Examination of Witnesses (Questions 240
MONDAY 22 OCTOBER 2001
MONTAGU KCB, MR
240. I understand that.
(Mr Hartnett) We will make estimated assessments on
the best basis we can from what we know about the individual having
241. And how often have you done that?
(Mr Hartnett) With drug dealers?
(Mr Hartnett) When we know that someone is a drug
dealer and we can show that it amounts to trading activity we
243. How do you know? You have put a bit of
work into ghosts and casual moonlighters, have you put the same
effort into work on drug dealers?
(Mr Hartnett) That is really for Customs and Excise
244. You are before us now and we are talking
about the income of these people. There are other offences being
committed, I understand, but I am asking you specifically about
paying their fair share of income tax.
(Mr Hartnett) If I go back to what I was saying to
Mr Jenkins earlier on, if we target an area, for example, and
find there are people with wealth that we do not understand the
source of we will investigate and try and establish the source
of that wealth.
245. I understand that. So if you see somebody
with big cars, a big house, you know they are selling drugs, what
(Mr Hartnett) But it is very rare for us to know that.
246. The dogs on the street know it in a number
of my areas, the police will be able to tell you who is selling
drugs in the area. They have difficulty in catching them, and
I accept that, but I am seeking to clarify what action do you
take in these circumstances of people who have got unexplained
sources of income?
(Mr Hartnett) I do not think I can really add to what
I have said, other than to say that we will try and establish
a source. If it is a source within the tax system, such as trading,
such as gains, we will tax it.
247. Can you clarify for me how many cases of
people trading in drugs you have actually pursued over the last
year or so?
(Mr Hartnett) I am sorry, I do not have that information.
248. Maybe you could let us have that information
(Sir Nicholas Montagu) Those are data that we do not
249. So you do not know how many drug pushers
you pursue for tax?
(Sir Nicholas Montagu) Not in that form, no.
250. What form might you have it in?
(Sir Nicholas Montagu) I do not know. We might have
some form of data about people with unexplained sources of income
and what we have taken by way of tax. What we would not have is
"X is a drug dealer, we did him for £10,000".
251. Okay. Can I just clarify then the question
of penalties. I am not clear about the point of confiscation because
you mentioned that you could charge a maximum of 100 per cent
of the amount to which people put their hands up and interest.
(Sir Nicholas Montagu) Yes.
252. Where does confiscation come into it?
(Sir Nicholas Montagu) If our attempts to enforce
a debt have failed we can then distrain.
253. You have not confiscated any restaurants
(Sir Nicholas Montagu) No.
254. If they have paid up 100 per cent you do
not have any confiscation?
(Mr Hartnett) If we have prosecuted someone who happens
to be a restaurateur then we will look to see whether a judge
will authorise confiscation of assets.
255. So it will only be done by the agreement
of a judge and only after prosecution?
(Sir Nicholas Montagu) In a criminal case. In a civil
case we will enforce to the point of distraint in appropriate
256. But if somebody puts up their hands and
hands you the money then there will be no question of confiscation?
(Sir Nicholas Montagu) No.
257. I just wanted to clarify that point.
(Mr Hartnett) Could I go back on drugs because I want
to make one very quick point, if I may. There are Government proposals
for something that has been called the Criminal Assets Recovery
Agency which will target in particular the sort of characters
you mentioned. The proposals involve that agency having some tax
powers as last resort.
258. I am aware of that, I am just wondering
what powers you generally have. Can I finally ask a point about
targets. You have mentioned on a couple of occasions that you
have not got a cash target for recovery of this, that and the
other. I am talking in the context of identifying taxpayers. Would
it not be more helpful to the state as a whole in terms of the
amount of money that was collected if you were maximising your
efforts on amounts of tax rather than the number of individuals
who are being pursued? Throughout today, having listened to what
you have said to my colleagues, I do very much get the impression
that because it is easier in many ways to catch ghosts or moonlighters
than it is to catch people who are evading much larger sums then
it is the smaller people you go for.
(Sir Nicholas Montagu) I do not think that is right
at all, Mr Davidson. The answer is no. Dave has mentioned the
Special Compliance Office, they specialise in the large evaders.
We have had some publicised cases. The reason why I am against
targeting yield is what we are after is the right amount of tax
from the right people. If you target yield, as other fiscal authorities
have found, it can encourage inappropriate behaviour. We forecast
yield and if yield achieved was at odds with forecast then Stephen
and his fellow directors would want to look at the office to find
259. It is a pleasure as always to listen to
you, Sir Nick.
(Sir Nicholas Montagu) And indeed to be questioned
by you. Save the best until last, Mr Williams.
Mr Steinberg: Thank you very much.