Tax QC Jolyon Maugham had an interesting article on Comment is Free yesterday. As some will know, Jolyon and I cross swords about as often as we agree, but he is a man whose opinion is always well reasoned (as you would expect). In the article, which was on how to collect tax from the wealthy, he said:
[W]hen it comes to prosecutions, we can't ignore that winning tax evasion cases, as with much white collar crime, is incredibly difficult. The law and facts are just too complicated to get a jury over the line on beyond reasonable doubt. But the status quo — effectively of impunity for wealthy tax evaders — plainly isn't good enough.
A government that was serious about tackling financial crime would change the law to enable specialist juries — or even abandon jury trials altogether.
Now that's contentious. It is putting tax evasion into the same arena as serious fraud. But why not, for that is what it is?
And to some extent, why not when many tax cases to determine fact are held before special tax tribunals?
I have no fixed opinion on this as yet. I can see arguments both ways. But when, as is obvious, tax crime frequently involves intensely complicated arrangements established precisely to undermine the law is it appropriate to think that a specialist legal response to securing prosecution is required so long as appropriate appeals processes are available? I can see why Jolyon has raised the question.
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Its a hard call, and of course it is not just tax related trials where there is this problem – It’s been a problem for years http://www.cardiff.ac.uk/socsi/resources/Levi%20Royal%20Commission%20draft%20report%20on%20the%20Investigation%20Prosecution%20and%20Trial%20of%20Seriuous%20Fraud.pdf as long ago as 1992 – I remember reading this report.
In observing overseas trials I think and cherish the decisions and the process of the English courts and worry about the impact of change.
I share that concern
or use special juries – grand juries – with experience in tax law and practice.
Yesterday on BBC Radio 5 Live at about 6.40pm for about 12 minutes you discussed the morality of tax avoidance. You can hear it at the link below. Play from 02:37:40.
http://www.bbc.co.uk/programmes/b051qtsj
You wrongly stated that section 176 Companies Act 2006 stipulates that directors of companies do not have a duty to avoid tax. It does no such thing. Section 176 imposes a duty on directors not to accept benefits from third parties. If you look at every occurrence of “tax” and “taxation” in the whole of Companies Act 2006, nowhere in any of those occurrences is there any provision remotely like what you asserted. Your grasp of the law is pretty poor.
Sorry
I should have said section 172
A momentary error that I even realised second later
The alternative is to pursue recovery with the Civil Law.
A further weakening of the right to trial by jury is a bad idea, and I’m uneasy with the idea that we might add special provisions to tax cases in the civil courts – the concept of a ‘finding’ or determination that deliberate concealment or deceit is involved – that would allow the penalties available to the criminal courts to be applied in civil cases, on the civil-law ‘balance of probabilities’ test.
I would go so far as to entertain the idea that the concept of exemplary damages could have a special definition in civil-law tax cases that allows recovery at a penalty rate of double (or more); and I am very much in favour of a special type of court order – “Open the books, ALL the books” – in cases where the Revenue win and illegal concealment or outright deceit is evident.
Richard, what do you mean when you say Richard’s proposal is “putting tax evasion into the same arena as serious fraud”? Serious fraud is of course tried by a jury in the usual way.
It is occasionally suggested that is changed to trial by a specialist jury or panel of judges, but that’s never gone anywhere. There’s a general view (to which I am sympathetic) that the SFO’s failure to obtain convictions in a number of high profile cases can be blamed on SFO incompetence rather than failures on the part of the jury. A similar point can be made about some of the recent tax evasion cases – the Harry Redknapp trial, for example, was not particularly complex in terms of facts.
I mean that the suggestion is in the same space as suggestions on fraud
I am not sure I buy the SFO incompetence argument
It is very convenient for some to suggest it
What a fascinating report that is to read John – thank you.
Rather than a court, I’d like to see a task force of accountancy specialists (CPS forensic accountants) working with a judge on such cases behind closed doors with the judge making the decision probably under review from judges on the side lines.
These cases are far too complex for lay – juries. We know enough now about the behaviour of people in business, financial and banking sectors to justify upping the ante and given them some serious special treatment devoid of any glamour or clamour – rather lets have a bit ‘slammer’ for this lot since a lot of them have got away with it for too long.