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10.15 pm

Let us reflect on the fact that this is a new and complicated tax. We do not yet know how complicated, because even Ministers and civil servants do not know yet exactly what the status and shape of the new regulations will be. It is asking a lot of the industry to get to grips with such complicated legislation--and ever-changing regulations, no doubt. This will be virgin territory even for tax advisers. Surely the balance should be the other way, giving the taxpayer a better chance of getting to grips with the legislation.

Mr. Bercow: We are all enthused by the hon. Gentleman's position on the subject, as well as by the juridical exegesis by my hon. Friend the Member for Croydon, South (Mr. Ottaway). I do not in any way cavil at the perfectly sound points that the hon. Gentleman has made, but what assessment has he made of the limited scope of the commissioners' discretion in modifying financial liability under subsection (9)? Is it too limited, not limited enough, or about right?

Mr. Davey: From my detailed study of the subsection, my instinctive reaction would be that it is not limited enough. That is the problem: there are not enough limits on the commissioners, who are given the benefit of the doubt, while the taxpayer is not. I would be surprised if the taxpayers charter, which is much talked about but less kept to, would allow such legislation if it were properly applied to the clause. That is why the amendments have some validity.

The Government could think of other ways of dealing with the problem. Perhaps they could decide that the 45-day period given to the taxpayer to request a review should be lengthened, allowing fuller consideration of whether such a review would be worth while. That might be a sensible compromise. I am not sure whether Conservative Members would agree, but the Liberal Democrats would consider that a good alternative.

The Government have said in justification of the levy that it is not a revenue-raising measure. We question whether that is the case, but to stay faithful to that view, they should not put such a limitation on the taxpayer. They should say that there is no need for restrictive anti-avoidance measures and give the taxpayer the benefit of the doubt, extending the period and allowing some flexibility.

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I wish that the Government would both accept the amendment and extend the period for the taxpayer. That would prevent the tax from becoming even more burdensome than it will already be.

Mr. Jack: I seek clarification from the Financial Secretary. Subsection (4) says that when the commissioners first encounter an appeal, there is to be written notification of any decision that they reach--but if I have understood the matter correctly, my hon. Friend the Member for Croydon, South was right to say that if someone challenges that first set of decisions, they simply get a decision without reasons. That is an inconsistency.

This is important, as the Financial Secretary will appreciate, because decisions do not necessarily stop with the commissioners. In subsection (1) are listed the areas that can be the subject of challenge. Some of those refer to the way in which other parts of the tax will operate. The hon. Member for Kingston and Surbiton (Mr. Davey) rightly drew our attention to the fact that this is a new and untested tax. Subsequent court proceedings could follow from this secondary area of challenge, in which there is no need for a written description of a decision. Yet in the first instance there is a requirement for a written decision.

In these days of transparency and openness, I worry greatly about not having such information available for public scrutiny. For example, there is a case of a judge-made decision that affects every Member of the House, yet the reasoning behind it does not appear in the public domain. I refer to the case of Lord Levy, whose tax affairs appeared in the public prints. When that was challenged, the judge was supposed to have said that anybody in public office was fair game when it came to publishing such details. However, no reasons were given as to why that decision was reached. We have no idea, individually or collectively, how vulnerable we are to private information entering the public domain.

People may wish to challenge for a second time the various ways in which the tax operates, yet any decision that may arise concerning this novel form of taxation is without explanation. That is dangerous, particularly if someone subsequently takes the matter on through the courts, and, possibly, to the House of Lords.

Mr. Timms: I think that I can give some reassurance on these points, particularly to the hon. Member for Croydon, South (Mr. Ottaway). The provisions have been designed to meet in full the requirements of the Human Rights Act 1998. My right hon. Friend the Chancellor of the Exchequer was therefore able to sign the statement on the front of the Bill with complete confidence.

These are important provisions. We have referred to them a number of times already because they are mentioned at various points in the Bill. Under different parts of the legislation, the opportunity of review, and then appeal, is available.

The key point, which the hon. Member for Croydon, South missed--or at least, did not refer to--is that there are two stages to the process. The right hon. Member for Fylde (Mr. Jack) picked that up. There is the review, dealt with in clause 40, and there are the appeals against reviewed decisions, dealt with in clause 41, to which amendment No. 23 refers. I do not think that that

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amendment has been mentioned in the debate, but it is grouped with amendment No. 22. There may have been a misunderstanding about how those two elements relate to each other.

I make the point again, as I have done frequently throughout the debate, that these provisions are in keeping with those relating to other taxes such as the landfill tax, introduced by the previous Government. In practice, Customs and Excise will respond to all requests for review. However, the provision that failure to reply will be taken as confirmation of the original decision is, in reality, a safeguard. If that provision were not in place, it would be possible for Customs and Excise to delay giving an answer to a review--although I am sure that it would not do so--thereby delaying the appeal, which is the next stage in the process to which taxpayers have access.

Under the Bill, if Customs and Excise did not respond within the 45-day period, there would be a full appeal to a tribunal, as set out in clause 41(1)(a), which is in the interests of the taxpayer.

Mr. Letwin: I am grateful to the Financial Secretary. Perhaps he was merely being witty, but surely he recognises that our amendment would provide a safeguard, and that, unlike his safeguard, ours would be a real one. It would ensure that the commissioners had to produce an answer or end up revoking their original decision. There would then be no need for a tribunal, with all the expense to which that would put the taxpayer.

Mr. Timms: The amendment is pretty meaningless. An assessment will be made and a review requested, normally on the grounds that the amount of money required should be reduced. The hon. Gentleman suggested that the decision would then be revoked, but what does that mean? Would the taxpayer have no liability? "Revoked" is not an appropriate word in this context, as it does not give a satisfactory outcome to the process. I do not agree that the amendment is helpful or in the interests of the taxpayer.

Mr. Davey: In the process described by the Minister, the tribunal could go ahead with no indication from the commissioners as to why they took their original decision. The process is therefore flawed, because we need a cut-off point by which the commissioners should give their justification so that the tribunal can go ahead on the basis of that reasoning.

Mr. Timms: It will be in the interests of Customs and Excise to give its reasons so that the tribunal can consider them. That is why Customs and Excise will, in practice, respond within 45 days. The measure as drafted clearly protects the interests of the taxpayer by ensuring that there is no delay in proceeding to the appeal, at which the tribunal can consider the matter. That is completely consistent with the Human Rights Act.

The hon. Member for Kingston and Surbiton (Mr. Davey) queried the appropriateness of the 45-day period within which a request for a review must be made. A balance must be struck, but the Bill gets it about right, and reflects arrangements elsewhere in the tax system. The period of 45 days--a bit more than six weeks--is enough to enable research to be undertaken, but not long enough for people to become complacent or dilatory. A person need not necessarily deposit all the grounds for

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review within the 45 days in every case. If a case were complex, Customs could take a sympathetic view, while still guarding against the frivolous attempts to delay proper administration of the tax that occur from time to time.

Mr. Jack: Will the Minister address my point? Subsection (4) deems it necessary for a written decision to be given in the first instance. Subsection (5) reminds us that new information may be considered in a second or subsequent challenge to the first decision. In spite of that, however, when a decision is reached at the later stage, nothing is required in writing. Why is there that difference?

Mr. Timms: In practice, there would be written notification of the decision. My reading is that written notification would, in fact, be required. I shall reflect on the point, and if I am mistaken, I shall come back to it--but I think that written notification would be given in practice, as it should be.

I hope that I have persuaded the Committee that this measure is in the interests of taxpayers and protects their position. It is wholly consistent with the Human Rights Act, and I hope that the Opposition will not press it to a vote.

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