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As always, the hon. Member for Wolverhampton, South-West (Rob Marris) made some good points, some rather quirky points and—by his standards—some rather silly ones. The argument that he and some of his colleagues keep repeating that revenue-raising environmental taxes and behaviour-changing measures
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are fundamentally incompatible is simply wrong. Environmental taxation produces both effects, and if he wants some proof, he should look at the history of his Government’s climate change levy, which has raised more revenue and changed behaviour. That is a good model, on which our policy—and, I am sure, that of others—is based. As he normally makes very good contributions, I hope that he will not repeat that not very worthy point.

The right hon. Member for Suffolk, Coastal (Mr. Gummer), with his vast experience, started off with some good and helpful criticisms, which I took in good part. He then felt that he had to embark on a bit of tribalism too, which no doubt reflects what is happening on the doorsteps in his area at the moment. He told a good joke, however, and I will repeat it at my party’s fundraising dinner.

The Minister made some good, constructive criticisms. I do not intend to press the amendment to a vote, as some useful points have been made. I accept that there is an argument against delay, and that is one of the reasons we do not intend to lose the principle behind the amendment, but will return to it in a different form that captures that criticism properly. As the Minister is opening his mind to a consultation and a review of how the tax would work, I hope that he will accept that he should look more broadly and in the direction that we have indicated. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 12 ordered to stand part of the Bill.

Clause 81

Criminal investigations: powers of Revenue and Customs

Julia Goldsworthy: I beg to move amendment No. 19, in clause 81, page 56, line 7, leave out ‘thinks’ and insert

I should like to incorporate the few remarks that I have to make in the clause stand part debate with my comments on the amendment, tabled by me and my hon. Friend the Member for Twickenham (Dr. Cable). Clauses 81 to 84 amend the Police and Criminal Evidence Act 1984, and I want to place it on the record that it was argued forcefully from our Benches at the time that powers should be extended beyond the police to other arresting authorities, including Customs and Excise. In relation to the 1984 Act, the Bill seeks to reflect the fact that the Inland Revenue and Customs and Excise have since merged. Having said that, we need to be clear about what powers HMRC will take on, and the context in which they will be used. The need to amend the Act must not result in some kind of mission creep in relation to its scope.

Amendment No. 19 flags up an issue that I will flag up again in clause 96 and schedule 24, which deal with penalties issued by HMRC for errors. The issue relates to the burden of proof for action that can be taken depending on what an HMRC officer “thinks”. I want to query not the substance of the clause, but how we deal with the issue of objectivity. There is a range of options. We could take it that an officer just “deems”
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something to be the case, whereas the use of the word “thinks” implies some element of objectivity and some grounds. There should, however, be some burden of proof, whereby the officer

that the previous section should not apply. If we wanted total objectivity, that reference could be taken out altogether, and the clause would read, “if an application under Schedule 1 would not succeed”. I would not want to push it that far; I am simply saying that there should be “reasonable grounds for believing” that to be the case. That issue becomes even more important when we deal with penalties for errors.

I hope that the Minister will respond favourably, as I will raise those issues later, and what he says may have a bearing on the amendments that we choose to table. I hope he will give positive consideration to the need for more objectivity in the language. Although it could be argued that the present wording is easier to understand, there are other more complex drafting issues. It must be clear that there is that element of objectivity.

Mr. Mark Francois (Rayleigh) (Con): I, too, welcome you to the Chair, Mr. Illsley.

Amendment No. 19 appears to relate specifically to the production of documents under the proposed new section 14B of the Police and Criminal Evidence Act 1984. As the amendment is so specific, I propose to speak about it very briefly in order to reserve the main part of my remarks on clause 81 to our amendment No. 2.

Amendment No. 19 seeks to alter the wording relating to the conditions under which an officer of Her Majesty’s Revenue and Customs may use PACE to apply for an order that documents may be produced. The change in the wording from “thinks” to

represents a tightening of the circumstances in which the power may be exercised, and the Conservatives do not object to it.

Rob Marris: The present wording represents a subjective test, whereas the wording proposed in the amendment represents an objective test. I urge my hon. Friend the Financial Secretary to think very carefully about the Government’s response to the amendment.

Following the recent Channel 4 programme and with reference to our previous debate, let me say that a number of my constituents “think” that human activity does not contribute to global warming. Personally, I do not “think” that those individuals have “reasonable grounds” for believing that. There is a difference between the two.

