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Trans-atlantic Tax Tattlers

Posted on 05/27/2007 20:45:55 | Link | Post Comment

Although English common law serves as the foundation for the U.S. legal system, British officials are now looking at an American legal concept to boost U.K. treasury collections.

The British Home Office announced last week that it was considering a program based on the U.S. False Claims Act, also known as "qui tam," the first words of a Latin phrase meaning "he who sues for the king as well as himself." This allows anyone who learns of fraud to launch a legal claim on the government's behalf. And a successful claim means money for the person who got the ball rolling.

Or, as The Evening Standard of London put it, "Public could get cash rewards for grassing on tax-dodging neighbours."  FYI for all my Yank readers, the Dictionary of English Idioms and Slang defines "grassing" as telling on or mentioning something to authorities that incriminates another.

The types of revenue fraud cited in the article range from someone cheating on government benefits to cigarette smugglers to companies dodging VAT (value added tax) payments.

Pay per prosecution: In releasing the proposed Asset Recovery Action Plan, Home Office officials noted that it is based on a U.S. program that has been "strikingly successful ... with many billions of dollars raised annually."

Some of those billions go to the informants, who typically receive 15-to-30 percent of seized assets when convictions are handed down. Thanks to a new law enacted last December, the reward percentage for IRS whistleblowers was bumped up to that top range.

The Home Office is seeking public comment on its proposal through Nov. 23. And it expects the plan, despite its potential to bring in more money, to generate some negative feedback.

In the document itself, officials note that, "Clearly the qui tam provisions of [the U.S. False Claims Act] are embedded in a very different U.S. historical, legal and cultural context. They would be a novel import into England and Wales."

But Vernon Coaker, a Home Office minister, said, "We are asking is it applicable in this country, is it something that people would find acceptable and is there a workable model?

"We think it would be irresponsible for us as a government not to look at what people are doing overseas."

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