Column Number: 125
Standing Committee B
Tuesday 20 May 2003
[Sir Nicholas Winterton in the Chair]
(Except Clauses 1, 4, 5, 9, 14, 22, 42, 56, 57, 124, 130 to 135, 138, 139, 148 and 184 and Schedules 5, 6, 19 and 25, and any new Clauses and Schedules tabled by Friday 9th May 2003 relating to excise duty on spirits or R&D tax credits for oil exploration.)
The Chairman: If hon. Members want to take jackets or cardigans off, they are free to do so, as I indicated earlier.
Time limit and right to further review
Mr. Stephen O'Brien (Eddisbury): I beg to move amendment No. 123, in
clause 34, page 26, line 23, leave out 'given' and insert 'issued by the taxpayer'.
The Chairman: With this it will be convenient to discuss amendment No. 124, in
clause 34, page 26, line 26, leave out 'given' and insert 'issued by the Commissioners.'.
Mr. O'Brien: Welcome back from the comfort break, as you would describe it, Sir Nicholas.
We are discussing import and export civil penalties. The clause sets down the time limit for requesting a review by Her Majesty's Customs and Excise of decisions when it is contended that a breach of a Customs requirement has taken place. Cutting straight to the chase, rather than describing the provision in great detail, the problem as we see it, and the reason for the amendments, is that the time limit is based on the time at which ''relevant notice is given''. In the interests of clarity, particularly for small businesses, which are uppermost in my mind, it would be helpful to have the phrase ''relevant notice . . . given'' defined, so that all parties know whether it refers to the date when the notice is prepared, the date when it is issued, or the date when it is received by the taxpayer.
The solution to the problem, as contained in the amendments, is that the time limit for an appeal should run from the date that the notice is issued, which should be on the notice itself. The time limit for a reply should run to the date on which the taxpayer issues a reply. The Economic Secretary might say that the argument against that is that, although basing a time limit for appeal on the time that the notice is received by the taxpayer is helpful to the taxpayer, it is likely to cause additional debate and argument, and that would not aid the simplification that is sought. The provision is a prime example of where we should hesitate and consider the balance to be struck between the taxing authorities and the citizens of this country—the taxpayers. When provisions are finely balanced, we should always err on the side of the taxpayer, who
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often will not have the same resources to be able to contend with the public authorities.
I do not want to water down anti-avoidance measures. I repeat that we are all on the side of anti-avoidance. However, simply because something is cloaked with the term ''anti-avoidance'' we cannot defer, or ignore, the normal rights and balances that should be uppermost in the minds of all hon. Members.
Amendments Nos. 123 and 124 would put into effect the recommended solution to this serious and important matter that I have outlined. The solution is wholly consistent with the normal approach that we would expect to apply in relations between the potentially over-mighty state and the citizen taxpayer of this country. With those comments, I hope that the amendment will find favour with the Minister.
The Economic Secretary to the Treasury (John Healey): Clause 33 provides the taxpayer with the right to require Customs to review its decision that a taxpayer is liable for a civil penalty, whether or not a penalty has actually been imposed. Clause 34 sets time limits in which a person requiring a review under clause 33 must notify Customs. It also provides the right to require a decision to be reviewed a second or subsequent time, but only when new facts or matters are presented.
Amendments Nos. 123 and 124, which the hon. Member for Eddisbury (Mr. O'Brien) has tabled, are clearly aimed at clarification, as he said. I contend that they are unnecessary and in some ways unhelpful. If accepted, they would provide the opportunity for potential abuse of the time limits by the taxpayer and Customs. The amendments rightly identify ''given'' as a key word in clause 34(1) and (2). In both subsections, that can rightly be interpreted as meaning that the notice referred to must be both issued and received. However, the amendments provide only for the issue of a notice, in one case by the taxpayer and in the other by Customs.
