§ 25. Mr. Frank Cook
To ask the Chancellor of the Exchequer what measures his Department is taking to prevent and detect tax fraud. 
§ Mr. Jack
The Inland Revenue's strategy is to encourage voluntary compliance and to maintain an active presence across the tax system, underpinned by statutory powers, to detect and deter tax evasion and fraud. The Inland Revenue aims to help taxpayers to comply with their tax obligations by explaining what those obligations are in clear and simple terms.
Local tax offices scrutinise taxpayers' accounts and returns, and investigate those where, for example, profits appear to be understated, to detect and put right evasion. 775W Specialist offices deal with larger and more complex cases, including those where prosecution may be appropriate. In addition to investigations involving taxpayers known to the Inland Revenue, resources are also allocated to the detection of those individuals who should be paying tax, but make no declarations of their income.
The Department has consistently made efforts to improve the quality of its compliance work. There has been an emphasis in recent years on larger or more high-risk cases, while the Department has maintained a presence in all areas of the tax system, and it has established an investigation quality monitoring system, which has ensured that its work in the area is extremely cost-effective—the reported yield being enhanced by the future compliance of taxpayers successfully investigated and by the deterrent effect on those who might otherwise try to evade tax.
Further details of the Inland Revenue's compliance work may be found in the chapter entitled "Compliance" in the Board of Inland Revenue's 136th annual report, which was laid before Parliament in October 1994. It gives a broad outline of the Department's compliance activities, including the detection of possible fraud. The report also contains tables that show the yield from compliance work.