Information gathering in the Post-Truth world

Abstract

The effective operation of any taxing regime depends ultimately upon the revenue authority being able to obtain timely and reliable information about a taxpayer’s relevant activities (both domestic and, increasingly offshore) which it needs in order to establish their tax liability. While most taxpayers (try to) comply fully with their tax obligations, in the Post-Truth world especially, a minority do not. Regulators therefore need an effective information gathering system to identify non-compliant taxpayers and obtain details of their transactions. Various countries take different approaches to the task of gathering such information, and this paper compares the effectiveness of access powers available to three regulators: the Australian Tax Office (ATO), New Zealand (NZ) Inland Revenue and Her Majesty’s Revenue and Customs (HMRC) in the United Kingdom (UK). Modern technology provides revenue authorities with a vast mass of “mineable” electronic data from a wide range of sources which can be analysed quickly and accurately by computers. It is therefore not surprising that the powers available to revenue officials in the three jurisdictions include powers to access to electronic storage devices and providing codes and passwords needed to access and decrypt data. However, there are also some significant differences between the various jurisdictions - for example, in relation to the powers to remove and retain hard copy and electronic documents in order to examine them forensically; access to private dwellings, and other areas. In discussing these issues, the paper highlights areas where one jurisdiction might usefully adopt or adapt elements from another system in order to improve the effectiveness of its own access powers.