The hon. Gentleman is seeking clarity, so I shall try to be clear for the record. We shall resist amendment No. 123 because it would give unscrupulous taxpayers the opportunity to claim that they had missed deadlines about which they knew nothing. Amendment No. 124 would give Customs the opportunity to put the taxpayer in the same, unfair position. The use of the word ''given'', with its meaning of the notice being both issued and received, offers the necessary protection to both parties: the taxpayer in clause 34(2) and Customs in 34(1).
Mr. Jonathan Djanogly (Huntingdon): If that is the case, why could the Bill not say ''issued and received'' to give the clarity that the Government intend to apply, rather than have the current wording, which does not seem to say either?
John Healey: I believe that the formulation has sufficient certainty and clarity. We are essentially following established precedent, as I shall explain in a moment.
Accepting the amendments would create practical difficulties, frustrating the proper process of the provision. If amendment No. 123 were accepted, a taxpayer could claim that a notice requiring a review had been issued, and could complain that no review had taken place or leave Customs with an impossibly short time in which to conduct a proper review. Conversely, adopting the wording in amendment No. 124 could disadvantage a taxpayer who had not received the notice containing the original decision, in the event of non-receipt because the time period had expired before he became aware of the disputed decision, or in the event of late receipt because he was left insufficient time in which to marshal his arguments against the decision.
In passing, I draw the Committee's attention to clause 34(4), which makes it clear that Customs will be able to review its decisions in appropriate cases in which the taxpayer has not given it a notice requiring such a review within the time limit set down. The facts of each case will determine whether Customs exercises that option. It may take into account such factors as postal delays, computer breakdown and illness of key personnel. The regime is comparable to the excise regime, in which the same deadlines and arrangements as those in clause 34 apply.
The taxpayer must give a notice to Customs if they require a review, and must do so within 45 days of receiving notice of the disputed decision.
I accept that the amendments are well intentioned, but they are unnecessary and, to a degree, unhelpful, as the wording in the clause already achieves the effect that he desires. I hope that, in the light of my comments, he will seek leave to withdraw the amendment.
Mr. O'Brien: I have listened carefully to the Economic Secretary and I take his arguments at face value and in good faith. The difficulty remains that I am as yet unclear whether the phrase ''relevant notice is given'' replicates standard practice across all the relevant legislation relating to taxpayers. It is incumbent on us to ensure that, even though many of the clauses are dealt with by high-powered professionals who advise various clients, legislation should be usable by small businesses without advice. That is certainly part of the tax rewrite project approach, and it has been confirmed that the Government have attempted to style the clause in that manner.
In the colloquial way in which it is used, most people regard the phrase ''when notice is given'' as notice that has emanated from the person giving it. It does not necessarily mean that it is ''received'', although I can understand how the Economic Secretary sought to argue that point. Therefore, ''issued and received'' would have been a good way of dealing with the problem, as my hon. Friend the Member for Huntingdon (Mr. Djanogly) mentioned. If our amendments were adopted, ''issued'' would cover the point on both sides of the equation. The simple way to deal with such matters is to make sure that a notice is sent by recorded delivery, so that a person knows that it has been received. That seems to be a practical solution. As I have not been satisfied by the Minister's response, I wish to press the amendment.
Question put, That the amendment be made:—
The Committee divided: Ayes 8, Noes 16.
Division No. 8]
Baron, Mr. John
Burnett, Mr. John
Djanogly, Mr. Jonathan
Flight, Mr. Howard
Jack, Mr. Michael
O'Brien, Mr. Stephen
Wilshire, Mr. David
Cunningham, Mr. Jim
Hendrick, Mr. Mark
Howarth, Mr. George
Munn, Ms Meg
Pond, Mr. Chris
Question accordingly negatived.
Clause 34 ordered to stand part of the Bill.
Powers of Commissioners on a review
Mr. O'Brien: I beg to move amendment No. 131, in
The Chairman: With this it will be convenient to discuss the following:
Amendment No. 132, in
clause 35, page 27, line 15, leave out from 'which' to end of line 18 and insert—
(a) the notice requiring a review issued by the person or his representative in accordance with section 33 is received by the Commissioners, or
(b) the review is agreed to by the Commissioners as mentioned in section 34(4).'.
Amendment No. 120, in