Mr.
Field: Given the Minister’s reassurances, surely
the most important thing is that we get the new regime right rather
than rush it through. I appreciate that, given the pressure and high
profile of HMRC’s problems and concerns over the past year, the
Minister wishes to get the new regime moving as quickly as possible.
But surely, given the concerns that we have expressed today, it is even
more imperative that we get the regime right, rather than allow for the
prospect of HMRC getting a
hell of a lot of bad news headlines and disrepute because of confusion
about its precise powers in relation to many of the companies whose
interests we are trying to defend in this
debate.
Jane
Kennedy: If I believed that there would be a lot of bad
publicity as a result of our passing the powers and the way in which
they will be applied, I would share the hon. Gentleman’s
concerns, but the issue has been thoroughly consulted on and discussed.
I shall continue to listen to the representations that are being made,
and as we come to some of the detail in a few moments I will hopefully
be able to give further reassurance.
I know what
the hon. Gentleman is saying but do not believe that this is the right
time to stop the reform and hold it back. It is essential to HMRC to
enable it to bring together coherently its work across all the tax
structures. As the Minister to whom HMRC is accountable, it would be
irresponsible of me to make it even more difficult for it to achieve
the changes that it clearly needs to make if it is to retain its
position as one of the paramount tax authorities in the world and the
reputation that it rightly has for using its powers reasonably,
notwithstanding the fact that examples can always be given where those
powers have been excluded. With the proper safeguards that we are
building into the legislation, the Committee can be assured that HMRC
will conduct itself with those new powers appropriately.
My last
point relates specifically to the question that the hon. Member for
South-West Hertfordshire asked. There is a tendency to dismiss guidance
as not having safeguards because it does not have legal standing and,
therefore, the same standing in court. It is true that a court would be
entitled to take account of published HMRC guidance either of its own
account, or if its attention was drawn to it by either party. Such
guidance would not be conclusive, but it would be persuasive. In a case
involving the administration of tax, guidance would provide a court
with a statement of how HMRC expected its officers to act in different
situations.
While the
law cannot set out safeguards in every possible scenario, as I have
said, codes of practice and guidance provide more detail on how
legislation should be interpreted in different circumstances. A
criticism from a court that an HMRC officer had acted outwith their
powers and in breach of a code of conduct would be considered very
seriously indeed, not least by me as the Minister to whom they are
accountable.
Given that
lengthy response, I hope that the hon. Member for Taunton, whose
amendment was moved in order to set the scene for the debate, will feel
that it is not necessary to press the amendment and will allow the
clause to move forward with a fair
wind.
Mr.
Gauke: I will briefly make a couple of comments in
response to the Financial Secretary. I welcome her comments on a road
map and the need for a more strategic approach. I recognise that a new
chairman and chief executive will be in place, which might provide the
best opportunity to instigate that. I also noted her comments on the
Bill being used as a vehicle for those measures and that she said that
that is very convenient from the Government’s point of
view—no one knows
where we will be in four years’ time, so I will express myself
carefully. However, there is an argument that it is too convenient on
an annual basis. The Treasury has the privileged position of having a
guaranteed Bill every year for good historical reasons, and I still
question whether the Finance Bill is ideal. As a possible solution in
the long term, perhaps some sort of consolidated Bill would be better
so that it would not be done through a money Bill.
I noted the
Financial Secretary’s point about guidance being persuasive to
the courts, but there are two concerns with guidance. One is that it is
not legally binding, a point that she addressed to some extent by
saying that it is none the less persuasive. The other point is that it
is not something that we in this place have a chance to review and
consider in the same way that we do with legislation. She also drew the
point that the powers might be diminished for some taxes, such as VAT,
whereas for others they might be increased, such as corporation tax. It
is worth saying that VAT, and to some extent PAYE, are continually paid
and therefore need to be continually assessed. Some taxes are done on
an annual basis so that a tax return is completed, and there are good
historical reasons why slightly different regimes exist for those
different taxes. There is a criticism to be made of a one-size-fits-all
approach. Finally,
we welcome the Financial Secretary’s reassurance that no
Government amendment will be tabled consisting of HMRC’s powers
with guns. The Opposition welcome the absence of that
amendment.
Mr.
Browne: I tabled the amendments with the intention of
kick-starting a proper debate on this important matter. Such is the
importance I attach to the issues we are discussing that I would like
to press the amendment to a
Division.
Question
put, That the amendment be
made:— The
Committee divided: Ayes 5, Noes
15.
Division
No.
11] Blackman-Woods,
Dr.
Roberta Question
accordingly negatived.
Clause
108 ordered to stand part of the
Bill.
Schedule
36Information
and inspection
powers
Mr.
Browne: I beg to move amendment No. 162, in
schedule 36, page 352, line 6, after
‘An’, insert
‘authorised’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 163, in
schedule 36, page 352, line 14, after
‘An’, insert
‘authorised’. No.
164, in
schedule 36, page 352, line 18, after
‘is’, insert ‘in that person’s possession
and’. No.
170, in
schedule 36, page 356, line 36, leave
out from ‘(b)’ to
‘a’. No.
171, in
schedule 36, page 356, line 39, at
end insert— ‘(2A) A taxpayer
to whom a third party notice relates may also request a copy of the
document, and an officer of Revenue and Customs must comply with such a
request without
charge.’. No.
172, in
schedule 36, page 357, line 3, at
end insert ‘and any consequential losses
suffered.’. No.
183, in
schedule 36, page 370, line 14, leave
out from ‘who’ to end of line 15 and insert
‘holds the position of Inspector of Taxes within
Revenue and
Customs.’. No.