John Healey: I acknowledge the broader comments made by the hon. Member for Falmouth and Camborne (Julia Goldsworthy), and the fact that the hon. Member for Rayleigh (Mr. Francois) promised to make his own broader comments on his amendment in the next group. With your permission, Mr. Illsley, I shall make my broader comments in response to him when we debate the next group of amendments.

On amendment No. 19, however, I want to be quite precise. I can tell the hon. Member for Falmouth and Camborne that it is not necessary. The phrases “the
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officer thinks” and “the officer has reasonable grounds for believing” have the same meaning and effect in the circumstances covered by the clause, but I consider that “think” is clearer, simpler and shorter. Under administrative law a public officer must think reasonably; otherwise, his decision would be unlawful.

I hope that the hon. Lady will reflect on another point. The word “thinks” is well established in United Kingdom law to identify cases in which a judgment must be made, and also to make clear who will make that judgment.

Mr. Heath: As a veteran of countless criminal justice Bills, I would say that it is normal for the concept of reasonable belief, rather than the word “think”, to be used in them. It appears in an awful lot of criminal justice Acts. The reasonableness of an officer’s thought can be challenged only through administrative court proceedings, which is a very long-winded way of arriving at the right decision. I do not think that the concepts “the officer thinks” and “the officer reasonably believes” are entirely congruent.

John Healey: As I have just explained, an officer has a duty to think reasonably, because otherwise his decision would automatically be unlawful under administrative law. I respect the hon. Gentleman’s experience of criminal justice legislation, and the Government have given him plenty of opportunity to accumulate it in recent years when he has spoken on such legislation from the Front Bench. He may be interested to learn, however, that the word “thinks” is used over 3,000 times on the statute book, and I believe that its use here is appropriate.

I can tell the hon. Lady that we have received no representations suggesting that the word “think” in clauses 81 and 82 should be removed or amended since the Bill was published at the end of March—apart, of course from her amendments.

9.30 pm

The hon. Lady mentioned clause 96. She may be aware that representative bodies and tax professionals have expressed reservations to us about the phrase “HMRC thinks” in respect of the clause and the schedule on civil penalties, but the underlying concern raised on those provisions is entirely separate from the clauses on criminal investigations. I will not go into the distinction here. I am sure that we will have a chance to do so in Committee, but in recognition of the anxiety that has been expressed and in response to those representations that have been made, I intend to table an amendment in the Public Bill Committee to clause 96 and schedule 24 on civil penalties. However, it would be inappropriate to change the word “thinks” in clause 81, as her amendment suggests. I therefore hope that she will not press the amendment.

Julia Goldsworthy: I am somewhat reassured by that. I was hoping to ensure that the Bill was consistent in terms of the language used. I think that, under the amendment, there would be a change from the subjective to the objective. I would be quite happy with “reasonably thinks” if the Minister wants straightforward language. He is right, however, that the key area of concern has been around clause 96 and the
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schedule that relates to it and there have been concerns about the use of exactly that language. I and my hon. Friend the Member for Somerton and Frome (Mr. Heath) have tabled amendments on that. I hope that the Minister will accept them when we debate the measure in the Public Bill Committee. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Francois: I beg to move amendment No. 2, in page 56, line 47, at end insert—

‘(2B) Any power or function conferred by a provision of this Act shall, so far as it is exercisable by an officer of Her Majesty’s Revenue and Customs, only be exercised by an officer who has been duly authorised for that purpose by the Board of HMRC and who has been properly trained and supervised.

(2C) For the purposes of subsection (2B), what constitutes “properly trained and supervised” shall be decided by the Board of HMRC with the approval of the responsible Minister.

(2D) Subject to subsection (2E), the number of officers authorised under subsection (2B) shall not exceed 500 at any one time.

(2E) The Treasury may by order amend the number of officers mentioned in subsection (2D).

(2F) The annual report of HMRC shall include an analysis of the use made by officers of HMRC of the powers or functions conferred on them by this Act. The report shall cover the frequency of use of the relevant powers or functions and the circumstances in which they were invoked.

(2G) The report mentioned in subsection (2F) shall also include an analysis of the use made by officers of HMRC of the equivalent powers and functions in Northern Ireland and Scotland.’.

