§ 33. Mr. Houghton
asked the Chancellor of the Exchequer whether his attention has been drawn to the comments made by Mr. Justice Stable in a tax-evasion case at the Assizes in Leeds on 12th November, 1953; and upon what grounds the Board of Inland Revenue base their decision to prosecute or to settle on payment of money penalties in tax-evasion cases.
§ Mr. R. A. Butler
Yes, Sir. The particular case was one in which a cashier-accountant who was entrusted with the P.A.Y.E. arrangements of his firm falsified the records to his own advantage. It is the Board's practice to prosecute in cases of this kind. For a statement of the Board's general practice in regard to instituting criminal proceedings for alleged frauds on the Revenue, I will, with the hon. Member's permission, arrange for the circulation in the Official Report of a copy of an answer given to a Question in this House on 5th October, 1944, at columns 1149–50.
§ Mr. Houghton
Is the right hon. Gentleman aware that I am familiar with the statement made by the then Chancellor of the Exchequer, Sir John Anderson? Can the right hon. Gentleman supplement that statement by making clear to all concerned the difference between cases in which there is evidence of intent to defraud and those cases in which a reasonable plea of omission might be made, and the difference of treatment of the two cases from the point of view of 1792 prosecution or acceptance of money penalties?
§ Mr. Butler
The question of whether to prosecute or to accept money penalties is a difficult one. It is partly dealt with in the statement I am circulating, but I will certainly see whether any further investigation can be made in response to the suggestion of the hon. Member.
§ Sir H. Williams
Will my right hon. Friend consider prosecuting the Board of Inland Revenue when they demand 55s. per share for the purposes of Death Duties and the judge ultimately decides that it is 19s.? Is not that as big a fraud?
Following is the answer:Sir J. Anderson: The practice of the Commissioners in this matter is governed by Section 34 of the Finance Act, 1942 [now Section 504, Income Tax Act, 1952], which makes provision for the admissibility in evidence of any disclosure made in the circumstances there set out. As the Section indicates, the Commissioners have a general power under which they can accept pecuniary settlements instead of instituting criminal proceedings in respect of fraud or wilful default alleged to have been committed by a taxpayer. They can, however, give no undertaking to a taxpayer in any such case that they will accept such a settlement and refrain from instituting criminal proceedings even if the case is one in which the taxpayer has made full confession and has given full facilities for investigation of the facts. They reserve to themselves complete discretion in all cases as to the course which they will pursue, but it is their practice to be influenced by the fact that the taxpayer has made a full confession and has given full facilities for investigation into his affairs and for examination of such books, papers, documents or information as the Commissioners may consider necessary.The above statement of the Commissioners' practice should be regarded as replacing the one made by my predecessor on the Second Reading of the Finance Bill, 1942, which has, I understand, given rise to some misapprehension.