Taxmen censured for accepting gifts

COLLEAGUES OF corrupt taxman Michael Allcock enjoyed lavish overseas trips and hospitality from the suspects they were sent to investigate, according to the Government's spending watchdog. The National Audit Office reports today that five other senior tax inspectors have been disciplined following an internal inquiry into Allcock's activities

The senior tax inspector was sentenced to five years in prison last year after an Old Bailey jury found him guilty of six counts of corruption. The trial heard that he had accepted pounds 150,000 and the services of a prostitute in bribes from the wealthy Arab businessmen he was supposed to investigate.

Sir John Bourne, head of the NAO, found that although there had been a tax loss of pounds 130,000 in one of Allcock's investigations, the total potential loss could be much higher, but many files were incomplete and it was impossible to establish a final figure.

Sir John found that Allcock was not alone in acting fraudulently and revealed that five other tax inspectors had accepted excessive hospitality such as holidays abroad. Three were demoted, with salary cuts of up to pounds 8,000, while two others were given formal warnings. Other members of staff were under suspicion but insufficient evidence was available for disciplinary proceedings.

Allcock, 47, headed the "Ghostbusters" team, a section tasked with tracking down "ghosts", or figures who had never registered for tax. Police found he had been corrupted by the wealth around him and had indulged in fraud on a "breathtaking scale", receiving air tickets, holiday accommodation and cash from taxpayers.

In a report to Parliament published today, Sir John found that weak management controls and naive assumptions about the honesty of tax inspectors had created a culture where corruption could exist undetected. He welcomed steps by the Inland Revenue to tighten up its anti-corruption measures, but warned that further improvements had to be made.

He recommended that periodic staff surveys should be conducted and managers should be trained in spotting tell-tale "warning signals" in an employee's behaviour. Any member of staff exhibiting an extravagant lifestyle, financial problems, unusual gifts, regular excuses for performance and rule-breaking should be closely watched, he said.

"The Allcock case has had a significant impact on the reputation of the Inland Revenue for fairness and honesty and has also damaged morale," he said.

"In response, senior management in the department have committed substantial time and resources to investigating what went wrong and to strengthening internal controls within the Special Compliance Office. If the improved controls are applied actively and consistently, and further action is taken in response to our recommendations, the risk of corruption should be substantially reduced."

A spokesman for the Inland Revenue said it was considering the recommendations contained in the NAO report. "The report recognises that the control environment now in place, following the changes made by the department, provides the framework for much firmer control than the regime under which Mr Allcock operated."