The Temporary Chairman: With this it will be convenient to discuss the following amendments: No. 18, in page 57, line 12, at end add—

‘(12) This section shall come into force on a day which the Treasury may by Order appoint.

(13) No Order under subsection (12) may be made unless—

(a) the Treasury has prepared and laid before the House of Commons a code of practice relating to the exercise of the powers conferred by this section, setting out in particular the circumstances in which the relevant powers of arrest are expected to be used; and

(b) the code mentioned in sub-paragraph (a) has been approved by a resolution of the House of Commons.’.

No. 20, line 12, at end add—

‘(12) Any power of arrest conferred by a provision of this Act as it amends section 114 of the Police and Criminal Evidence Act 1984 shall, so far as it is exercisable by an officer of Her Majesty’s Revenue and Customs, only be exercised by an officer or officers serving in the Criminal Investigation Directorate of HMRC.’.

Mr. Francois: As the Minister mentioned it, may I say quickly that Conservative Members welcome his admission that there has been concern on clause 96? We have received representations on the matter and we look forward to seeing his amendment in due course.

On amendment No. 2, any extension of the powers of the state relative to the individual is a matter that should rightly provoke parliamentary scrutiny, particularly, as in this instance, where it potentially involves powers of arrest. Given that, my purpose this evening is to seek some specific assurances from the
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Minister about how the proposed new powers will operate in practice and some guarantees—I use that word deliberately—that they will not be used arbitrarily to put undue pressure on legitimate taxpayers.

The background to all this is the merger of the Inland Revenue and Customs and Excise, which was brought about by the Commissioners for Revenue and Customs Act 2005, which received Royal Assent on 7 April 2005. Before the merger which created Her Majesty’s Revenue and Customs, the two heritage organisations had different roles and different powers accordingly. HM Customs and Excise has historically had relatively strong powers, including powers of arrest and seizure, which evolved from its role in fighting smugglers and more latterly drug traffickers. Before the merger, those powers were based on the Police and Criminal Evidence Act 1984, or PACE as it is more generally referred to, and specifically section 114, which conferred specialist powers on Customs and Excise officers to help to fight crime.

In contrast, the Inland Revenue was equipped with more restricted powers designed predominantly to help it to combat so-called white collar crime in areas such as financial services and the deliberate evasion of tax. Importantly, however, Inland Revenue officers did not usually have any powers of actual arrest and needed to be accompanied by a police officer if and when that became necessary.

In the spring of 2006, the Treasury initiated a consultation process on how the powers of the two heritage organisations might effectively be combined. There have now, in fairness, been three separate consultation documents relating to that process, including a second technical consultation in August 2006 and a third revised consultation in January this year. The consultation included a draft copy of the statutory instrument that the Government intend to use to initiate the powers contained in part 6 of the Bill. Therefore, we accept that the change has not come out of the blue and that the Treasury has received a considerable number of responses that have led, at least in part, to the drafting of part 6.

Given that, we are not opposed in principle to combined powers for HMRC. Our concern is the extent of such powers and how they are likely to be employed in practice. The Treasury has apparently sought to reassure the professional bodies that those powers, including that of arrest, will be used sparingly; but, importantly, few such guarantees are stated in the Bill. My party is by no means alone in being concerned. The Chartered Institute of Taxation, in a consultation response of 16 February this year, stated:

It went on that if HMRC is given the powers,

Mr. Heath: I have a great deal of sympathy with what the hon. Gentleman is saying: there is a need to identify which officers have arrestable powers. I am,
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however, concerned about amendment No. 20. It appears to preclude a Customs officer at a port of entry having powers of arrest unless he is a member of the criminal investigations directorate; otherwise, he would need to be with a person in the office of constable to effect an arrest. That cannot be what the hon. Gentleman intends.

Mr. Francois: I take on board the hon. Gentleman’s point, but it would be up to HMRC to decide where to deploy its CID officers. Also, there are usually police officers available at most ports.

In a more recent note produced after the publication of the Bill, the Chartered Institute of Taxation argued:

The Institute of Chartered Accountants in England and Wales, in its parliamentary briefing of 24 April, said:

It added:

The Law Society reflected those concerns in its parliamentary briefing of 20 April when it said:

It was also concerned that

The Professional Contractors Group, which represents many small businesses including in the IT sector, stated:

With regard to the proposed criminal powers, the PCG states:

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