XN000022-1975-04-09 — Page 2

WEDNESDAY, APRIL 9, 1975

ADVANTAGES OF VOLUNTARY DISCLOSURES OF TAX EVASION

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THE INLAND REVENUE DEPARTMENT TODAY DREW ATTENTION TO THE NORMAL PRACTICE OF THE COMMISSIONER WHEN DEALING WITH A PERSON WHO HAS MADE A FULL VOLUNTARY DISCLOSURE OF TAX EVASION,

A SPOKESMAN FOR THE DEPARTMENT SAID THAT ALTHOUGH NO UNDERTAKING COULD BE GIVEN AS TO WHETHER OR NOT THE COMMISSIONER WILL REFRAIN FROM PROSECUTION IN THE CASE OF ANY PARTICULAR PERSON IT IS HIS PRACTICE TO BE INFLUENCED BY CERTAIN FACTORS.

+ IF A PERSON HAS MADE A FULL CONFESSION OF ANY OFFENCE TO WHICH HE HAS DEEN A PARTY, AND HAS GIVEN FULL FACILITIES FOR INVESTIGATION AND HAS PROVIDED CORRECTED RETURNS ACCOMPANIED BY DETAILED STATEMENTS IN SUPPORT OF THE RETURNS, THEN THESE FACTS WILL HAVE A FAVOURABLE DEARING ON THE AMOUNT OF THE PENALTY OR WHERE APPLICABLE, THE ADDITIONAL TAX IN SETTLEMENT.

THE SPOKESMAN POINTED OUT THAT UNDER PROVISIONS OF THE INLAND REVENUE ORDINANCE, THE COMMISSIONER MAY INSTITUTE PROCEEDINGS AGAINST TAX EVADERS.

REFERRING TO THE INLAND REVENUE (AMENDMENT) (NO. 2) BILL, WHICH WAS INTRODUCED INTO THE LEGISLATIVE COUNCIL LAST WEDNESDAY, THE SPOKESMAN SAID THAT AMONG OTHER THINGS IT SEEKS TO INCREASE THE PENALTIES WHICH THE COURTS MAY IMPOSE.

AT PRESENT IT IS $2,000 PLUS A FINE EQUAL TO THE AMOUNT OF TAX UNDERCHARGED AND THE PROPOSAL IS THAT IT SHOULD BECOME $2,000 PLUS TREBLE THE AMOUNT OF THE TAX UNDERCHARGED,

ANOTHER CLAUSE SEEKS TO EMPOWER THE COMMISSIONER, SUBJECT TO A RIGHT OF APPEAL BY THE TAXPAYER, TO IMPOSE AN ADMINISTRATIVE PENALTY KNOWN AS ADDITIONAL TAX+.

THE SPOKESMAN RECALLED THAT THE FINANCIAL SECRETARY, IN MOVING THE SECOND READING OF THE BILL SAID THAT AN ADDITIONAL MOTIVE BEHIND THE INCREASE IN PENALTY WAS TO GIVE THE COMMISSIONER A GREATER DEGREE OF FLEXIBILITY IN FIXING THE AMOUNT OF PENALTY.

*AT PRESENT,+ MR. HADDON-CAVE SAID, IF ONE DOES NO MORE THAN RECOVER WHAT SHOULD HAVE BEEN PAID TO THE EXCHEQUER IN THE FIRST INSTANCE THE PENALTY WOULD VERY OFTEN HAVE TO BE CLOSE TO THE 100 PER CENT MARGIN.

+THERE IS VERY LITTLE THEREFORE THAT THE COMMISSIONER CAN OFFER BY WAY OF INDUCEMENT TO A TAXPAYER TO MAKE A CLEAN BREAST OF THINGS AND SUBMIT CORRECTED RETURNS.+

THE SPOKESMAN SAID THAT UNDER THE PROPOSED LEGISLATION THERE WOULD BE MORE OF AN INDUCEMENT FOR A PERSON TO COME FORWARD IN ORDER TO AVOID THE FULL IMPACT OF THE SUBSTANTIALLY INCREASED PENALTIES.

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