New tax fraud offence

The UK Government has announced a new statutory offence of evading income tax that will come into force on 1 January 2001 . In the meantime, Paymaster General Dawn Primarolo, advised those in the “informal economy” to make use of a confidential Inland Revenue telephone hotline that would help them to put their affairs on a legal footing. The new offence may be tried either summarily in the magistrates’ court or on indictment in the Crown court (and their equivalents in Scotland and Northern Ireland). Summary conviction carries a penalty of six months’ in prison or a fine of up to UK£5000 or both. If indicted, the penalty is a maximum seven year sentence, an unlimited fine or both. The principal targets are likely to be employers who are guilty of “persistent and deliberately failure to deduct income tax from employees’ wages” and those who pay cash in hand without payment of income tax and to the encouragement of benefit fraud. Currently, the Inland Revenue prosecutes the more serious tax fraud in the Crown court, generally for the common law offence of cheating the public purse but until now there has been no suitable charge that can be applied in trials in magistrates’ courts. The majority of tax cases are dealt with under civil procedures governed by tax law which involve repayment together with interest and a fine. The new offence will permit the Revenue to increase its case load of smaller serious prosecutions and up to fifty staff are to be assigned to this area.