Finance Bill

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Mr. Djanogly: Surely the purpose of the Bill is not to cater for the sicknesses of individuals in the Inland Revenue. Surely the point is that people want determination within a set period and it is up to the authorities to ensure that they have the organisation to deliver that.

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John Healey: The hon. Gentleman's point underlines mine. Customs and Excise manages the regime, not the Inland Revenue.

The purpose of the clause, as with the excise regime, is to ensure that traders who believe that judgments are flawed can challenge them and know that that challenge can be made in a timely way. If, for any unavoidable reason, Customs and Excise is unable to meet its part of the arrangement within 45 days, that trader, irrespective of any delays or problems with Customs and Excise, may choose to take the case to a tribunal.

Mr. Jack: The Minister said that the procedure is paralleled by similar procedures under existing Customs and Excise legislation. Can he tell the Committee whether Customs and Excise has received representations from any representative body complaining about the existing procedures and their operation?

John Healey: I regret that I cannot at this stage give a certain response to that question. However, I shall examine it and, if such representations have been received, I will write to the right hon. Gentleman and send a copy to Committee members. I ask my hon. Friends to resist the amendment if the hon. Member for Eddisbury chooses to press it.

Amendment No. 132 seeks to clarify where no clarification is necessary. The clause provides for a 45-day period from the day on which the review is required by the taxpayer under clause 33. Customs and Excise must receive a notice of requirement to be aware of the need to review and the mechanism by which it is made aware is already provided in clauses 33 and 34(1). I hope that I have demonstrated that the amendment is unnecessary and that hon. Gentleman will choose not to press it.

On amendment No. 120, let me say that clause 36 sets out a number of rights and powers concerning tribunals, including the listing of decisions that may be appealed against. To provide certainty, clause 36(1) makes it clear that when Customs and Excise has failed to notify a review decision within the specified period and is consequently deemed to have upheld the original decision in accordance with clause 35(4), the taxpayer has the certainty that he can appeal to a tribunal against the upheld decision should he wish to do so. The same arrangements and powers operate under the excise regime. The amendment would remove that element of certainty for the taxpayer, and I hope that Opposition Members will reflect on that and not press the amendment.

Mr. O'Brien: I have listened carefully to the Minister and recognise the encompassing approach of clauses 35 and 36.

The hon. Member for Wolverhampton, South-West (Rob Marris) made an interesting intervention, which the Minister found telling. There is a clear answer to the parallel that he drew with planning law, in addition to the incisive observation from my hon. Friend the Member for Huntingdon. The basis of planning law is that a citizen seeks to have something granted by public authorities, whereas the taxing authorities would not be in that position and a review would not be sought if the taxing authorities were not seeking to extract something from the citizen. If one examines carefully the directions that the propositions in those two examples would give, planning law has a slightly different context than the clause, under which the taxpayer needs to be given protection.

Mr. Burnett: A more searing and important reason for the analogy being completely inappropriate is that a local planning authority is an arm of the Executive, albeit of local government. The commissioners are part of a judicial and independent function.

Mr. O'Brien: I am grateful to the hon. Gentleman, who made an important point that supports an intervention on the previous clause. On the basis that that can be distinguished, the issue is certainty. There is a balance of argument between certainty for the taxing authorities and certainty for taxpayers. One person's draconian power is another person's potential oppression. We must consider that carefully, and while those phrases may seem extreme, they represent the extremes of the argument.

The Minister sought to rely on the difficulty that the amendments might encourage an orchestrated campaign, but, as we are dealing with civil penalties, I respectfully submit that he must not overlook the interplay between the civil penalties and the remaining criminal penalties. If there was an orchestrated campaign or conspiracy, criminal jurisdictions would apply. That is a problem, and the Economic Secretary would not want civil penalties to be substituted. That is a fair distinction.

It is interesting that PricewaterhouseCoopers said of clause 35, and in support the amendment:

''This amendment seeks to remove an unwelcome development. As the relevant clause . . . stands, if the time limit for the Commissioners to reply passes, they are treated as confirming their original notice. This rewards inaction and penalises the taxpayer, who must then appeal to the Tribunal. This does not seem the right balance. In other areas (notably tax clearances) a lack of reply means a decision in the taxpayer's favour. I would not like to see this form of decision by inaction becoming the norm.''

