Clause 22: Rewards

131.      This clause gives the Commissioners for HM Revenue and Customs a discretionary power to pay rewards for service to them or their officers by any person in relation to a function of the new department or its officers. The power conferred by the clause would replace a similar power in relation to Customs and Excise matters, under section 165 Customs and Excise Management Act (CEMA) 1979, and a more limited power to pay rewards to informers in relation to Inland Revenue matters, under section 32 Inland Revenue Regulation Act 1890.

Clause 23: Inspection England and Wales

132.      This clause provides for Her Majesty's Inspectors of Constabulary (HMIC) to scrutinise how HMRC ensures compliance with the laws, rules and procedures of the criminal justice system.

133.      Subsection (1) provides for the Treasury to make regulations to enable HMIC to undertake inspection functions in relation to the Commissioners for HM Revenue and Customs and the officers of Revenue and Customs.

134.      Subsection (2)(a) to (e) lists the matters in relation to which regulations may be made.

135.      Subsection 2(a) provides for HMIC to carry out a programme of inspections in HMRC similar to those carried out by it of Police Forces in England and Wales. The approach is not simply to apply the relevant provisions of the Police Act 1996 because arrangements will need to be tailored to the circumstances of HMRC.

136.      Subsection 2(b) provides for Ministers and the Commissioners for HM Revenue and Customs to require HMIC to carry out specific inspections of functional business activities of, and operational business units within, HMRC.

137.      Subsection 2(c) provides for reports on inspections to be made by HMIC. Such reports may be edited according to provisions in the regulations and then published. Examples of reasons for editing might include national security or where it is felt that individual's safety might be jeopardised. It is expected that the regulations will specify that reports shall be made to the Chancellor and the Commissioners for HM Revenue and Customs.

138.      Subsection 2(d) provides for an annual report by HMIC. It is envisaged that this report will be made to the Chancellor and the Commissioners for HM Revenue and Customs in respect of the inspections performed in HMRC during the year and be published.

139.      Subsection 2(e) provides the option for payment arrangements to be made if necessary and appropriate by the Commissioners for HM Revenue and Customs in respect of inspections carried out by HMIC.

140.      HMIC inspections will not cover the full range of HMRC's activity, but will be focussed on those areas involved in law enforcement where their expertise is most relevant.

141.      Subsection (3) ensures that there is no duplication between the HMIC functions under the clause and wider public audit functions by providing that an HMIC inspection should not cover the issues of overall efficiency, effectiveness and economy in use of resources that are conducted on behalf of the Comptroller and Auditor General under the National Audit Act 1983.

142.      Subsection (4) provides that the regulations to be made under subsection (1) are to be made by Statutory Instrument subject to annulment by either House of Parliament (negative resolution procedure).

143.      Subsection (5) confines the scope of the regulations to functions exercised in or in relation to England and Wales.

Clause 24: Complaints and misconduct: England and Wales

144.      This clause provides for the Independent Police Complaints Commission's (IPCC) remit to be expanded to provide coverage of HMRC.

145.      Subsection(1) provides for the Treasury to make regulations setting out the arrangements for such coverage. This covers both Commissioners and officers to ensure comprehensive coverage.

146.      Subsection (2)(a) provides for the IPCC to carry out for HMRC a similar role to that it performs in respect of Police Forces in England and Wales where it examines police complaint handling procedures and undertakes or supervises investigations. The approach is not simply to apply the relevant provisions of the Police Reform Act 2002 because arrangements will need to be tailored to the circumstances of HMRC. It is not proposed that the IPCC will have a role in relation to all actions officers of Revenue and Customs which result in disciplinary action; only those where there are allegations of criminal conduct or gross misconduct. Again reflecting the practice for the Police, where IPCC has a role, they may choose not to investigate directly, but to decide to supervise or manage an investigation instead, depending on the circumstances.

147.      Subsection( 2)(b) provides for IPCC or a person acting on its behalf, to be given as necessary, the same powers as an officer of Revenue and Customs, to enable the discharge of its responsibilities in respect of HMRC.

148.      Subsection (2)(c) provides the option for payment arrangements to be made if necessary and appropriate by the Commissioners for HM Revenue and Customs in respect of the functions carried out by the IPCC.

149.      Subsection (3) provides that the regulations to be made under subsection (1) are to be made by Statutory Instrument subject to annulment by either House (negative resolution procedure).

150.      Subsection (4) confines the scope of the regulations to functions exercised in or in relation to England and Wales.

Clause 25: Confidentiality, &c.

151.      This clause covers the use and disclosure by HMIC and the IPCC of information obtained in the course of their functions.