263, in
schedule 36, page 362, line 24, at
end insert ‘and of the company or companies
that the Officer believes are subsidiary undertakings and the notice
shall be taken as relating only to the companies so
specified’. No.
268, in
schedule 36, page 370, line 15, at
end insert— ‘(2) The
Commissioners shall
publish— (a) the
criteria by which they determine who should be authorised for any
particular provision, and (b)
for each provision requiring an authorised officer, the names of all
officers who are so
authorised.’.
Mr.
Browne: I tabled the first seven of the nine amendments
that you read out, Sir Nicholas. I will not reheat the broad principles
of the debate with every group of amendments.
[Interruption.] There has just been a sedentary
intervention about the interest being shown by my colleagues in these
proceedings. Meanwhile, huge numbers of Labour MPs are walking out of
the room who seem to pop in periodically only when we need some useful
idiots to prop up the Government.
[Interruption.]
The
Chairman: Order. We have had a wonderfully sensible debate
this afternoon and I am sure that it will continue. We can get a little
bit more invigorated, but hopefully it will be totally in accordance
with the content of the
amendments. 3.30
pm
Mr.
Browne: I am grateful for your guidance, Sir Nicholas, and
for the audience that I have before me, diminished though it is, since
the vote took place, on the Opposition Benches. Let me run through the
amendments. They are all quite specific, but if they are seen in
isolation, their purpose can be hard to understand. I will explain
briefly what each of the seven is trying to achieve. Amendment No. 162
restricts the power to a senior officer who is able to undertake the
inspections. Currently, the inspection can be authorised by any HMRC
employee, including those at quite a junior level. The purpose of the
amendment is to put a floor under the seniority of the inspector so
that there is some reassurance that the powers are exercised by someone
with the appropriate level of authority and
experience.
Amendment No.
163 effectively covers the same points, and there is nothing extra that
I need to say. The point of amendment No. 164 is that a third party
should not be expected to provide a document to which they have no
access. As currently drafted, paragraph 2 says that if information or
documents are “reasonably required”, they must be
provided by the third party. However, that does not account for the
likely situation in which the third party does not have access to the
documents that HMRC wants. In that case, the amendment proposes to
ensure that the person is not liable to produce a document that they do
not
possess. Amendment
No. 170 says that a person should rightly have full access to copies of
their own documents. This amendment would delete part of paragraph
14(2)(b) so that a person does not have to “reasonably”
require a copy of their own document before they are granted one. I
apologise to the Committee if I slightly garbled my words. At the
moment, there is a threshold that the person has to overcome of
“reasonably” requiring a copy of their own document if
they are to be given that document by HMRC. Amendment No. 170 seeks to
delete that
requirement. Amendment
No. 171 allows the taxpayer access to a document when it is given by a
third party if it concerns them. The amendment proposes to insert
additional sub-paragraph (2A), so that if a third party has obtained
documents from HMRC when someone’s tax record is inspected, the
taxpayer has a right to obtain a free copy of those documents.
Amendment No. 172 is designed to compensate business losses arising
from HMRC errors. That is an important point that would concern some
businesses in some circumstances. Currently paragraph 14(4) provides
for compensation to be made to replace documents lost by HMRC. However,
as the Institute of Chartered Accountants has pointed out, it would not
cover instances in which negligent behaviour by the HMRC resulted in
the business losing revenue. The amendment requires HMRC to compensate
for any “consequential losses suffered”, so it covers not
just the documentation itself but the knock-on effects resulting from
the actions of HMRC. Amendment No. 183 also covers the point about an
authorised officer that I raised in earlier
amendments. Therefore,
the overall theme of the amendments in this group is about trying to
tighten and strengthen the powers of the individual citizen in their
dealings with HMRC. For example, the amendments require HMRC to engage
with them at a senior level, and make requirements about the
documentation to which the citizen has access. Finally, they ensure
that HMRC’s behaviour does not impact in a way that is unfair or
disadvantageous to that individual or business. For example, they
ensure that the individual or business does not lose out financially as
a result of the Government’s enforcement actions. It is, of
course, right and appropriate that HMRC and the Government should seek
to take and collect the taxes owed to them, but the individual citizen
or company has rights in their interactions with the state. My
intention is to protect those rights as far as
possible.
Mr.
Field: The hon. Gentleman makes an important point in his
amendments, particularly in pointing out the need to create a level
playing field between the individual and the state. In so far as the
state wishes to take upon itself particular powers through any of its
agencies—in this case, HMRC—it is fair that the
individual, too, should be able to benefit at a similar level. In this
provision, we are considering the power to exact money from either a
sole trader or a company, and there should be a
balance. I
suspect that I am about to pre-empt what the Minister is going to say
about the nature of the compensation that the hon. Member for Taunton
has in mind, but I fully appreciate that unfettered economic loss,
particularly for acts of tortious negligence, would be against public
policy. That has been the case in the past and will be so in future.
Although the level of compensation that the hon. Gentleman has in mind
would be a step too far, that does not detract in any way from the
importance of ensuring that we do not trample over individual rights,
particularly those of small companies or sole traders, as the hon.
Gentleman suggests in his
amendment. I
hope that the Minister will consider this matter. I suspect that she
will not be happy about the notion of unlimited economic loss in
respect of the financial compensation is proposed in the amendment, but
the hon. Gentleman makes an important point. All too often, an
increasingly all-powerful HMRC is pitting its powers against the
individual, and we need the balance to which the Minister referred
earlier, albeit in a different
context.
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