§ Malcolm BruceTo ask the Chancellor of the Exchequer what steps the Inland Revenue has taken to identify economic sectors with a high incidence of1710W trading with developing countries in which there would be an increased risk of companies seeking tax relief on illegal payments. [175939]
§ Dawn PrimaroloThe UK does not allow tax relief for bribes. These payments are most likely to be distinguished in the profit and loss account as fees, commissions and entertaining, and therefore, would come to light through local initiatives looking at companies with large fees and commission entries plus evidence of business with countries where bribery can occur.
§ Malcolm BruceTo ask the Chancellor of the Exchequer whether overseas bribery is one of the risk factors taken into account when the Inland Revenue considers which tax returns to examine in detail. [175940]
§ Dawn PrimaroloFor obvious reasons, the Inland Revenue does not publicise its risk assessment criteria.
§ Malcolm BruceTo ask the Chancellor of the Exchequer what steps the Inland Revenue has taken to ensure that(a) UK companies do not claim bribes paid overseas as tax deductible and (b) its staff are trained to detect bribes paid overseas in UK company tax returns. [175941]
§ Dawn PrimaroloThe UK does not allow tax relief for bribes. Claims to bribes would be detected as part of our normal risk assessment programme. The legislation covering non-deductibility of illegal payments is at section 577A of the Income and Corporation Taxes Act. Training on detection of bribes paid overseas by UK companies is included in the Inland Revenue's basic training for new tax inspectors and in the programme of technical updates for existing inspectors. In addition, extensive guidance is available in the "Business Income Manual", together with instructions for submitting suspect cases to Revenue Policy, Business Tax for advice.
§ Malcolm BruceTo ask the Chancellor of the Exchequer how many instances of overseas bribery the Inland Revenue has detected since February 2002; and what action it has taken. [175942]
§ Dawn PrimaroloSection 577A of the Income and Corporation Taxes Act 1988 disallows the deduction of any payment, the making of which would constitute the commission of a criminal offence in the UK. If the payment is made outside the UK, it is also disallowed if the same payment made in the UK would have been a criminal offence.
Where a claim for such expenditure is discovered, the amount would be added back in the tax computation and the additional tax would be recovered together with interest and penalties where due.
The Inland Revenue, as with many classes of expenditure, does not keep central records of expenditure disallowed under this provision.