152.      Subsection (1) requires that information obtained by HMIC may only be used by it for the purposes of carrying out an inspection and may not be disclosed without the consent of the Commissioners for HM Revenue and Customs.

153.      Subsection(2) requires that any report made by HMIC may not include information relating to a specified person without his consent.

154.      Subsection(3) requires that information obtained by the IPCC from an official source in the course of an investigation may only be used by it for the purposes of that investigation. Any disclosure of such information is subject to any restrictions imposed by or under regulations made under clause 24(1) (complaints and misconduct).

155.      Subsection(4) specifies that an offence will be committed by any persons contravening the provisions in respect of disclosure.

156.      Subsection(5) provides a defence for any person charged with an offence of disclosing or using information where he can prove that he reasonably believed disclosure or use was lawful, or that the information had already been lawfully made available to the public.

157.      Subsection(6) sets out the penalties where a person is found guilty of unlawful disclosure under these provisions.

158.      Subsection(7) lays down the roles and responsibilities for mounting prosecutions under these provisions in England and Wales.

159.      It may be noted that clause 50(2) specifies liability to a reduced sentence on summary conviction where the offence under these provisions was committed before the commencement of section 282 of the Criminal Justice Act 2003.

Clause 26: Impersonation

160.      Under subsection (1) it is a criminal offence for any person to attempt to pass themselves off as a Commissioner for HM Revenue and Customs or officer of Revenue and Customs in order to gain any form of benefit. A 'benefit' includes obtaining entry to property or obtaining information. The individual does not have to actually receive any benefit from the impersonation for an offence to be committed - an intention to obtain a benefit is sufficient.

161.      Subsection (2) provides for the penalty for committing the offence. A person may be imprisoned for a maximum of 51 weeks, may be fined (up to £5,000), or may be both imprisoned and fined. This maximum penalty is, however, subject to clause 50(2). Where an offence is committed before section 281 of the Criminal Justice Act 2003 comes into force, the maximum sentence for the offence will be 6 months and / or a fine (the Criminal Justice Act provisions increase the maximum sentence for summary only offences, such as this, from 6 months to 51 weeks).

162.      Subsection (3) provides for a lower penalty of 6 months for offences committed in Scotland and Northern Ireland to accord with their arrangements for maximum summary penalties.

Clause 27: Obstruction

163.      Subsection (1) of the clause provides for an offence of obstructing:

• a officer of Revenue and Customs;

• a person acting on behalf of either the Commissioners or an officer of Revenue and Customs; or

• a person assisting an officer of Revenue and Customs.

• 164.      The provision applies only when the officer or other person specified in subsection (1) is acting in accordance with his statutory duties. So obstruction of an officer when they are not exercising statutory duties - for example when they are not at work - would not be an offence under this provision. Furthermore, a person will not be guilty of an offence if they have a reasonable excuse for the obstructing behaviour. The type of activities that could constitute obstruction in the context of HMRC might include:

• an action to impede a lawful search;

• an action intended to prevent a lawful arrest;

• an action intended to impede the seizure of smuggled goods that are liable to forfeiture; or

• an action which prevents giving of evidence as to whether such goods are liable to forfeiture.

165.      Subsection (2) provides for the penalty for committing the offence. A person may, upon conviction, be imprisoned for up to 51 weeks, or fined (up to £1,000), or both imprisoned and fined. This maximum penalty is, however, subject to the provisions at clause 50(3). Where an offence is committed before section 281 of the Criminal Justice Act 2003 comes into force, the maximum sentence for the offence will be 3 months and / or a fine (the Criminal Justice Act provisions increase the maximum sentence for summary only offences, such as this, from 3 months to 51 weeks).

166.      Subsection (3) provides for a lower penalty of 6 months for offences committed in Northern Ireland and Scotland to accord with their arrangements for maximum summary penalties.

Clause 28: Assault

167.      This clause provides for assault on an officer of Revenue and Customs to be a criminal offence. The provision applies only when the officer is acting in the course of his duties, so an assault on an off-duty officer would not be an offence under this provision.

168.      Subsection (2) provides for the penalty for committing the offence. A person may, upon conviction, be imprisoned for up to 51 weeks, fined (up to £5,000), or both imprisoned and fined. This maximum penalty is, however, subject to the provisions at clause 45(4). Where an offence is committed before the provisions of section 281 of the Criminal Justice Act 2003 come into force, the maximum sentence for the offence will be 6 months and / or a fine (the Criminal Justice Act provisions increase the maximum sentence for summary only offences, such as this, from 6 months to 51 weeks).

