Clause 8: Ancillary powers

57.      This clause provides the Commissioners with ancillary powers to do anything necessary in connection with the exercise of their functions or incidental business. Examples are:

• the gathering of information relating to the exercise of its functions;

• establishing advisory bodies;

• entering into agreements;

• acquiring and disposing of property; and

• promoting, or assisting in the promotion of, publicity about the tax system.

Clause 9: The Valuation Office

58.      This clause enables HM Revenue and Customs to carry on the work currently undertaken by the Valuation Office Agency of the Inland Revenue.

59.      Subsection (1) lists the duties of the officers within the Valuation Office Agency. They are to provide any valuations of property needed in relation to the functions of HMRC. They may provide property valuations at the request of any other public authority. They may also provide property valuations where these are needed in connection with a public function (for example, a multiple compulsory purchase by a public utility), or with the management of property distributed in the exercise of a public function (for example advising government and third party partners on policy programmes such as the Sustainable Communities agenda).

60.      Subsection (2) allows the Commissioners to charge fees for valuation services provided to other public authorities.

61.      Subsection (3) makes clear that the functions of such officers cover giving related advice, as well as providing actual valuations.

Clause 10: Treasury directions

62.      This clause sets out the relationship between the Treasury and the Commissioners' exercise of their functions.

63.      It carries forward the existing oversight by the Treasury of the predecessor Commissioners' exercise of their statutory functions. "Any directions of a general nature" replaces a variety of expressions in previous legislation, and applies to all the functions of the Commissioners for Revenue and Customs provided to them by clause 4. In the exercise of those functions, it gives the right for the Treasury, for example, to direct the Commissioners' strategies and call them to account for the overall effect of actions taken by them, but not to direct day-to-day or operational decisions. Thus it does not provide for Treasury to be able to decide or be otherwise involved in, for example and in particular, an individual taxpayer's affairs.

Clause 11: Commissioners' arrangements

64.      This clause provides for the Commissioners to determine the arrangements for the conduct of their proceedings, including any of their committees under subsection (1)(b), subject to the condition at subsection (3) that agreement to such arrangements must be taken by more than half of the Commissioners holding office at the time the arrangements are adopted.

65.      Subsection (2) describes how particular arrangements may be made for the exercise of Commissioners' functions. Paragraph (a) provides for the Commissioners to make arrangements to exercise their functions through a quorum of Commissioners at meetings. Paragraph (b) provides for Commissioners to make arrangements for a function of Commissioners to be exercised by two or more Commissioners or a specified number of Commissioners greater than two. Part 1 of Schedule 2 places restrictions on the exercise of functions.

Clause 12: Exercise of Commissioners' functions by officers

66.      This clause provides for officers of Revenue and Customs to exercise any function of the Commissioners, other than a function reserved to Commissioners by subsection (3). It closely follows existing arrangements for the officers of the predecessor departments. In the exercise of a function of the Commissioners, subsection (2)(b) places a duty on officers of Revenue and Customs to comply with the directions of Commissioners made under clause 2(3) and with arrangements made under clause 11. Part 1 of Schedule 2 places restrictions on the exercise of functions.

67.      Subsection (3) reserves to Commissioners the exercise of certain functions. Paragraph (a) prevents the delegation of the Commissioners' function of making, by statutory instrument, a regulation, rule or order, and paragraphs (b) and (c) similarly prevents the delegation of approving an application for a warrant to search premises under section 20C of the Taxes Management Act 1970 (c.9), or to enter premises under Part 7 of Schedule 13 to the Finance act 2003 (c.14).

Clause 13: Delegation

68.      Subsection (1) provides for Commissioners, or a number of Commissioners, to delegate a function of the Commissioners to a single Commissioner, a committee established by the Commissioners, or to any other person, other than matters reserved for Commissioners by subsection 2. These delegations would be made in accordance with the arrangements determined under clause 11, and Part 1 of Schedule 2 places restrictions on the exercise of functions.

