Commissioners for Revenue and Customs Bill

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Dawn Primarolo: I assumed on seeing amendment No. 78 that the hon. Member for Chichester was tabling a probing amendment. I could not believe that he would actually remove powers that would enable the effective and efficient collection of VAT. So I am going to respond to the points he was making with regard to powers, rather than the substance of the amendment, unless he particularly presses me. The substance of the amendment basically removes the ability to enforce and collect VAT. He referred to those very few taxpayers who, none the less, require consistent encouragement and persistence from Customs in order to pay the VAT that is due to the Revenue departments. So I shall concentrate on the points made by both hon. Gentlemen about the principle of powers stretching across the clauses. The hon. Member for Chichester identified why we need to read clauses 5 and 6 together. I start with the first position.

Hundreds of different powers apply across the many regimes currently administered by the Inland Revenue and Her Majesty's Customs and Excise. I take the word power to mean the right of the department concerned to take discretionary action in respect of an individual taxpayer in order to monitor and assist and, when necessary, to enforce compliance with the law. It is almost always capable of being backed by sanctions.

I want to deal with all the questions on consultation and its scope in one go. First, I shall deal with the specific questions about the restrictions on Revenue and Customs powers as they are transferred to the new department. The hon. Gentleman asked about a point that he said had been raised in their submission by the Scottish accountants, which was on information sharing between departments. That already goes on. I understand that such information has been collected at information gateways for some time. That adds to the complexity of trying to approach a difficult series of questions.

The hon. Gentleman said that Customs uses its more extensive powers to enforce Customs and Excise-based tax, but that sharing the information could result in what might be called information creep. However, that already happens; and in order to ensure that the departments fulfil the objective of protecting the Revenue base through the merger, which I know is of concern to the hon. Gentleman, that has to remain the case.

Mr. Tyrie: There is a huge difference between the staff of two independent and separately run departments deciding to exchange a piece of information—having thought about it carefully and perhaps having consulted a superior—and two people sitting side by side, cheek by jowl or on opposite sides of the corridor having a chat each afternoon about a particular client.

Dawn Primarolo: I do not know whether the hon. Gentleman has noticed, but those teams have been working side by side for a considerable time, both under the previous Government and under the closer working strategy. It is not new.

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I acknowledge the theoretical point that the hon. Gentleman makes about the importance of clarity, and I have been doing my best to ensure that the drafting of the Bill and the draft advice note indicate under what circumstances the powers could be used by officers of the respective department in relation to the different taxes in order to act as a bridge in the move to consultation.

The hon. Gentleman asked whether there was a parallel provision—he said that the Bill appeared to restrict Customs powers only to Customs taxes, but that it seemed to work differently for the Inland Revenue. [Interruption.]

The Chairman: Order. I remind hon. Members that long and extensive conversations in Committee are not permitted. Brief conversations on matters before the Committee are permitted. I should be grateful if right hon. and hon. Members recognised that.

Dawn Primarolo: Thank you, Sir John.

As the hon. Member for Chichester said, clauses 5 and 6 are closely related. A parallel arrangement for the Inland Revenue can be found in clause 6(2), which states that the Revenue has a new transfer ability insofar as it is exercised in relation to Revenue functions. That brings me directly to the question of consultation.

10.15 am

I agree entirely with the hon. Gentleman that it is about checks and balances. The consultation will be a large exercise, given the overriding requirement of the new department to protect the Revenue base. It will cover the appropriateness of existing powers regimes, including the option of the abolition of the risk assistance, the name for the Customs powers that the hon. Gentleman was referring to. It will look at the benefits of greater consistency of approach across taxes and duties in respect of requirements to provide information, interest, surcharge regimes for late payment, penalties for non-compliance and rights of appeal. The hon. Gentleman alluded to that when he was comparing the level of authority required in some of the Customs legislation for use of some of the powers with that required in the Inland Revenue. It works in the other direction as well—there are some Revenue powers where Customs powers require a higher authority. It will go to the heart of the question that the hon. Gentleman is also raising: what are the modern powers and practices that the new department—I think the hon. Gentleman said ''in this changed world''—might need to allow it to build on the considerable success to date and deliver its public service agreement targets? What might it need to ensure the taxpayers'—on Second Reading I said ''experience'', which caused some hilarity in the Chamber, so let me rephrase it—contact with the department is efficient for the taxpayer as well? Rather than having to go to lots of different places, if the taxpayer is dealing with one department, the taxpayer
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should be able to tell it certain types of information once, to ensure that we have efficient services with improved compliance.

