Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 12:00 am on 3rd May 1976.

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Photo of Mr Denis Healey Mr Denis Healey , Leeds East 12:00 am, 3rd May 1976

The whole country will have noticed the extraordinary discrimination exercised by the Conservative Party in pursuing the widow or unemployed worker for minuscule amounts of tax while raising a major campaign in the national Press to protect the millionaire who is defrauding the Revenue of millions of pounds.

It therefore seems, from the figures, that there has been a significant decline in the ability of the Revenue to detect and counter illegal evasion.

I hope the House will forgive me if I explain my proposals in some detail. The amount of misinformed comment about them makes it necessary that I should do so. They fall under two headings. The first concerns the power of a tax inspector to issue a notice calling for documents which relate to an individual's tax liability. For the overwhelming majority of tax payers this is automatic because they pay under PAYE. There is nothing in this provision which will empower the Inland Revenue to interrogate people or to require anyone to testify against anybody. Anyone who fails to comply with such a notice to call for documents may, however, attract a financial penalty.

If it is found necessary to approach any person other than the taxpayer, this can be done only with the consent of a General or Special Commissioner of Income Tax, and the Commissioner can give such a consent only when he is satisfied that in all the circumstances of the case the inspector is justified in seeking to issue a notice.

The second part of my proposals concerns the power to enter premises with a warrant. The relevant section provides that, where a justice of the peace is satisfied by information which he has received on oath that there are reasonable grounds for suspecting an offence involving tax fraud, he may issue a warrant to an officer of the Board of Inland Revenue. The officer will then be authorised to enter premises, search for and seize documents and other evidence which might be needed for proceedings relating to such an offence.

The House and the country should be quite clear what this means. In this provision we are concerned only with the suspicion of a criminal offence involving deliberate dishonesty. We are concerned with nothing else. The Inland Revenue will not be able to obtain a warrant merely on the grounds that a taxpayer has omitted something from his tax return through negligence or carelessness—because, of course, that is not a criminal offence.

It is wilful nonsense to pretend that tax inspectors will be walking into all sorts of people's premises and homes. There is nothing new for the Inland Revenue in the procedure for entering premises and searching them. It happened under the last Conservative Government. Under the existing law it is possible for the Revenue to apply for a search warrant in connection with tax investigations, for example under Section 26 of the Theft Act of 1968 or under Section 16 of the Forgery Act 1913.

The sort of circumstances in which it might be necessary to use the power of entry we now propose are those where the Revenue, if it tried to obtain documents under other powers and without a search warrant, would run the risk of the documents being destroyed or conveniently mislaid before it could get hold of them. On this basis, I envisage that the powers will be used at the most in only a handful of the most serious cases each year.

It has been suggested, Mr. Speaker, that a Treasury Minister should countersign every search warrant issued to the Inland Revenue by a justice of the peace. If hon. Members think about this, particularly Tory Members, they will recognise that it would run completely contrary to the traditions underlying the administration of direct taxation in this country to involve Ministers of the Crown in decisions on particular cases

. Ministers stand apart from the detailed operation of the tax system, and it is important that they should, so that we can avoid any claim that important decisions affecting individual taxpayers are influenced by political considerations. I am sure right hon. Gentlemen on the Tory Benches will agree that that should remain an essential part of the administration of tax in this country. I do not think they want, any more than we do, Ministers to be able to form a view on the tax circumstances of their political opponents, interesting as on occasions that might be.