Criminals, including organised criminals, seek to attack the UK’s tax and duty systems to steal taxpayer’s money. To counter this HMRC needs similar criminal investigation powers to those that are available to other law enforcement agencies. In particular it needs powers to:-
In England and Wales these powers are made available through the Police and Criminal Evidence Act 1984 (PACE). In Northern Ireland they are made available through the Police and Criminal Evidence (Northern Ireland) Order 1989.
The Finance Act 2007 amends PACE and the PACE (NI) Order so that they can be used for all HMRC criminal investigations. The only exception is when HMRC is acting as an agent for another government department.
The advantage of using PACE is that it provides a set of powers that are designed for use by law enforcement agencies. It means that tax crime is tackled in the same way as other crime.
Not all the powers in PACE are made available to HMRC. For example, HMRC does not take fingerprints, charge or bail suspects. This has to be done by the police.
Some of the powers in PACE are modified for HMRC. For example, a search warrant may allow HMRC to search persons found on the premises without the need for arrest. This allows HMRC to search a bookkeeper who may evidence in a briefcase or laptop when a company’s premises are searched, but who is not considered a suspect.
PACE does not apply in Scotland. Finance Act 2007 introduced a special set of powers that apply in Scotland within the Criminal Law (Consolidation) (Scotland) Act 1995 and the Criminal Procedure (Scotland) Act 1995. These powers cover the same areas as PACE.
The criminal investigation powers can be used only by officers who are authorised to use them. An authorised officer is an officer of HMRC, appropriately trained and engaged on operational duties in Criminal Investigation, Detection, Risk and Intelligence and Internal Governance directorates.
PACE provides that some powers can be exercised only by police constables of a particular rank. When those powers are applied to HMRC the police ranks are converted to HMRC grades of an equivalent authority:-
HMRC has set internal authorisation levels requiring an authorised officer to get the approval of a higher graded officer before using certain powers. The authority levels for HMRC are set no lower than the authority levels in the police, the primary user of PACE powers. However, in most cases, HMRC has set the main authority level required at a minimum of Senior Officer Grade, for example applications to magistrate or court for a production order or search warrant. The majority of authorities in the police service are held at Inspector level, equivalent to HMRC’s Higher Officer grade.
The approximate numbers of officers in HMRC who have powers of arrest are:-
These powers can be used only for HMRC offences. They are not general powers of arrest. As with all of HMRC’s criminal investigation powers arrests are made only by authorised officers who have been appropriately trained.
Usually it is obvious fairly early in an investigation where a crime has been committed. The investigation may require evidence to be gathered in different parts of the UK. This means it is necessary to take account of the differences between the legal systems in England and Wales, Scotland and Northern Ireland. In particular there are significant differences between the legal system in Scotland and those in other parts of the UK.
HMRC’s criminal investigation powers can be exercised in all parts of the UK. For example, a search warrant issued by a court in Scotland can be exercised in England if it is endorsed by an English court and vice versa.
Cross border powers contained in the Finance Act 2007 only apply to UK borders and not EU or international borders.
It may be possible to prosecute an offence in more than one part of the UK. The prosecuting authorities are working on guidance which explains how they decide in which UK country the offence is prosecuted.
In the case of serious crime only, HMRC can apply to use the intrusive surveillance powers in the Regulation of Investigatory Powers Act 2000 (RIPA) and the Police Act 1997. The most significant powers are:-
These powers are very effective in the fight against serious and organised crime. But because they are so intrusive their use is subject to strict safeguards.
They can be used only when investigating serious crime. The interception of communications has to be approved personally by the Home Secretary. The use of this power is overseen by the independent Interception of Communications Commissioner.
The most intrusive surveillance requires prior approval of a surveillance commissioner. All other cases of intrusive surveillance have to be reviewed by a surveillance commissioner who can revoke the authorisation. The use of intrusive surveillance is overseen by the Surveillance Commissioners.
The use of these powers has to be approved at the highest levels in Criminal Investigation. Only certain members of the senior management team can approve applications for the use of any of these powers.