Mr.
Browne: Before the Minister moves on to fresh territory,
will she respond to the point I made earlier about the number of cases
in which the seven days would not apply—in other words, special
exemptions—because the reassurance that the Committee could draw
from the seven-day limit would be lessened were there to be routine use
of
exemptions.
Jane
Kennedy: I will come to that point in a moment, but first
let me say that the Government amendments other than those I have
already mentioned mainly correct miscellaneous
errors—surprising, but they do occasionally happen. Amendment
No. 225, discussed by the hon. Member for South-West Hertfordshire was,
I thought, consequential on amendments just discussed. He asked what
means of transport might be subject to inspection. I am advised that
that might refer to businesses such as mobile chip vans and market
stalls run from vans. It does not mean that a car is a business
premises. However, a car could be a business asset and would be
inspected differently. I hope that that answers his
question. I
should like to deal as quickly as I can, while giving a reasonable
answer, with the amendments tabled by the two Opposition parties.
Amendment No. 165 is unnecessary, as it is well understood that the
term “inspection” does not extend to a right to search,
and the term has worked in the past for VAT and PAYE inspections. There
is also the new safeguard that only the statutory records of the
business can be inspected on the premises—again, that is a
reining in of some of the powers that inspectors have had in the past.
The hon. Member for Taunton said last week that he had never had the
opportunity to vote for removing and reducing inspectors’
powers; well, here we are inviting him to do exactly that. Secondly,
the reference to any person to whom paragraph 10(1) may apply would not
work properly if the premises being inspected are not those of the
person whose tax position is being
checked. On
amendment No. 167, another new safeguard would require unannounced
visits to be pre-authorised by a senior, experienced officer in HMRC.
The hon. Member for Braintree was over-dismissive of that provision,
which will ensure that the need for such a visit has been critically
examined at an appropriate level within HMRC. It would be heavy-handed
for the first-tier tribunal to be involved in every case where an
unannounced visit is considered necessary. However, the tribunal will
have to pre-authorise any visit in respect of which HMRC intends to
levy penalties against any person for obstructing a
visit. Amendment
No. 168 would bring in yet another new safeguard that is not present in
existing legislation—a requirement for the officer making an
unannounced visit to provide a written notice to the occupier or the
person who appears to be in charge. In cases where no one appears to be
in charge, the notice must be left in a prominent place on the
premises. That might ensure
that there is evidence of a visit to an unmanned commercial car park,
for example. It is right and proper that HMRC should be able to be able
to visit unoccupied business premises and it should be right and proper
that a notice of their visit is left on those premises. There is no
right to force entry to premises, so I anticipate that the number of
times that such a notice would be left and such an inspection would be
made would be
limited. Amendment
No. 169 proposes changes to what the Bill specifies that the notice of
a visit should contain. It is important that the occupier should be
made aware of the consequences of obstructing the officer in the
exercise of their duties. I think that paragraph 10(5) should remain,
and I hope that I can reassure the Committee. It would be impractical
for a notice to specify all the rights of the occupier in such
circumstances, but I envisage that the occupier will always be given a
copy of a written code of practice governing unannounced visits that
sets out their rights. A draft of that code of practice was published
in January with the consultation document, and the final version will
be drawn up with considerable input from representative
bodies. I
have read amendment No. 252 again while listening to this debate. I am
not sure that it makes
sense. Amendments
Nos. 253 and 254 together would change the definition of
“business premises” in paragraph 10(7). The right
criterion for defining business premises is that they are used in
connection with carrying on a business. Premises should be treated as
business premises that are liable for inspection even if they are not
so used “wholly or mainly”. Adding the
words “or
from which a business is substantially carried
on” would
introduce new uncertainty into the Bill. Cases where business use is
insignificant—for example, someone taking work home—will
be covered in guidance which will be drawn up with input from
representative bodies.
Amendment
No. 269 would delete paragraph 58(3). The power to make regulations has
been included in a taxpayer-friendly measure to remove possible
uncertainty about what constitutes a business. I hope that is of some
comfort to the hon. Member for Gosport. It will remove uncertainty as
to what constitutes a business and, therefore, as to whether premises
being used are business premises. It will also be possible to specify
that a particular group of persons should be given comfort that they
will not be visited—for example, certain clubs, societies or
charities.
I hope that
I have answered all the points raised in debate. I therefore commend
the amendment standing in my name, and hope that the hon. Members who
have spoken to their own amendments have been sufficiently reassured
not to press
them.
Mr.
Browne: I say in a spirit of good will that, although a
number of concerns have been raised, and it was right and proper that
we should have dwelt on this part of the legislation at some length
because it is about defending the liberties and rights of the
individual citizen, it is welcome that the Government have shown some
movement and willingness to listen. I take on board the points the
Minister has made. In many cases I would have wished to see them go
further; nevertheless, it is right to acknowledge that there has been
progress, particularly in relation to amendment No. 169.
I welcome
the fact that the Minister envisages that a code of conduct will be
made available to the people who are being inspected. I do not fully
understand how
the transition is made between her envisaging that being the case to
people actually receiving a copy of the code. She said there will be
consultation and what the time scale is, and I am sure that can be
resolved within her Department. It would balance the powers of the HMRC
inspector if the person being inspected was empowered to some degree to
know where they stood with regard to their rights in those
circumstances. That would be a welcome
development. We are also
happy to withdraw our modest proposal for a 72-hour notice period and
to accept that triangulation is not yet a dead concept in new Labour,
although it may be close to the end of its lifespan. We support the
proposal of a week as a reasonable period.
