Select Committee on Northern Ireland Affairs Minutes of Evidence

Memorandum submitted by the Inland Revenue

  The Committee asked us for a short memorandum on three issues.

1.  What are the particular difficulties of conducting investigations—both standard and "special"—in Northern Ireland, and the approaches which have been or might be adopted to address these circumstances?

  Tax investigations in Northern Ireland are conducted either by our local tax offices or by our Special Compliance Office.

  Local tax offices normally handle tax investigations, but senior officers in the Northern Ireland Region would be made aware of difficult or sensitive cases as they arise and as they become progressively harder to handle. As in other regions, the Inland Revenue select cases for investigation after a risk analysis process and these are normally handled by local Inspectors as a precursor to being referred to the Special Compliance Office if necessary. No caseworker is expected to be able to deal with particularly sensitive matters on their own and our procedures allow advice to be sought on how best to deal with specific points. Cases will be referred to Special Compliance Office to handle where the nature or complexity of the issues demand it.

  Special Compliance Office are responsible for the investigation of suspected tax avoidance and tax fraud, in the more serious or complex cases. They also undertake all of the Inland Revenue's criminal investigations of tax and tax credit fraud. They operate from nine offices around the United Kingdom but they do not have an office in Northern Ireland.

  Cases appropriate to SCO which derive from Northern Ireland are handled in their Manchester and Liverpool offices. Those offices also deal with cases from elsewhere. The selection of cases to be investigated by SCO is exactly the same for Northern Ireland as for the rest of the United Kingdom. The same quality and tax risk assessment criteria are used.

  Staff are not compelled to work on Northern Ireland cases and they are made aware of the sensitivities of the situation on appointment to any post which involves such work. Various security measures are taken to reduce the profile of investigators who visit Northern Ireland and meetings are usually held in Inland Revenue offices or known accountants' offices. Visits to Northern Ireland are restricted or suspended at certain times of the year and in periods of raised tension. There have been no instances of threats to staff in recent years.

  SCO investigators work closely with their colleagues in tax offices in Northern Ireland and often call on their local knowledge for guidance in security matters. Mechanisms are also in place to check any suspicions about paramilitary links of any particular taxpayer. Where such links are confirmed by the Police Service of Northern Ireland, SCO take their advice on the appropriate course of action. The same procedure is adopted by criminal investigators when considering visits to potential witnesses. Criminal investigations are undertaken with the assistance of the Police Service of Northern Ireland in the execution of search warrants.

2.  Whether, and if so what, human and financial resources are available to the Organised Crime Task Force through the Inland Revenue?

  As we understand it, the role of the Organised Crime Task Force is to be a high level, facilitating group and not an operational one. A Deputy Director from our Special Compliance Office attended the last meeting of the Task Force in advance of the establishment of information gateways under the Anti-Terrorism, Crime and Security Act. The new information disclosure powers in the Act allow the Inland Revenue to disclose information to other authorities to assist in the fight against terrorism and other crime. The Deputy Director will take up a seat on the Task Force at the next meeting thereby recognising the Inland Revenue joining the Task Force. The SCO Criminal Investigation Group Leader responsible for Northern Ireland has attended Task Force sub-committee meetings and had discussions on how SCO might work with the Task Force on appropriate cases, in addition to the provision of information to Task Force members under the provisions of the Act. This is expected to be on a similar basis to that adopted by other members of the Task Force, principally Customs and Excise.

3.  What human resources will be allocated by the Inland Revenue to the Northern Ireland division of the Assets Recovery Agency, and what roles will those personnel fulfil?

  We understand that the ARA will have an office in Northern Ireland but the staffing of the Agency as a whole is only now coming up for discussion. In particular, the basis on which Inland Revenue staff might be seconded to ARA is under consideration. A Project Board is being set up to oversee the establishment of the Agency and an Implementation Group to oversee the implementation of the Proceeds of Crime Act. We will be liaising with both of these bodies and will be considering with them the staffing question both nationally and in Northern Ireland in particular.

25 January 2002

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