Commissioners for Revenue and Customs Bill

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Mr. Burnett: One reason why we ask for fetters on the clause is that occasionally the taxpayer base is very small. Sometimes, there can be a taxpayer base of just one company and one major transaction. I am thinking particularly of stamp duty reserve tax. We were told in proceedings on the 1998 Finance Bill that all loopholes had been closed; I think that that related to the fact that stamp duty had changed so much. Contrary to those assertions, when British Petroleum merged with the non-US assets of, I think, Mobil—I might have the names wrong—something like £1 billion or £1.5 billion in stamp duty reserve tax was lost because the companies used a perfectly legitimate avoidance method.

The loopholes have not been blocked satisfactorily, and that gives a specific taxpayer's case relevance to Ministers. That is why we really need to know whether the duty that we are talking about is a duty to the Crown and a duty always to act in good faith. That is not to impugn the integrity of the Paymaster General here today. We want legislation that inures all Ministers, whatever the party in government. We want statute that ensures integrity, whoever has conduct of our affairs.

Mr. David Heathcoat-Amory (Wells) (Con): I shall intervene briefly. I could not be here this morning—I apologise for that—so I shall just emphasise two points that were made. I do so from the perspective of having been a Minister in the Treasury, and having had charge of Customs and Excise. I do not know whether that is an interest that I should declare. I am totally proud to have been in charge of the department for a year or two. On the basis of that experience, I am rather alarmed by the clause.

First, on the phrase ''general nature'', I understand that the Paymaster General believes the phrase to be a helpful restriction, but it is still fairly vague. In my view, it might not catch directions of a fairly specific but broad character, such as a direction to the new Revenue department not to pursue certain
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investigations involving other Government Departments or agencies, or even public servants or Ministers. Such a direction might be interpreted, or at least varnished, as being a direction of a general nature. Such an act might not be specific to an individual, but nevertheless it would make considerable mischief. I am not sure that the restriction ''general nature'' gives an adequate safeguard.

My other point is about the nature of the direction. I know that I missed this point being made, but has it been illustrated and confirmed that the new direction would have to be in writing? One assumes so. Quite apart from everything else, if it were not, the Minister would not know whether any direction had been given by previous Governments or Ministers. I would also like to probe the Paymaster General further on what she told the Committee about going through what had been done by previous Ministers in the Department to see whether they had issued directions. I do not know how she can be so sure whether those directions had been given orally. I have met the head of Customs and Excise regularly and nothing that I have said to him could possibly be interpreted as a direction. However, under the clause, the Minister of the day might have a new power to issue oral instructions. The instructions must be in writing and must be made public. When defending her remarks, the right hon. Lady said that matters were not known about previously because they had not been published and were not on the public record. Presumably, that means that instructions will be in writing and publicly available. Will she reassure the Committee about that?

Dawn Primarolo: I am happy to do so. I am surprised by what the right hon. Gentleman said. I refer him to the customs legislation. I shall provide the Committee with Inland Revenue evidence, too. Section 6(2) of the Customs and Excise Management Act 1979 states:

    ''the Commissioners shall, subject to the general control of the Treasury''.

Section 1(2) of the Inland Revenue Regulation Act 1890 states:

    ''subject to the authority, control and direction of the Treasury''.

There is no statutory requirement to signify that such action be carried out by convention.

The general direction requirement was used in 1890 in respect of the Inland Revenue and, under the more recent Act, for Customs and Excise. Ministers, including the right hon. Gentleman, operated within the definitions of general direction, using PSA targets, spending settlements, advice from Departments, and the priorities and policies pursued on behalf of the Government of the day. There is a saying, ''If something works, why fix it?'' Such a policy has worked. Everyone understands how it works.

I say to the hon. Member for Sevenoaks that, when bringing together the two departments, it is important that in no way should there be any diminution of taxpayers' confidentiality. Even though such a requirement is set out in the Act to which I referred, it should be contained in the Bill. Our discussions today have been extremely helpful, but I am puzzled
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by the response of the hon. Member for Chichester, who has knowledge of the Treasury, and of the right hon. Member for Wells (Mr. Heathcoat-Amory), who has been a Treasury Minister and operated within such general control and authority.

Mr. Heathcoat-Amory: Could the Paymaster General now answer my question? I know how I operated under such legislation, but will she tell the Committee how she will operate under future legislation and say, in particular, whether the directions under the clause are to be in writing and are to be published?