69.      Subsection (1)(b) provides for the delegation of a function of the Commissioners to one of their committees, which may include committees whose members are neither Commissioners nor officers of Revenue and Customs. This allows the Commissioners, for example, to adopt sound corporate governance practice such as setting up an Audit Committee, to be chaired by a person who is neither a Commissioner nor an officer, and whose membership may include persons of a similar status. Such non-executives may join with the Commissioners to form a board, with the intention of bringing from outside of HMRC different experience and an independent perspective to the work of the board.

70.      Subsection (2) reserves to Commissioners the exercise of certain functions, which because they cannot be delegated under subsection 1 to a single Commissioner, means that two or more Commissioners must exercise these functions. These reserved functions are the same as those that apply to the exercise of Commissioners' functions by officers of Revenue and Customs at clause 12(3).

71.      Subsection (3)(a) provides that, if a function of the Commissioners is delegated, such delegation does not prevent the Commissioners, or a number of Commissioners (under the arrangements made under clause 11), from exercising that function themselves. Similarly, under paragraph (b), other than matters reserved for Commissioners under subsection(2) or subject to express provision to the contrary in a direction issued by the Commissioners under clause 2(3), the delegation of a function of Commissioners does not prevent the exercise of that function by an officer of Revenue and Customs. This clarifies that, although Commissioners' functions can be delegated, that does not prevent the Commissioners from exercising those functions themselves.

72.      Subsection (4) places certain conditions on the delegation of Commissioners' functions, made under subsection (1)(c), to any other person who is neither a Commissioner nor an officer. Paragraph (a) places a duty on the Commissioners to monitor the exercise of the function by that person. Paragraph (b) places a duty on the delegate to comply with directions of the Commissioners, or a number of Commissioners (if the function was delegated by Commissioners to a quorum of Commissioners or a number of Commissioners under the arrangements at clause 11).

Clause 14: Agency: Scotland and Northern Ireland

73.      The Scotland Act 1998 and the Northern Ireland Act 1998 both contain provisions that permit Ministers of the Crown and Scottish Ministers or Northern Ireland Departments to act as 'agents' for one another - that is, it allows them to make arrangements to exercise specific functions on behalf of the other party. This 'agency' arrangement does not affect the accountability of the person whose functions are being exercised under the agency agreement.

74.      For example, in the case of an environmental tax which involves tax reliefs based upon compliance with best environmental practice, the tax would remain a reserved matter under the collection and management of HMRC, but HMRC could engage the devolved administration's environmental expertise by engaging them as agents in respect of the technical and specialised aspects of the scheme.

75.      Clause 14 introduces provisions permitting HMRC to be treated as a Minister of the Crown for the purposes of entering into an agency agreement with Scottish Ministers or Northern Ireland Departments.

76.      Subsection (1) permits agency agreements between HMRC and Scottish Ministers, allowing both Commissioners' and officers' functions to be subject to such an agreement. Subsection (2) introduces similar provisions for Northern Ireland.

Clause 15: Restrictions, &c.

77.      This clause introduces Part 1 of Schedule 2, which applies restrictions and makes other provisions on the exercise of certain functions. For example, it prevents the accidental widening of Commissioners' powers.

Clause 16: Use of information

78.      This clause allows the new department, subject to suitable safeguards, to use any of its information, including information inherited from the predecessor departments, to support any function of the department, not just the particular function from which the information was originally derived. This will supersede existing provisions to pool information within a department, together with the existing provision in section 127 Finance Act 1972. Section 127 authorises either set of predecessor Commissioners or their officers to disclose information to the other set of Commissioners or officers for the purpose of assisting the receiving set in the performance of their duties. It will be repealed, as no longer required, on the coming into existence of the new department.

79.      Subsection (1) states the general principle that information acquired by "the Revenue and Customs" (as defined in subsection (3)) in connection with one of their functions may be used by them in connection with any other function. A similar provision is contained in section 435 Proceeds of Crime Act 2002 in relation to the use of information, including taxpayer information, by the Asset Recovery Agency.

