Finance Bill

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Mr. John Burnett (Torridge and West Devon): I support the amendment wholeheartedly. I do not believe that it is in the interests of the Inland Revenue, let alone the taxpayers, that e-filing should be mandatory; it should be permissive. We all want to encourage electronic communication, but the Government are taking the power to make e-filing mandatory and that is simply not on. The clause will give the Government unbridled power that would substantially and adversely affect the lives of many

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people, especially the elderly who are not conversant with the internet, and who are invariably assiduous and law-abiding people.

Mr. Bercow: Many people would be frightened by, and feel vulnerable because of, the arrangements of the clause. I am not suggesting that the person to whom I am about to refer is the most obviously vulnerable person or one easily frightened, but one person who would have grave difficulty if the clause were enacted would be my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), who has gone on the record as saying that he would not recognise a website if it jumped out of his breakfast cereal.

Mr. Burnett: The right hon. Member for Bromley and Chislehurst is not alone among Members of the House. There are many of us, and I confess that my knowledge of such matters leaves much to be desired, although I am considering taking courses.

I return to the elderly and other individuals not conversant with e-mail and the internet. Those people will have to pay to go to intermediaries. They will be forced to do so and will incur expenditure that they can ill afford.

Mr. Iain Luke (Dundee, East): Does the hon. Gentleman not accept that the elderly people doing tax returns that we are talking about will inevitably be going to agents anyway to ensure that their tax returns are properly processed?

Mr. Burnett: No, absolutely not. I should like to place it on the record that, for years and years, I acted for a number of owner-managed businesses, and I found that many people, especially at the smaller end, did their own tax returns and filing. They did so for many reasons: first, because they were competent to do so; secondly, because they were honest; and, thirdly, because they could not afford to pay accountants to do it for them.

Mr. Peter Luff (Mid-Worcestershire): There is, of course, the question of elderly people who employ domestic help. They will certainly not be using professional help.

Mr. Burnett: Indeed, that is correct. I believe that that point was alluded to by the hon. Member for Buckingham (Mr. Bercow) when he referred to the major and compelling objections of a number of the professional bodies. Rarely have I seen unity on such a scale when discussing policy measures introduced by a Government. I do not want to repeat verbatim what the hon. Gentleman said, but the Institute of Directors has made it absolutely clear that it is not appropriate to compel people to file electronically. It thinks it deplorable that the regulations will, in effect, require taxpayers to use intermediaries and strongly believes that the words ''or require'' should be deleted.

I refer to the submissions made on behalf of the Institute of Chartered Accountants. The hon. Gentleman has already referred to some of them. The ICA is a distinguished and authoritative body, and the Government should take heed of what it says. It questions whether the clause is compatible with the European convention on human rights, and says, quite clearly:

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    ''We feel strongly that the attempt to make an e-filing regime compulsory is the wrong approach. Whilst supporting the moves towards e-filing we believe the incentives should be by way of carrot, not stick.''

The Paymaster General (Dawn Primarolo): Will the hon. Gentleman share with the Committee why those institutions believe that moving to e-filing is a good thing?

Mr. Burnett: For the very reasons that I, the hon. Member for Buckingham and others in the Committee have adumbrated. The Chartered Institute of Taxation states:

    ''We are concerned that these clauses impose a burden on all taxpayers not just those identified by the Carter Review and we believe that there should be let-outs for taxpayers who either cannot afford or choose not to use electronic communication.''

Mr. Mark Hendrick (Preston): Does the hon. Gentleman accept that, with the current roll-out rate of digital services, it is likely that, by 2010, people will be able to submit their tax returns through the equivalent of a television set?

Mr. Burnett: I am afraid that I disagree with the hon. Gentleman. The year 2010 is slightly less than eight years from now, and there are people aged 50 in my constituency who want and prefer to use paper and do not wish to file their returns on the internet. They are also deeply concerned about confidentiality.

