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Beware! Anyone could turn out to be a disguised inspector


The recent amendment of the Inspection Act (Official Gazette of the Republic of Slovenia, No 40/14; hereinafter: the ZIN-B), which entered into force at the end of June 2014 provides inspectors with a new authorisation within the scope of conducting inspection proceedings, namely to make simulated purchases by identifying themselves with an official ID card only after the purchase has been completed, provided this facilitates the identification of the elements of a minor offence and information regarding the perpetrator. The objective of this amendment is to tackle grey economy more effectively. Although ZIN-B regulates inspection proceedings in general, we primarily expect the tax inspection to utilize the new authorisation in practice, due to its general purpose and nature. Simulated purchases are likely to serve as an instrument employed by inspection authorities to verify the issuance and appropriateness (accuracy) of invoices. Hence, someone providing the impression of an innocent ordinary buyer might actually turn out to be a disguised (tax) inspector knocking on your door in the near future.

The amendment therefore introduces the simulated purchase concept, which up until now has only been present as a similar measure implemented by the Criminal Procedure Act (hereinafter: the ZKP) within the context of feigned purchases, feigned acceptance of gifts or feigned giving of bribes pursuant to Article 155 of the aforementioned act. However, it should be particularly noted that the ZKP places a number of restrictions on the use and authorisation of the mentioned measure. First, pursuant to the ZKP, the above measure can only be imposed for certain serious criminal offences, which are explicitly listed in the second paragraph of Article 150 of the ZKP, and only if it can be reasonably concluded that a particular person is involved in an thus listed criminal activity (substantive safeguard). In addition, only the state prosecutor may authorise the aforementioned (and always only one-time) measure in accordance with the ZKP by way of a written order and based on a written substantiated proposal by the police (procedural safeguard).

In comparison with the criminal proceedings' regulatory framework, the ZIN-B significantly expands the possibility of utilising the simulated purchase concept even to the minor offences segment, while criminal procedure law restricts the use of a comparable concept exclusively to criminal offences, and this primarily only to the most severe forms explicitly listed. Furthermore, there is no developed standard of proof safeguard, standing in way of utilizing the newly introduced authorisation pursuant to ZIN-B. Instead of the criminal law expression "can reasonably be concluded", the ZIN-B merely indicates "provided this facilitates the identification of the elements of a minor offence and information regarding the perpetrator", which is an entirely undefined concept providing inspectors with an extremely broad discretion as to when to employ simulated purchases. Moreover, no procedural safeguards are envisaged for the newly introduced authorisation under the ZIN-B in terms of the state prosecutor's order, which is envisaged by the ZKP. Ultimately, contrary to the ZIN-B, pursuant to the ZKP the measure may only be imposed as a one-time measure, preventing the moment when an offence is committed or the entire duration of the (criminal) offence being entirely subject to the discretionary powers of the police.

In light of the expressed concerns, we doubt that the simulated purchase authorisation under the ZIN-B was adopted with the required special consideration and, ultimately, also by taking into account possible concerns relating to the possibility of an abuse of the newly introduced authorisation, which most definitely contains strong elements of provocation. An inspector does not employ the newly introduced authorisation to establish already committed minor offences retrospectively, but in a sense even induces a person to commit a minor offence. The ZIN-B primarily pursues the interest of detecting/investigating a minor offence (at minimum in the context of confirming the inspector's own working hypothesis), which in practice certainly cannot be neglected when considering the employment of simulated purchase in practice. Moreover, also circumstances and allegations associated with inducing person to commit a minor offence and the implications of such actions are also likely to surround the use of the new authorisation in practice. In a legal sense, the expressed concerns entail that we may even legitimately question the constitutionality of the newly introduced authorisation by the ZIN-B. In Decision No U-I-25/95 of 27 November 1997 (para. 91), the Constitutional Court of the Republic of Slovenia (hereinafter: the Constitutional Court) allowed (of course, at the time, in the context of the ZKP) the possibility of assessing the similar measure under the ZKP in terms of a breach of the right to privacy and of personal rights, particularly questioning the introduction of such a measure in the context of minor offences prosecution from the point of view of the proportionality principle. Finally, the undefined legal framework of simulated purchases pursuant to ZIN-B and the lack of material and procedural legal safeguards also legitimately raise the question of compliance with the rule of law (lex certa) principle which demands strict regulation of any state authorisations, in particular when infringements of constitutional safeguards are at stake.

Therefore, if you become a victim of a (tax) inspection authority's "covert investigation", you may legitimately decide to consider filing a motion for the constitutional assessment of the newly introduced simulated purchase authorisation as regulated pursuant to the ZIN-B.