The Revenue Commissioners have, for a long number of years, had the power to enter business premises and private homes with a warrant. While there they can inspect any records relating to the business, question any person (other than a customer) who may be of assistance to them, search a taxpayer's person, remove outer clothing, and if still not satisfied arrest the taxpayer.

In the light of these and other powers some people may find it difficult to understand why there is such a furore over some of the powers the Finance Bill 1999 proposed giving to the Revenue. The first of the main changes relates to the Revenue's power to request information from a third party about a taxpayer. The Revenue may write to such a person without advising the taxpayer and seek detailed explanations as to their dealings with that taxpayer. If the third party refuses to co-operate he can face a court imposed fine of up to £1,500. The taxpayer may well be cleared of any additional liability to tax but this form of approach to a third party may well be detrimental to the person's business. As set out in the legislation the taxpayer has no right of appeal or even a right of notice that a person (normally one of his customers) will be contacted by letter.

The legislation states that this letter will indicate that it is in connection with an examination into the affairs of the named taxpayer.

The second area of concern relates to new powers which the Revenue Commissioners have taken in approaching the banks. Since 1983 the Revenue Commissioners have powers to approach a bank for detailed information on an individual's account. This legislation obliged the inspector to go to the High Court, establish that he had reasonable grounds for his search and then have the Court, in the event of their deciding to give him the approval, specify the information which he could obtain.

In a 1984 case Mr Justice Murphy in the High Court indicated that the information which should be forthcoming would relate to the account and would not include particulars of other dealings involving the person.

In the two major cases where these powers have come before the courts it is important to emphasise that the judge in each case saw his role as balancing the right of the taxpayer against the common good. What the Minister chooses to call new powers are simply the old powers with what the courts called the "invaluable safeguard" of judicial involvement removed. The present legislation seeks to allow the Revenue Commissioner to go directly to the bank. Furthermore under the draft proposals the inspector can examine not just the financial records but any other items of correspondence, memoranda of meetings, letters of undertaking, letters of guarantee, etc, which may be on the individual's files.

The legislation does not seek to give this power in a willy-nilly way to the tax inspector. Any application must come from a Revenue Commissioner. Clearly the Revenue Commissioner will not lightly give his consent to such an application.

Consequently, if the inspector has prepared a memorandum outlining the validity of his case and the reasons why this power should be granted, then surely the place for such a case to be made is before an independent arbitrator such as the Appeal Commissioners.

The new approach appears to be based on an assumption that the fruits of tax evasion would be sitting in the client's bank or building society across the road. The evidence which has emerged at recent tribunals would seem to indicate that this rather folksy view of tax evasion is either dated or relates only to the small fry. This approach may not necessarily be the appropriate one in the present high profile cases and this raises the spectre of the long established theory in military history that generals often have a habit of fighting the current war with strategy more appropriate to the last one.

The Minister has indicated that he is calling for these changes ahead of any recommendations which the Moriarity Tribunal may make. The Moriarity Tribunal Report may well seek further powers for the Revenue but it is also a possibility that it may well state that the present powers could, if properly resourced and used, give a higher level of return than we are achieving at present.

If, in the present climate, more powers are given they should be granted in the clear understanding that, not just these powers but all Revenue powers will be examined after Moriarity reports.

In a recent statement the Minister indicated that he had established a committee from his own department and the Revenue Commissioners to examine what extra powers were required this year. I would suggest that the post Moriarity Review should have a major input at the highest level from tax practitioners and the Institute of Taxation who have already contributed greatly to the introduction of self-assessment and to the consolidation of tax legislation.

The Minister has repeated the old mantra that the compliant tax payer has nothing to fear. But Mr McCreevy has, however, on his shelf the very detailed Commission on Taxation study which reported in the 1980s and stated that the Revenue Commissioners should be accountable for the use of powers given to them. It also reported that "wide-ranging powers should not be provided on the grounds that they will be applied only in a small number of serious cases unless the legislation specifically limits their use to such cases."

The present controversy will have served a purpose if it brings into the debate the whole question of Revenue powers and that these can be approached in a rational manner rather than stop-gap and fire brigade measures to meet the demands of public opinion.

The following should now be done:

Appoint an independent Tax Ombudsman who is well resourced and reports publicly on an annual basis.

Ensure that taxpayers and others have a right of appeal against all calls for information and approaches to third parties.

Review the entire position of Revenue powers in the aftermath of the Moriarity report and have equal input from all sides. Have this review chaired by a High Court judge and have a Government undertaking to implement its recommendations.

By adopting a sensible approach what has unfortunately become an annual confrontation between the Minister and his advisers on the one hand and the tax practitioners on the other can be avoided and a workable solution found.

Dr Frank Brennan is a leading taxation consultant and has, for many years, been a council member of the Institute of Taxation in Ireland. He has written many books on taxation and economic matters.