80.      Subsection (2) makes the general principle subject to certain exceptions. These are any restriction or prohibition which expressly limits the use of information, as imposed by:

• this Bill itself, such as Part 2 of Schedule 2, which limits the use of certain information in relation to disclosures to other government departments, to prevent the integration of the former departments extending the scope of the information that may be disclosed;

• any other enactment, such as the Data Protection Act 1998 and the Human Rights Act 1998; and

• any international agreement or arrangement of the United Kingdom, such as an express limitation on use of information obtained from a foreign tax authority under a Double Tax Treaty concluded under section 815 C Income and Corporation Taxes Act 1988, or from the Isle of Man Customs and Excise Service under the UK and Isle of Man Revenue Sharing Agreement of 15 October 1979, as amended.

81.      Subsection (3) defines "the Revenue and Customs" for the purposes of subsection (1) as the Commissioners for HM Revenue and Customs, their officers, those, such as contractors, who act on their behalf, and members of committees established by the Commissioners under clause 11(1)(b). It also includes the former Commissioners of Customs and Excise and Inland Revenue and their officers, thereby bringing the holdings of information inherited from those organisations within the new Commissioners' information pool.

82.      Subsection (4) defines "function" in subsection (1) to mean a function of any of the persons who are defined as constituting "the Revenue and Customs". In this way, information derived from any spent, or obsolescent functions of the former Commissioners or officers may also be included in the new Commissioners' information pool.

83.      Subsection (5) introduces Part 2 of Schedule 2 to the Bill, which deals with certain exceptions.

Clause 17: Confidentiality

84.      The clause lays down a code of confidentiality for the new Commissioners and their officers in relation to information held by "the Revenue and Customs", and the circumstances in which disclosures can be made. The clause is based on the provisions of the Inland Revenue statutory declaration (Schedule 1 Taxes Management Act 1970), extended as a statutory duty to all Commissioners and officers of the new department.

85.      Subsection (1) lays down the general principle that "Revenue and Customs officials" may not disclose information held by "the Revenue and Customs". The terms are defined in subsection (4).

86.      Subsection (2) then provides for a limited number of specific circumstances where disclosure may be allowed.

87.      Subsection (2)(a) allows a disclosure to be made for the purposes of a function of the Revenue and Customs, which does not contravene any restriction imposed by the Commissioners. This would cover, for example, a disclosure made in connection with the levy of distress for unpaid taxes, or disclosure to a bank by paying in a tax refund.

88.      Subsection (2)(b) allows a disclosure in the public interest, in accordance with procedures laid down in clause 19.

89.      Subsection (2)(c) allows a disclosure to be made for the purposes of civil or criminal proceedings relating to a function of the Revenue and Customs. This would cover a disclosure in the course of Special Commissioners or VAT and Duties Tribunal or other civil proceedings, or in relation to criminal proceedings in relation to the Commissioners' functions.

90.      Subsection (2)(d) allows a disclosure in pursuance of any order of a court. This would cover a disclosure in accordance with a witness summons.

91.      Subsection (2)(e) covers a disclosure to HM Inspectors of Constabulary, who are to take on an inspectorial function for the new department, under clause 23.

92.      Subsection (2)(f) covers a disclosure to the Independent Police Complaints Commission, who are to take on an oversight of complaint handling about allegations of criminal conduct or gross misconduct for the new department, under clause 24.

93.      Subsection (2)(g) covers a disclosure made with the consent of each person to whom the information relates. This would cover for example an individual case where a taxpayer raised their circumstances with their Member of Parliament, asked them to take the case up with Treasury Ministers, and authorised the Commissioners to disclose what they knew of the case to the Minister for that purpose.

94.      Subsection (3) makes subsection (1) subject to any other enactment permitting disclosure, e.g. section 8 Finance Act 1988, which authorises the Commissioners of Customs and Excise (and in future the Commissioners for HM Revenue and Customs, by virtue of the working of clause 45(1)) to disclose information about imported goods.

95.      Subsection (4) defines "Revenue and Customs officials" and "the Revenue and Customs" for the purposes of the section. The definition looks forward to the time when there will be persons who were Commissioners and officers of the new department, but have ceased to be so, e.g. by retirement or resignation. "Revenue and Customs officials", the persons to be subject to the statutory duty imposed by subsection (1), are therefore defined to be any current or former:

• Commissioner for HM Revenue and Customs;

• officer of Revenue and Customs;

• person acting on behalf of the Commissioners or an officer, for example a contractor; and

• member of a committee established by the Commissioners under clause 11(1)(b).

