§ Mr. KempTo ask the Attorney-General what consideration the Crown Prosecution Service has given to the implications of the judgment of the Court of Appeal (Criminal Division) in R v W and another; and what arrangements exist for liaison with the Inland Revenue about criminal cases with a tax aspect. [38837]
The Attorney-GeneralIn the proceedings to which my hon. Friend refers the Court of Appeal (Criminal Division) examined the respective of the Crown Prosecution Service and the Inland Revenue to pursue criminal proceedings. It confirmed that the Inland Revenue's common law power to prosecute is ancillary to, supportive of and limited by their duty to collect taxes. In contrast, the Crown Prosecution Service's statutory duty to take over and conduct criminal proceedings is free-standing, unconfined (for the purposes of the particular case) and reflects much wider public interest concerns and objectives. Accordingly, there is no logical inconsistency in the Crown's position if the Crown Prosecution Service prosecute in circumstances where the Revenue have decided not to.
231WThis ruling accorded with the existing understanding of the Crown Prosecution Service and Inland Revenue as to their respective roles in relation to criminal investigation and prosecution and does not require any change of policy or practice on the part of either. Nor does it affect the position of those individuals who co-operate with the Inland Revenue on what is commonly referred to as `the Hansard practice' or otherwise. Primary responsibility for investigation and prosecution in relation to alleged tax evasion rests with the Inland Revenue; proceedings brought by the Crown Prosecution Service will ordinarily encompass charges relating to tax evasion only in circumstances where that is incidental to allegations of non-fiscal criminal conduct. In such circumstances the Crown Prosecution Service and Inland Revenue liaise closely together. The arrangements for such liaison have recently been strengthened by the establishment of the 'Convention between Prosecuting Authorities to provide arrangements for ensuring effective co-ordination of decision making and handling in related cases which are the responsibility of different authorities'. Both the Crown Prosecution Service and Inland Revenue became signatories to that Convention when it was established on 11 February 1998. A copy of the Convention has been lodged in the Library of the House.
In R v W and others the applicants were charged on 27 July 1995 with offences of conspiracy to obtain property by deception (later changed to conspiracy to defraud) and conspiracy to commit false accounting in connection with the affairs of companies with which they were associated. The proceedings were transferred to the Crown Court on 6 November 1995. The prosecution case at this stage was that the motive for the alleged false accounting was partly to conceal the removal of company funds for purposes other than tax and partly the evasion of tax. The case in relation to false accounting was subsequently narrowed to allege only tax evasion. The Inland Revenue had, prior to the institution of the criminal proceedings, decided that its own inquiries should be pursued in relation to unpaid tax. This in turn led, in 1997, to a negotiated settlement of unpaid tax with the companies concerned.
The negotiation between Inland Revenue and the companies concerned was quite independent of the criminal proceedings although all parties were aware of their existence. Lord Justice Rose said in giving the judgment of the Court of Appeal:
In any event we reject the suggestion that, because the prosecution case against both applicants on false accounting was previously based partly, but is now based solely, on tax evasion, this constitutes such a change that [the applicant], at the time of settlement by the companies was misled".