VIEW FROM THE HOUSE - Failings point to need for revenue committee

Every year, the Public Accounts Committee, on which I sit, conducts a routine review of the work of both Customs & Excise and, separately, the Inland Revenue.

In the week of 10 March, we held a special hearing into the work of Customs in seizing the assets of drug dealers followed by the normal Revenue hearing. Both provided fascinating insights into failings in our system of getting revenue for the state.

What we heard from Customs was depressing. It is only a few years since it was first given powers to seize drug-dealers' assets. The powers it has are limited by statute and subject to considerable delay in court process (Customs can only start looking for the assets when someone has been found guilty, often years after the offence) and co-operation is frequently against the best financial interests of the drug dealer who seeks to preserve a means of living for when he leaves prison.

Customs needs greater powers to seize assets and act earlier in cases of suspected drug dealers. It also needs a much greater level of forensic expertise and more regular public scrutiny of its work, purely as a spur to success.

Reporting on the introduction of self-assessment, the Revenue was less able to conceal its blunders.

Despite greater staff training which has led, in general, to brighter and more constructive telephone conversations between accountants and the Revenue as a means of settling clients' affairs, errors have already crept into the self-assessment process. Revenue officials were unconvincing in suggesting that all was well.

Sir Anthony Battishill, chairman of the Board of the Inland Revenue, even tried to suggest that what he insisted on calling 'statements of tax due from the self-employed' had been working.

This when the world knows that these statements were not just due to be issued to the self-employed, but also to taxpayers with savings income received gross. Some taxpayers did not receive them, while the level of error, particularly regarding savings income on which the tax due was incorrectly requested in two installments, was so great that the Revenue has already lost an unspecified amount of interest on late payment.

What is, of course, frightening in both of these areas is that the sums of money lost are of such size in real terms as to make any other department of state drool. When Customs decides, as a matter of policy, not to make enquiries in the worldwide banking system in respect of a particular criminal suspected of concealing substantial assets or when the Revenue foregoes interest on a category of late payments, then the issue of Parliamentary scrutiny is bound to come up.

Maybe what we need is a supplementary body to the Public Accounts Committee: a Public Revenue Committee, operating on the same lines as the PAC but looking solely at the efficiency of the revenue-collecting departments.

It would highlight areas where the system of tax-collection is not functioning as well as it might. Such a committee could, for example, have drawn attention to the income tax cost of BES loanbacks some months before the Government took action.

More power to the PRC. Now that's a slogan you won't hear from campaigning politicians over the next month.

Michael Stern is Conservative MP for Bristol North West.

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