96.      "The Revenue and Customs", whose holdings of information define the subject matter of the statutory duty under subsection (1), has the same meaning as in clause 16 above, and therefore includes the holdings of information inherited from the predecessor departments within the scope of the statutory duty of confidentiality of the new department.

Clause 18: Wrongful disclosure

97.      Clause 17 lays down a code of confidentiality for the new Commissioners and their officers. Clause 18 establishes a criminal offence, in relation to disclosures about identifiable persons, to buttress the duty of confidentiality, which widens the ambit of the existing offence, and lays down how such an offence will be prosecuted. The clause is based on the existing offence provision of section 182 Finance Act 1989, which applied to both predecessor departments, but extended to cover all functions of the new department.

98.      Subsection (1) makes it an offence for any person to contravene the non-disclosure provisions of clause 17(1), in relation to information relating to a person whose identity is revealed by the disclosure. The term "person" includes both natural and legal persons, and, for example, the tax affairs of a limited company are also protected by the provisions of the subsection.

99.      Subsection (2) provides certain defences for a person charged with the subsection (1) offence. In particular, he will not be guilty of the offence if he proves that he reasonably believed that the disclosure was lawful, that is that the disclosure fell within the terms of clause 17(2). Similarly, he would not be guilty if he proved that he reasonably believed that the information had already been made available to the public, and that this had been done lawfully; it would be no defence as regards a subsequent unlawful disclosure to say that the information had been disclosed previously, if that previous disclosure was itself unlawful.

100.      Subsection (3) lays down the penalties for those found guilty of the offence under subsection (1). The offence is triable "either way", that is:

• either summarily, when the maximum penalty will be 12 months imprisonment, or a fine not exceeding the statutory maximum (currently £5000), or both; or

• on indictment, when the maximum penalty will be two years imprisonment, or an unlimited fine or both.

101.      Subsection (4) provides that a prosecution for the offence may be instituted in England and Wales only by the Director of Revenue and Customs Prosecutions, or with the consent of the Director of Public Prosecutions.

102.      Subsection (5) provides that prosecutions for the offence may be instituted in Northern Ireland (where the Director of Revenue and Customs Prosecutions has no functions) only by the Commissioners, or with the consent of the Director of Public Prosecutions for Northern Ireland.

103.      No comparable provision is needed in Scotland, because the Procurator Fiscal and the Crown Office automatically have exclusive cognisance of summary and indictable offences in Scotland, under the law relating to Scotland, without the need for specific enabling provision.

104.      Subsection (6) provides that the maximum penalty on summary conviction in Scotland and Northern Ireland is to be six months, rather than twelve, to accord with their arrangements for maximum summary penalties.

105.      It should also be noted that clause 50(1) makes a temporary change to the maximum penalty of imprisonment on summary conviction, provided for under subsection (3)(b), reducing it to six months from twelve months, pending the coming into force of a general amending provision about the maximum penalties on summary conviction (section 282 Criminal Justice Act 2003).

106.      Subsection (7) provides that the prosecution of the clause 18(1) offence is without prejudice to other remedies for unlawful disclosure contrary to the clause 17(1) duty of confidentiality e.g. the seeking of an injunction to restrain an unlawful disclosure.

Clause 19: Public interest disclosure

107.      The clause lays down the procedures under which the Commissioners may authorise disclosures in the public interest, in accordance with regulations to be made by the Treasury, subject to an affirmative resolution procedure.

108.      Subsection (1) provides that a disclosure is lawful for the purposes of clause 17(2) (confidentiality) if it is made both on the instructions, either general or specific of the Commissioners, and for a purpose of a kind specified in Treasury regulations.

109.      Subsection (2) limits the purposes the Treasury may specify in the regulations to those where it considers that to permit disclosure for those purposes would be in the public interest.

110.      Subsection (3) sets out a list of ways in which the disclosures to be authorised under the regulations may be limited or restricted, e.g. as to the satisfaction of a public interest test, the nature of the information to be disclosed, the person to whom disclosure may be made, or some combination of factors.

