Sat | Dec 10, 2016

Beware tax intelligence agents and investigators

Published:Sunday | September 28, 2014 | 12:00 AM
Everald Dewar
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An agent of Tax Administration Jamaica (TAJ) visited a popular seafood restaurant somewhere in Jamaica. He was observed taking notes and holding discussions with the patrons entering and leaving.

The proprietor, suspecting him to be a competitor or maybe from one of the media houses, made enquiries, whereby the agent announced that he was there to undertake intelligence gathering on activities taking place during a specified period.

The proprietor did not want the agent present and asked him to leave. However, the agent said that as he had the power to carry out the surveillance he intended to do so and refused to leave. The proprietor called his accountant who in turn sought our firm's advice.

We have always held the view that the provisions of the Revenue Administration Act (RAA) are open to misinterpretation and misapplications which may lead to abuse; that it could not give the TAJ any powers to remain on premises without the taxpayer's permission, unless the agent was undertaking one of the specified powers of requesting for entry to examine and inspecting records.

We called the restaurant and spoke with the agent on the phone where we suggested that as he was exercising powers improperly, the taxpayer was in his rights to close the restaurant and sue the commissioner general for loss of earnings.

Clearly the agent began having second thoughts about his position. We however wanted to cooperate with the TAJ and direct the proprietor to assist by giving the agent access to the daily sales report to help in his intelligence gathering.

There is one small problem this writer has with the TAJ: it keeps recruiting agents that are human beings and human beings suffer from the same frailty we all do, that is, they can take offence.

A word to the wise - when it relates to matters of taxation, it is not all the time that one should stand up for one's rights, as you may lose your feet in the long run.

The agent was given records, and in extracting the information he also used his cellular telephone to copy other data he came across. The proprietor only became aware of this after receiving estimated assessments three months thereafter.

We then decided to pursue the matter with the head of the unit at the TAJ. During this engagement there were meetings, but we did not receive a satisfactory explanation of the agent's power of surveying and his action of improperly obtaining evidence in violation of the proprietor's rights.

We felt the commissioner was not addressing the point as to whether TAJ agents have the power to enter the taxpayer's premises to survey and take copies of documents where it was abundantly clear the taxpayer had no knowledge of this action.

We also reinforced the point that surveying and taking copies of documents against the owner's wish is a trespass, unless there was specific right to do so.

In our opinion, there is no right outside the RAA that would allow the TAJ to enter premises and carry out surveying and taking copies of documents not given to them and if such a right existed it could only be granted by statute.

The supervisor of the unit held the view that while there was no specific single power in the RAA or the Income Tax Act, that intelligence operations were lawful within the general powers conferred by those acts and that the issue of trespassing is not valid as the agent was eventually given permission to stay, and that the TAJ has the power to obtain evidence within its general powers to gather information in order to make assessments.

Furthermore, the TAJ held that the agent was in fact given access to records and obtaining other evidence was an incidental and natural consequence of the work.

Obviously, what was done may well lead to assessments, but then so too may intercepting the business telephone or planting a camera on the premises - but no one would suggest that the commissioners have the right within the act to do those things.

The commissioner's views seem to be that the TAJ has the right to do anything that is reasonable if it leads to an assessment.

However, the supervisor did acknowledge that it is acceptable that the validity of the agent's action be called into question by the taxpayer.

Notwithstanding, there is nothing invalid about the assessment and it will remain.

This kind of ideology is a matter of 'I Shot the Sheriff', but falsely accused of having killed the deputy.

Everald Dewar is senior taxation manager at BDO Chartered Accountants in Kingston.everald.dewar@bdo.com.jm


Everald Dewar

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