MR LAKE REPLIES ON TAX INQUIRY COSTS

Press, Volume C, Issue 29669, 13 November 1961, Page 6

MR LAKE REPLIES ON TAX INQUIRY COSTS

"Hie duty to maintain and produce adequate business records .is thrown on the taxpayer. and where this duty is discharged, an investigation bjt the department should not involve him in any . appreciable expense." said the Minister of Finance (Mr Lake) in reply to a correspondent. Mr A. B William, son. , In a'letter to the editor' of •The . Pi-ess,” Mr Williamson asked ifMr Lake Would consider the allowance of legal and accountancy costs against income tax in instances where taxpayers were found faultless by the inspectorate or the courts. Mr Williamson wrote:— "Your argument in the leading article of October 27 was irrefutable in The Tax Gatherers,’ at page 154. James Coffield writes of the duty of Parliament to examine “the onus of proof, the revenue's use and abuse of evidence, the too-easv making of assessments, the narrow rule on employees’ expenses. the facility with which the Crown pursues taxpayers into the courts even on trivial matters, the case asrainst the Crown for costs.' the allowance of legal and accountancy costs in revenue cases as expenses in computing profits." Would Mr Lake reoly. on the question of inspectors’ salaries, that if these are to be increased he will also consider the allowance of legal and accountancy costs against income tax in instances where taxpayers have been found faultless by the inspectorate or the courts?” “As I understand it your correspondent suggests that where a taxpayer’s affairs are investigated by the De-

partmen! of Inland Revenue he should receive an award of legal and accountancy costa in the event of there being no disclosed deficiency of tax,” Mr Lake said. "The first comment which I would like to make is tha. no system of taxation would work unless the Crown had the rigilTt to investigate in any case and to the extent it considered desirable. The duty to maintain and produce adequate business records is thrown on the taxpayer, and where this duty ty discharged an investigation by the department should not involve him in any appreciable expense. ■lt is in cases where the taxpayer's records are deficient or missing that the question of expense in investigation really arises. Even in such circumstances where the investigation shows merely mistake or oversight, the taxpayer is under no extra liability than late payment penalty. It is only in cases where there has been deliberate avoidance or negligence that the taxpayer is in peril. “The Crown must remain free to investigate any case it wishes. There is no evidence that such investigations are lightly embarked upon, and it would not be in the interests of the community if a taxpayer could claim the costs of carrying out his ordinary obligations. “Of course, if matters in dispute between a taxpayer and the commissioner reach the Courts, they can award costs for or against the department according to the merits of the case. “I do not think the matter calls for any further action by the Government,” said Mr Lake.