111.      Subsection (4) allows the regulations to impose conditions regulating the further disclosure of information under the clause, and subsection (5) makes it mandatory that the regulations must provide that any disclosure in breach of the restrictions imposed under the clause are subject to the criminal sanction of clause 18 (wrongful disclosure)

112.      Subsection (6) provides that the regulations are to be made subject to an affirmative procedure, requiring a draft of the regulations to be agreed by each House of Parliament. Subsections (7) to (9) set out transitional arrangements for the first regulations to be affirmed after coming into force.

Clause 20: Evidence

113.      This clause consolidates former provisions relating to the proof of documents.

114.      Subsection (1) provides for any document purporting to be issued or signed by one or more Commissioners for HM Revenue and Customs or by any other person with their authority to be treated as having been so issued or signed until the contrary is proved. Such documents are admissible in any legal proceedings.

115.      Subsection (2) provides for any document purporting to be issued by the Commissioners and certifying any of the matters specified in subsection (3) to be treated as accurate until the contrary is proved.

116.      The matters specified in subsection (3) concern the appointment of any particular person as a Commissioner for Revenue and Customs or as an officer of Revenue and Customs. They also concern the time and purpose for which a function was delegated to a particular Commissioner, committee or person.

117.      Subsection(4) provides that a photographic or other copy of a document acquired by the Commissioners, which is certified by them to be an accurate copy is admissible in any legal proceedings to the same extent as the document itself

118.      Subsection(5) applies section 2 the Documentary Evidence Act 1868 to any document issued by the Commissioners for HM Revenue and Customs. In all courts of justice and in any proceedings, the 1868 Act authorises proof of such things as orders in the ways set out in section 2 of that Act. These include production of a copy or extract of the London Gazette containing the orders in question. Thus any notice published in the Gazette will be admissible in proceedings.

119.      Subsection (6) applies section 2(3) of the 1868 Act so as to authorise proof by production of a copy or extract, purporting to be certified to be true, by the Commissioners for HM Revenue and Customs or any other person acting on their authority.

120.      Subsection (7) defines a reference in this clause to a document as meaning a document issued by the Commissioners for HM Revenue and Customs and makes provision for the clause to apply also to any document issued by the Commissioners of Customs and Excise and the Commissioners of Inland Revenue prior to their dissolution.

Clause 21: Conduct of civil proceedings

121.      This clause specifies those persons who may conduct civil proceedings in relation to any function of the Commissioners for HM Revenue and Customs or an officer of Revenue and Customs ('function of the Revenue and Customs').

122.      Subsection (1) provides that an officer of Revenue and Customs, or any person authorised by the Commissioners, whether or not legally qualified, may conduct any civil proceedings in a magistrates' court or the sheriff court in relation to any function of the Revenue and Customs.

123.      Subsection (2) provides that a member of the Commissioners' staff who has been admitted as a solicitor (whether or not he holds a practising certificate) may act as a solicitor in relation to a function of the Revenue and Customs in connection with civil proceedings in England and Wales or Northern Ireland.

124.      Subsection (3) provides that a member of the Commissioners' staff who has been admitted as a solicitor or called to the Bar (whether or not he holds a practising certificate) may conduct civil proceedings in relation to the former Inland Revenue matters specified in clause 6.

125.      Subsection (4) requires a court to grant any rights of audience necessary for a person to perform any function under this clause.

126.      Subsection (5) gives definitions of terms used in the clause.

127.      Subsection (5)(a) defines a "function of the Revenue and Customs" as meaning either a function of the Commissioners for HM Revenue and Customs or a function of an officer of Revenue and Customs.

128.      Subsection (5)(b) defines a reference in this clause to "civil proceedings" as meaning proceedings other than criminal proceedings in respect of an offence.

129.      Subsections (5)(d)and (e) determine the necessary qualification for a "legally qualified" and a "solicitor" member of the Commissioners' staff for the purposes of this clause.

130.      Subsection (6) provides that subsections (2) to (4) do not apply to proceedings in Scotland.