum wage. We have quite a lot of information that we can use. The Bill provides for information gateways to relevant Government Departments to ensure that we can use subsequent information to establish the facts, if we need to. That is dealt with carefully in the Bill.
Another issue is requests for information from claimants by the Inland Revenue. The hon. Member for East Devon mentioned that. Additional information that we might ask for includes bank statements, passbooks, payslips or receipts. That would be the sort of information we might ask for once we were investigating because we suspected someone.
The hon. Gentleman also referred to the experience of other countries. Canada's experience has led it to come back and design a system that is now very similar to ours. The United States has an interesting system, but ours is very different from it. The level at which payment is made and the way in which the system buttresses the Government's overall strategy in tackling poverty makes it different. France and Germany have been interested in our tax credit system because of its effectiveness to date. We have had much discussion with them about it, and we have given them a lot of information and support.
The hon. Member for Hertsmere mentioned 1.5 per cent., a figure that the hon. Member for East Devon also used. In explaining how the process works, I have tried to show that we do not set a percentage. Instead, we rigorously assess what is happening at every point and ensure that that is correct.
The hon. Member for Hertsmere mentioned data sharing.