That is the nub of the arguments that we have tried to put across. The amendments may seem at first flush to be de minimis, but they go to the heart of the balance between taxpayers and taxing authorities.

As my arguments do not appear to have gained the Minister's favour, I shall press the amendment to a vote.

Question put, That the amendment be made:—

The Committee divided: Ayes 9, Noes 15.

Division No. 9]

AYES
Baron, Mr. John Burnett, Mr. John Djanogly, Mr. Jonathan Flight, Mr. Howard Jack, Mr. Michael
O'Brien, Mr. Stephen Price, Adam Prisk, Mr. Mark Wilshire, Mr. David

NOES
Cruddas, Jon Cunningham, Mr. Jim Cunningham, Tony Healey, John Hendrick, Mr. Mark Howarth, Mr. George Mallaber, Judy Marris, Rob
Merron, Gillian Mountford, Kali Munn, Ms Meg Pond, Mr. Chris Primarolo, Dawn Quinn, Lawrie Trickett, Jon

Question accordingly negatived.

Clause 35 ordered to stand part of the Bill.

Clause 36 ordered to stand part of the Bill.

Clause 37

Appeal Tribunals

John Healey: I beg to move amendment No. 158, in

clause 37, page 28, line 4, leave out '35' and insert '36'.

Clause 37 provides for appeals against decisions by Customs and Excise to be settled by agreement. It also allows for the recovery of costs awarded against an appellant as though they were customs duty. It is sometimes possible to settle appeal cases by agreement rather than by resorting to a tribunal hearing. The provision, which will result in savings for all parties, mirrors the provisions in use in the VAT civil penalty regime.

I have written to the hon. Member for Eddisbury and other members of the Committee about Government amendment No. 158 explaining that an incorrect reference has unfortunately been included in the published clause. The clause should refer to section 36 of the proposed legislation but instead refers to section 35. The Government amendment therefore corrects the clerical error.

Mr. O'Brien: I am grateful to the Economic Secretary for writing to all members of the Committee. We agree with the amendment, although I am cross that I had not spotted the mistake because I thought that I had read the Bill from cover to cover.

Amendment agreed to.

Clause 37, as amended, ordered to stand part of the Bill.

Clause 38

Admissibility of certain

statements and documents

Question proposed, That the clause stand part of the Bill.

Mr. O'Brien: The clause relates to the admissibility of certain statements and documents. I want to place on the record the concerns expressed by the Institute of Chartered Accountants in England and Wales. We have not tabled an amendment, but if issues surface in the light of the Economic Secretary's remarks, further consideration may be given to the clause on Report.

The ICAEW states:

''Clauses 38, 98 and 203 are all related to the difference in treatment accorded to direct and indirect taxes and the existence of the hitherto clear Hansard procedure for direct tax which precluded criminal prosecution where a successful negotiation of civil penalty and full disclosure has been made.

We believe the reservation of the right to use information obtained in the process of a successfully negotiated civil settlement without adequate safeguards is contrary to the Human Rights Act 1998 and contravenes the Human Rights Convention.''

We have discussed the matter before and the Economic Secretary has revealed why he believes that our concerns are not founded. It is nevertheless helpful to put the concerns on the record and it will be interesting to hear what he has to say. ICAEW goes on:

''Information obtained as part of a settlement should be inadmissible and a taxpayer who has successfully agreed a settlement should be free from the fear of criminal prosecution unless he has broken the requirements of disclosure. Clause 203 has, we feel, removed the certainty given in the House last November in respect of Hansard. Clause 38 replicates the existing anomaly within section 60(4)''

of the Value Added Tax Act 1994. My hon. Friend the Member for Hertford and Stortford (Mr. Prisk) will discuss clause 98 when we get the chance to debate stamp duty land tax.

The ICAEW concludes:

''Lastly in this respect we have long sought to have a 'joined up' approach whereby a disclosure for the purposes of one tax will be accepted as a disclosure for all taxes provided the taxpayer makes it clear at the time the disclosure is made. This would be an ideal opportunity to introduce this simple but significant improvement to the civil penalties regime.''

On the basis that I outlined earlier, I look forward to the Economic Secretary's reply.

3.15 pm

 

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Prepared 20 May 2003