169.      Subsection (3) provides for a lower penalty of 6 months for offences committed in Northern Ireland and Scotland to accord with their arrangements for maximum summary penalties.

Clause 29: Power of arrest

170.      Clause 29 permits a person to be arrested for the offences at clauses 26 to 28, and specifies who may make that arrest.

171.      Under subsection (1), an arrest may be made on the basis of reasonable suspicion that a person has committed an offence specified at clauses 26 to 28, is in the process of committing such an offence, or is about to commit such an offence. No arrest warrant is required for an arrest to be made.

172.      Subsection (1) provides for the arrest to be made by an authorised officer of Revenue and Customs. Subsection (2) confirms that authorisation must be given by the Commissioners. So an officer who is not the subject of a valid authorisation by the Commissioners may not exercise the power of arrest for these offences.

173.      Subsection (3) specifies the forms in which an authorisation may be given. Authorisations may be:

• by specific designation, whereby the Commissioners authorise a specified individual to exercise the power of arrest; or

• by general designation, whereby the Commissioners authorise a certain type or group of officers based upon criteria that the Commissioners may specify.

174.      So, for example, the Commissioners could generally designate all officers working in particular law enforcement jobs who have up to date training in arrest matters.

175.      In accordance with clause 20(2) and subsection (3)(e) (evidence), the Commissioners may confirm in writing that an officer was the subject of a designation under this provision at a specified time.

Clause 30: The Revenue and Customs Prosecutions Office

176.      This clause and schedule 3 establish the Revenue and Customs Prosecutions Office (RCPO) as a separate department, independent of HMRC and the two predecessor departments. Together they set out the structure of the Office by creating the office of the Director of Revenue and Customs Prosecutions, who will have responsibility for employing RCPO staff. The Director's jurisdiction to conduct Revenue and Customs prosecutions extends to England and Wales only. The present arrangements will continue in respect of prosecutions, following investigations by officers of Revenue and Customs, in Scotland and in Northern Ireland.

177.      Subsection (1) provides for the appointment by the Attorney General of a Director of Revenue and Customs Prosecutions.

178.      Subsection (2) gives the Director power to appoint staff subject to the approval of the Minister of the Civil Service as to their terms and conditions.

179.      Subsection (3) provides for the Director and his staff to be known as the Revenue and Customs Prosecutions Office.

180.      Subsection (4) introduces Schedule 3, which makes further provision relating to the Office.

Clause 31: Functions

181.      This clause sets out the functions of the Director in relation to the provision of legal advice and the institution and conduct of certain prosecutions. The Director's power to institute proceedings does not preclude HMRC from instituting such proceedings themselves. In addition to the institution and conduct of a criminal prosecution for offences investigated by HMRC, the Director will have the power to institute and conduct all proceedings related to that prosecution, including (but not confined to) proceedings for the restraint and confiscation of assets held by those subject to (or potentially subject to) prosecution.

182.      Subsection (1) provides that the Director has both a power to institute and to conduct all criminal proceedings in England and Wales arising from an investigation by HMRC and a duty to take over criminal proceedings instituted by Revenue and Customs in England and Wales.

183.      Subsection (2) enables the Director to provide such advice as he considers appropriate in relation to investigations carried out by HMRC and criminal proceedings in England and Wales in relation to such investigations. He may provide advice to all those involved in such investigations, including officers from other agencies working alongside HMRC on HMRC investigations and officers who may be carrying out investigations in Scotland or Northern Ireland which are expected to result in the institution of criminal proceedings in England and Wales.

184.      Subsection (4) provides that the Attorney may, if he considers appropriate, additionally assign to the Director the function of instituting or assuming the conduct of proceedings other than those set out in clause 31(1). Following such assignment. the Director may also provide advice in relation to the investigations, prosecutions and related proceedings which have been so assigned.

185.      Subsection (5) construes references to the institution of criminal proceedings for the purposes of this clause and defines "criminal investigations" for the purposes of the clause.

Clause 32: Functions: supplemental

186.      Subsection (1) provides that the Director is required to discharge his functions under the superintendence of the Attorney. The Attorney has a similar power of superintendence in relation to the functions of both the Director of Public Prosecutions (DPP) and the Director of the Serious Fraud Office. Accordingly the Director RCPO is accountable to the Attorney for the exercise of his functions and, in turn, the Attorney will answer to Parliament for the exercise of these functions by the Director.

187.      Subsection (2) requires the Director and prosecutors to have regard to the Code of Crown Prosecutors at all key stages prior to and during criminal proceedings.