In addition, the hon. Gentleman raised a question, as an example of the Hansard approach, about serious fraud. The revenue departments are currently reviewing their civil procedures and working practices in cases of suspected serious evasion. This may involve—I will have to wait and see what the review says—changes and new procedure under Her Majesty's Revenue and Customs. It is important to say clearly that the department will be seeking the views of all those that the department regularly consults with, and who will have views on these matters.

I am sure that the hon. Gentleman and Members of this Committee can see that that is a vast task. The process is that a consultation document will hopefully be issued by the end of the month—that is my intention and what we are working towards.

As the Minister, I am hoping to start the legislative process for the required changes in the Finance Bill 2006. It is difficult to say whether it will all be dealt with in that Bill, whether that is the appropriate vehicle, or how large the exercise is. That may need to be revisited. I am trying to emphasise that we are going to try to be clear, that there will be proper consultation and that this matter should not drift for a considerable time. However, we need to have some causal principles and everybody—Members of this House, Ministers and the bodies that we shall be consulting—needs to understand the direction that we intend to take. We shall use as a model—this is a compliment to the previous Government—the very successful model that they used for consultation when introducing self-assessment. It works extremely well, is focused and moves us forward.

I hope that that supplies the information that the hon. Gentleman was seeking with regard to the intentions. I have clarified the check in relation to the Inland Revenue and I have made it clear that there is already information sharing between the two departments, and has been for some time. He referred to the harmonisation of powers. I call them the appropriate powers. I think that we are basically talking about the same thing. However, that will be underpinned by the fact that in some respects we have quite different taxes operating. VAT is very different from corporation tax or national insurance. None the less, there needs to be some understanding so that people are clear on the current process.

The last point was that raised by the hon. Member for Yeovil in connection with the drafting. The Bill converts all of the terms used in current legislation to ''officer of Revenue and Customs'', as I said earlier. We are attempting to simplify things. All the terms are listed to ensure that all references from different legislation over many years are picked up. That returns to the point that I made on the programme motion: it is complex ensuring that all the legislation dovetails in. That is the answer to the hon. Gentleman's question.

I hope that the hon. Member for Chichester will not press his amendment to the vote. It would be a very expensive commitment by the Opposition. I am not
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going to be mischievous, because I know that it was only a probing amendment. I hope that I have dealt with all the issues. He made a point about having a Keith-type commission. I hope that he can see that the process is to deal with all the issues, but in a certain time frame and with openness. That is a good way to proceed, as he said, in a modern world—rather than using a process that worked 20 years ago.

Mr. Tyrie: We have travelled some distance. The Minister has managed to be mischievous and reasonable at the same time on one or two occasions. She has taken us some distance, but she has fallen short of explaining what—to use her phrase—''proper consultation'' is. It would be helpful to know. She says that we will use the precedent of self-assessment. Although self-assessment was a big process, it was far less fundamental and far less sensitive—although it is sensitive in itself—than the issues that would be raised by a fundamental change in the powers of the institutions. There is nothing that upsets our constituents and businesses more than the heavy-handed use of those powers, or worse, their occasional abuse or the act of apparently overstepping them. On the Revenue side, the commissioners spend quite a deal of time policing that and, as we know, there is a tribunal system on the Customs side. Again, those are different approaches to bringing the checks and balances to the whole system.

I am a little perturbed. The Minister says that she will do this in the Finance Bill 2006. That is a relatively short time frame and, who knows, perhaps I will be presenting the Finance Bill 2006 and she can stand here and have a go at what I propose, which would be putting somebody in charge of a thoroughgoing review who is demonstrably independent and who commands widespread respect in the business community and among those who are affected by the exercise of those powers.

I do not expect the Minister to make a decision on the spot because I have not discussed the matter with her beforehand, but I ask her to give me some reassurance that she will go away and think about whether it might be worth while finding somebody of that type to put together a small committee with a relatively tight time frame to do exactly what I am describing: to go through the issues that we have both agreed we need to examine, to report back, probably to go through some quick scrutiny by the Treasury committee and then to bring the matter before us as legislation that amends the four or five major Acts to which I have referred.

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