Dawn Primarolo: The departments will ask me to make a decision when I have sought information from them. There will be a copy of that in writing. I then make a decision that is transmitted to the departments in writing. There will be a lot of dialogue and exchange of information. There will be meetings and an audit trail.

Mr. Tyrie: Will the Paymaster General give way on that point?

Dawn Primarolo: No. I want to finish my point before giving way. If I am being asked whether I have ever given an instruction to override specific advice given to me by either Department—I have been a Minister in both—the answer is no, I have never issued such an instruction.

Mr. Tyrie: We want to know what a direction is. In answer to my right hon. Friend the Member for Wells, the Paymaster General said, ''I send letters out all the time.'' Are those directions, or not? As I understand what she has said until now, they are not. She has now used the word ''instructions'', but this is the first time that we have heard it. They seem to be some higher layer, above directions.

We are thoroughly confused about what the clause means, and I do not think that the Government are too sure about it. Practice that has been rolling along for the best part of a century is going to be disturbed by the creation of the new department and the need to codify legislation. The provisions have not been thought through, so we shall press our amendment.

Dawn Primarolo: Although I gave way to the hon. Gentleman, I said a very long time ago what the provision means. It means that Ministers can set strategic, high-level direction. I really regret what hon. Members are saying about their difficulty with the word ''directions''. They have asked whether it means instruct, enforce or require. In responding, I have tried to probe what it means. It means that Ministers can set the strategic, high-level direction on policy, expenditure, the use of resources, PSA targets, spending settlements and—the Bill provides for this for the first time—the annual remit, which will be published. That is what it means.
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Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 8.

Division No. 2]

Burnett, Mr. John Fallon, Mr. Michael Heathcoat-Amory, Mr. David
Laws, Mr. David Ruffley, Mr. David Tyrie, Mr. Andrew

Bailey, Mr. Adrian Clark, Mrs. Helen Fitzpatrick, Jim Healey, John
Henderson, Mr. Ivan Perham, Linda Primarolo, Dawn Williams, Mrs. Betty

Question accordingly negatived.

3.45 pm

The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill:—

The Committee divided: Ayes 8, Noes 6.

Division No. 3]

Bailey, Mr. Adrian Clark, Mrs. Helen Fitzpatrick, Jim Healey, John
Henderson, Mr. Ivan Perham, Linda Primarolo, Dawn Williams, Mrs. Betty

Burnett, Mr. John Fallon, Mr. Michael Heathcoat-Amory, Mr. David
Laws, Mr. David Ruffley, Mr. David Tyrie, Mr. Andrew

Question accordingly agreed to

Clause 10 ordered to stand part of the Bill.

Clauses 11 to 15 ordered to stand part of the Bill.

Schedule 2

Functions of Commissioners and Officers: Restrictions, &c. Amendments made:

No. 21, in schedule 2, page 27, line 17, at end insert—

    'A power under any of the following provisions of the Taxes Management Act 1970 may be exercised only in connection with functions relating to matters to which section 6 above applies—

    (a) section 21 (stock jobbers' transactions),

    (b) section 23 (copies of registers of securities), and

    (c) section 24 (information about income from securities).'.

No. 22, in schedule 2, page 27, line 18, leave out

    'the Taxes Management Act 1970 (c.9)'

    and insert 'that Act'.

No. 23, in schedule 2, page 28, leave out lines 12 to 14 and insert—

    '(1) Article 85 of the Police and Criminal Evidence (Northern Ireland) Order 1989 (application to customs and excise) shall not apply to investigations in connection with a matter to which section 6 above applies.

    (2) Section 6(4) above shall not have effect in relation to a function conferred by order under Article 85 of that Order.'.

No. 24, in schedule 2, page 29, line 21, after 'obtained', insert 'or is held'.
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No. 25, in schedule 2, page 29, line 27, after 'obtained', insert 'or is held'.

No. 26, in schedule 2, page 29, line 32, leave out

    'was obtained in the exercise of a function'

    and insert

    'has not been held solely in the exercise of functions'.

No. 27, in schedule 2, page 29, line 38, after 'obtained', insert 'or is held'.

No. 28, in schedule 2, page 29, line 39, at end insert—

    'Terrorism Act 2000 (c.11)

    Information may be supplied in accordance with paragraph 4(2) of Schedule 14 to the Terrorism Act 2000 (c.11) (exercise of officers' powers) only if the information has not been held solely in the exercise of functions relating to matters to which section 6 above applies.'.

No. 29, in schedule 2, page 30, line 5, after 'obtained', insert 'or is held'.

—[Dawn Primarolo.]

Schedule 2, as amended, agreed to.

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