188.      Subsection (3) provides the Director with a power to discontinue proceedings of which he has conduct. An equivalent power has been exercised by the DPP in relation to proceedings of which he has conduct before the magistrates` courts since the inception of the Crown Prosecution Service and latterly in relation also to those of his proceedings which are before the Crown Court.

Clause 33: Prosecutors

189.      This clause provides that the Director may designate legally qualified members of his staff as Revenue and Customs Prosecutors. They will be able to exercise all those functions of the Director set out in clause 31: giving advice in certain criminal investigations and proceedings and the institution and conduct of criminal prosecutions and related proceedings. It additionally stipulates that all Revenue and Customs prosecutors must act in accordance with any instructions given to them by the Director.

Clause 34: Conduct of prosecutions on behalf of the Office

190.      This clause confers a power on the Director to appoint legally qualified persons who are not employed by him to institute and conduct any specified criminal proceedings or class of proceedings. These persons must hold a general qualification under the Courts and Legal Services Act 1990 i.e. they must be able to exercise a right of audience in proceedings in the Supreme Court, county courts or magistrates' courts. They must act in accordance with instructions given to them either by the Director or by a Revenue and Customs prosecutor

Clause 35: Designation of non-legal staff

191.      This clause provides for the Director to designate any person, who is not legally qualified, as having a right of audience before the magistrates` courts in relation to certain procedural hearings which may arise in the course of a prosecution of which the Director has conduct. Such procedural hearings are principally remands, bail applications and directions hearings. A number of these hearings are currently conducted by officers but this will cease and, after appropriate training, designated persons will take over these functions. The clause does not provide for a right of audience in trials at magistrates` courts or any hearing before other tribunals. Any such designated person must exercise the powers designated to him in accordance with instructions given to him by the Director or a Revenue and Customs prosecutor.

Clause 36: Confidentiality

192.      The clause lays down a code of confidentiality for the Revenue and Customs Prosecutions Office, and the circumstances in which disclosures of information can be made. The clause also establishes a criminal offence to buttress the duty of confidentiality, and lays down how such an offence will be prosecuted.

193.      Subsection (1) lays down the general principle that the Revenue and Customs Prosecutions Office may not disclose information relating to an identifiable person held by the Office. This term is defined in subsection (5).

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

195.      Subsection (2)(a) allows a disclosure to be made for the purposes of a function of the Prosecutions Office, which does not contravene any restriction imposed by the Director. This would cover, for example, a disclosure made in connection with a civil proceeding ancillary to a prosecution, which might well be a public act.

196.      Subsection(2)(b) allows a disclosure to be made for the purposes of criminal proceedings, which is the principal business of the Office.

197.      Subsection (2)(c) allows a disclosure in pursuance of an order of a court, such as a subpoena or witness summons.

198.      Subsection (2)(d) covers a disclosure made with the consent of each person to whom the information relates.

199.      Subsection (2)(e) covers disclosure pursuant to any other enactment. This would include for example the disclosure under section 8(1) National Audit Act 1983 to the Comptroller and Auditor General of departmental documents which he reasonably requires for the purposes of his audit.

200.      Subsection (3) makes it an offence for any person to contravene the non-disclosure provisions of subsection (1) in relation to information relating to a person whose identity can be identified, either directly from the disclosure, or which can be deduced from it. 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.

201.      Subsection (4) provides certain defences for a person charged with the subsection (3) 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 subsection (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 in a subsequent unlawful disclosure to say that the information had been disclosed previously, if that previous disclosure was itself unlawful.

202.      Subsection (5) defines "the Revenue and Customs Prosecution Office" for the purposes of the section. The definition looks forward to the time when there will be persons who were members of the Office, or who were appointed to conduct prosecutions under clause 34, but have ceased to be so, e.g. by retirement or resignation. "The Revenue and Customs Prosecutions Office", the set of persons to be subject to the statutory duty imposed by subsection (1), is therefore defined to be the aggregate of:

• the Revenue and Customs Prosecutions Office, being the Director and his current staff, as defined in clause 30(3); and

• former members of the Office, and persons who have are or have been appointed to conduct proceedings on the Director's behalf, under clause 34.

203.      Subsection (6) lays down the penalties for those found guilty of the offence under subsection (3). 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.

204.      Subsection (7) 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.

205.      Subsection (8) 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.

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

207.      Subsection (9) provides that the maximum penalty on summary conviction in Northern Ireland is to be six months, rather than twelve, to accord with normal Northern Ireland arrangements for maximum summary penalties.

208.      It should also be noted that clause 50(6) makes a temporary change to the maximum penalty of imprisonment on summary conviction, provided for under subsection (6) (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).