Tax Evasion

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 17th January 1974.

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Photo of Mr Edward Milne Mr Edward Milne , Blyth

asked the Chancellor of the Exchequer if he will outline Her Majesty's Government's policy in regard to prosecution arising from alleged fraudulent tax evasion ; and if he will make a statement.

Photo of Mr John Nott Mr John Nott , St Ives

It is impossible to estimate the extent of tax evasion but details of under-assessments for the past 10 years are in Table 25 of the recently published report of the Commissioners of Inland Revenue.

The decision whether to prosecute in any case is a matter for the Commissioners of the Revenue Departments, and Ministers do not intervene in these decisions.

Photo of Michael Meacher Michael Meacher , Oldham West

Is the Minister aware that, according to the Inland Revenue, no fewer than 250 persons last year illegally evaded tax to the tune of over £10,000 in each case, yet only five of them were prosecuted and fewer still had to pay even a paltry fine? As the Government, in their Companies Bill, purport to believe in disclosure to prevent abuses, will the Minister say how many other cases there have been like that of Mr. Norman Fox-Andrews, QC, whose prosecution for fraudulent and extensive tax evasion was quashed by the Board of Inland Revenue after it had been recommended by the Solicitor's Branch?

Photo of Mr John Nott Mr John Nott , St Ives

I do not think that the hon. Gentleman has any right to make that kind of statement. He has no right to say that about the gentleman in question, who I believe is now deceased. In any event, I am not able to discuss this matter because of the long-standing rules of confidentiality about individual taxpayers. On the first part of the hon. Gentleman's question, however, there are well-established procedures and penalties for correcting under-assessments of tax. Cases involving tax fraud are often complicated and of a kind which is not easy to deploy before a jury. If the Inland Revenue was required to take more cases before the courts for criminal proscution, there is no doubt that there would be far fewer penalties paid for tax evasion than there are even now.

Photo of Mr Ralph Howell Mr Ralph Howell , North Norfolk

May I draw my hon. Friend's attention to the £150 million repaid in tax refunds wrongfully merely because short-term benefits are not taxable? Will he give consideration to altering this principle?

Photo of Mr John Nott Mr John Nott , St Ives

My hon. Friend has tabled Question No. 22 on this issue. He will shortly receive an answer to that Question. I hope that it will be an oral answer, but if not it will be a written answer. I hope that it will satisfy him.

Photo of Mr Edward Milne Mr Edward Milne , Blyth

Is the Minister aware that he has revealed the tremendous weakness in our tax legislation that needs to be examined by his Department? Will he undertake to examine closely the article sent to him by the Inland Revenue Staff Federation exposing the scandal of tax evasion and to deal with it as promptly as possible? Is he aware that at present we are dealing with a situation in which social security payments and the supposed attitudes towards them are receiving a tremendous amount of publicity and we are, therefore, having one law for the rich and another for the poor? That situation must be ended immediately.

Photo of Mr John Nott Mr John Nott , St Ives

I appreciate the point made by the hon. Gentleman. Clearly it is a matter of concern to all those who work in the Inland Revenue. I shall certainly draw the hon. Gentleman's comments to the attention of the Chairman of the Board of Inland Revenue. The hon. Gentleman knows that the Inland Revenue is never slow to suggest and recommend to Treasury Ministers additional powers to combat tax evasion. My view is that the Inland Revenue is extremeily vigilant in this area, as I am sure the hon. Gentleman will agree. In any event, whether there should be any additional rules is a matter for my right hon. Friend the Chancellor in the context of his Budget.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

Does not the hon. Genteman agree that the number of prosecutions against poor people receiving social security is vastly in excess of the number of prosecutions against the men referred to by my hon. Friend the Member for Oldham, West (Mr. Meacher)? Is there not a flagrant case of double standards here? The present Government won the 1970 General Election partly on the so-called scandal of scroungers. They should look at the scroungers at the top of the tree rather than those at the bottom.

Photo of Mr John Nott Mr John Nott , St Ives

The latest report of the Inland Revenue showed that over £5 million was charged in penalties for tax underassessment and evasion. But although there are very few criminal prosecutions in the courts—[HON. MEMBERS: "Why not?"]—substantial monetary payments are made to the Inland Revenue for tax evasion. The answer to the question "Why not?" is that it is extremely difficult to convict before a jury in a criminal prosecution, and that is the reason I gave.