Mr. Bercow: The hon. Gentleman is developing a powerful argument. I suggest to him that the position of the hon. Member for Preston (Mr. Hendrick) is flawed on both counts. He seems blissfully unaware that he is hoist with his own petard. Does the hon. Member for Torridge and West Devon (Mr. Burnett) agree that if the time scale is unrealistically tight, that is an argument against compulsion; if, as the hon. Member for Preston fondly imagines, it will be easily achievable, what is the need for compulsion?

Mr. Burnett: Absolutely right. That is a good very point.

I referred to confidentiality just before those interventions. People are not convinced about the security of such matters and that point of view should be respected. After all, we heard this morning on the news that people can tap in to the electronic communications of the Royal Family and senior Government Ministers, so what hope is there for individuals in small country towns and cities who submit their own tax returns, which often contain confidential details of their lives? It is not on and the Government should think again. The provision should be permissive, but mandatory e-mailing must be dropped. Permissive, yes; mandatory, definitely not.

Chris Grayling: I want to reinforce the comments made by my hon. Friend the Member for Buckingham and the hon. Member for Torridge and West Devon, and to raise another matter of concern that would result from this thoroughly ill-thought-out measure.

This debate reflects the complete absence of understanding on the Government Benches of the reality of running a business. The range of businesses in this country is hugely diverse, with different cultures, different experience, different working environments and so on. To tell them that they must

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do something with no choice defies all logic and suggests a complete absence of understanding. The Government seem to think that there is a large creature called ''business'' and that rules and regulations can be thrown at it and absorbed. The Government never seem to think through and consider the other end of their actions—the small business man or woman doing their books at home on a Sunday night and coping with the complexities, issues and changes that the Government require them to take on.

The Government, rightly and sensibly, want to encourage e-filing and none of us in the Committee disputes the logic for many business of being able to pursue such a route, but we part company with the Government's absolute insistence that there should be no choice. That is ill thought-out, narrow minded and does no favours for our hard-working business people.

We have heard about the issues that may arise. The hon. Member for Torridge and West Devon referred to people of the older generation and their unwillingness to change their way of working. Why should they? We expect the older generation to work longer in the future and we expect businesses to stay in business longer. People in traditional small craft firms—for example, those with masonry skills who carve elegant repairs on the sides of our cathedrals, those who thatch roofs, and others skilled in traditional crafts—will be asked to change the way that they work as they work into their older years and to buy the equipment to enable them to change the way that they work. That is illogical, unfair and unnecessary.

More particularly, another issue that has not yet been referred to is corporate security. Many companies have taken the decision to have a firm wall around their internal networks to the point where there are no links between those networks and the outside world for security reasons because, whether we like it or not, it is possible to hack into virtually any network anywhere in the world. Some people make a living from hacking their way into networks, finding confidential financial information and using it against those businesses or to cause trouble for them.

I am aware of companies that have taken a specific decision no longer to provide electronic links from their networks to the outside world. They may have a couple of machines in the office from which staff are able to send e-mails, but they do not provide external links. Are the Government telling those companies that they must put in place external links that feed straight through to their financial systems, to enable them to lodge an e-file of their PAYE details, even if they have strategic reasons for being unwilling to provide such links, such as consciousness of the security implications—potentially, national security implications? Will companies no longer have the ability to cut themselves off from the internet if they believe that the risk is not worth while? Will the Government compel such organisations to open their networks to outside links? It would be extremely foolish to do so, for the reasons that we have heard today.

Mr. Hendrick: Has the hon. Gentleman heard of encryption?

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Chris Grayling: The hon. Member for Preston demonstrates his naivety in that intervention. If one considers the evolution of technology, it is absolutely clear that there are no guarantees on the internet. There are no guarantees with encryption, because it is breakable. People make a living breaking encryption technology. I know of companies that have specifically said that it is not worth the risk.

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Prepared 25 June 2002