asked the Chancellor of the Exchequer what criteria govern the implementation of an in-depth inquiry by the Inland Revenue into the affairs of a particular taxpayer; what steps are taken to ensure that unfair pressure is not applied to the taxpayer during the process; what advantages are gained from an in-depth inquiry; and if he will make a statement.
Inquiries are undertaken where the inspector of taxes is not satisfied that the taxpayer has fully declared his profits and where the potential amount of tax at stake is likely to make an investigation cost-effective.The taxpayer's principal safeguard is his right of appeal to the independent Commissioners. Within the Inland Revenue, procedures for the control of in-depth inquiries are designed to ensure that the rights of taxpayers are strictly observed; for example, district inspectors are personally responsible for ensuring the satisfactory conduct of investigations within their offices. For a more detailed account of the powers of the inspector and the rights of the taxpayer I refer my hon. Friend to chapter 10 of volume 1 of the Keith report (Cmnd. 8822).In-depth inquiries help to secure compliance with tax laws and deter evasion. In the year ended 31 March 1984, investigations by the Inland Revenue resulted in the collection of £371 million additional tax.