On that
note, with the caveat that we would still like to have seen greater
safeguards provided for the people being inspected, we acknowledge that
this has been a useful debate. The Minister has provided on the record
much welcome clarity and made some worthwhile concessions and on that
basis I seek your leave—do I beg it or seek it, Sir Nicholas, or
just request
it?
The
Chairman: I have to say to the hon. Gentleman that he does
not have to do either.
Mr.
Browne: Because the Government amendment is the lead
amendment.
Mr.
Browne: I am getting better and better. In that case, I
merely express my gratitude for your willingness to listen to my
contribution.
Mr.
Gauke: I think this has been a useful debate and I do not
think there are enormous divides among us on the issues. I am grateful
to the Financial Secretary to the Treasury for saying that, where
possible, HMRC will seek to work in a co-operative manner with the
taxpayer and that the use of the powers in paragraph 10 will not be
abused or used as a matter of course.
I would like
to come back to the right hon. Lady on the question of seven
days’ notice. She argued that the target for HMRC is that
repayment cases are dealt with in 10 days, so a 14-day period would
create some administrative difficulties for HMRC. This is a reasonable
point to some extent, although it is worth noting that, under amendment
No. 222, it is possible to agree any time. It does not have to be after
the seven days; it could be tomorrow, for example. One would expect
that in the circumstances of a repayment, the taxpayer might be quite
enthusiastic about having a meeting sooner rather than later. I simply
draw that point to the Committee’s attention. I do not think
that it is a killer argument as such—the period of 14 or seven
days would come into effect when no agreement can be reached between
the occupier of the premises and HMRC. None the less, the Government
have moved ground. We will not press the amendment to a
Division. 12.30
pm Had
the final consultation period not been quite so rushed—I do not
want to go over old ground, nor do I wish to be churlish—the
Government’s position on notice periods might have emerged
slightly earlier than during the Committee stage. That is not to say
that the fact that it has emerged at this stage is
unwelcome.
Jane
Kennedy: We normally say that we keep all legislation
under review. I have made clear the intent of the period of notice and
that it may be a minimum, but that it may also be reduced if there was
an agreement with the taxpayer. I undertake to review the operation of
the measure to ensure that a period of seven days, where an agreement
cannot be found, is reasonable and works as I anticipate it
will.
Mr.
Gauke: That is an extremely helpful intervention. I am
grateful to the Minister. I am sure that those reading the record of
these proceedings will be pleased to know that that the Minister will
review the matter to see how it works and whether it creates
difficulties. I can envisage circumstances where someone is away or
does not receive the notice until late in the seven-day period,
particularly if he seeks to obtain legal advice, which can take a bit
of time,
too. Amendment
agreed
to. Amendments
made: No. 220, in schedule 36, page 355,
line 17, leave out third ‘the’ and insert
‘that
person’s’. No.
221, in
schedule 36, page 355, line 18, leave
out ‘of any person’ and
insert— ‘() The powers under
this paragraph do not include power to enter or inspect any part of the
premises that is used solely as a
dwelling. () In this
Schedule— “business
assets” means assets that an officer of Revenue and Customs has
reason to believe are owned, leased or used in connection with the
carrying on of a business by any person, excluding
documents, “business
documents” means documents (or copies of
documents)— (a) that
relate to the carrying on of a business by any person,
and (b) that form part of any
person’s statutory records,
and “business
premises”, in relation to a person, means premises (or any part
of premises) that an officer of Revenue and Customs has reason to
believe are (or is) used in connection with the carrying on of a
business by or on behalf of the
person. Power to inspect
premises used in connection with taxable supplies
etc 10A (1) This paragraph
applies where an officer of Revenue and Customs has reason to believe
that— (a) premises are
used in connection with the supply of goods under taxable supplies and
goods to be so supplied are on those
premises, (b) premises are used
in connection with the acquisition of goods from other member States
under taxable acquisitions and goods to be so acquired are on those
premises, or (c) premises are
used as a fiscal warehouse. (2)
An officer of Revenue and Customs may enter the premises and
inspect— (a) the
premises, (b) any goods that
are on the premises, and (c)
any documents on the premises that appear to the officer to relate to
such goods. (3) The powers
under this paragraph do not include power to enter or inspect any part
of the premises that is used solely as a
dwelling. (4) Terms used both
in sub-paragraph (1) and in VATA 1994 have the same meaning in that
sub-paragraph as they have in that
Act. Carrying out
inspections 10B’.
No. 222, in
schedule 36, page 355, line 19, leave
out from ‘this’ to end of line 22 and insert
‘Part of this Schedule may be
carried out only— (a) at a time
agreed to by the occupier of the premises,
or (b) if sub-paragraph (3) is
satisfied, at any reasonable
time. (3) This sub-paragraph is
satisfied if— (a) the
occupier of the premises has been given at least 7 days’ notice
of the time of the
inspection’. No.
223, in
schedule 36, page 355, line 40, leave
out from beginning to end of line 10 on page 356.—[Jane
Kennedy.] Mr.
Colin Breed (South-East Cornwall) (LD): I beg to move
amendment No. 173, in schedule 36, page 357,
line 39, leave out from first ‘notice’ to end of
line
40.
The
Chairman: With this it will be convenient to discuss the
following: Government amendment No.
224. Amendment
No. 291, in
schedule 36, page 358, line 30, at
end insert— ‘Provided that
this condition shall not be met one year after evidence of facts,
sufficient in the reasonable opinion of the Commissioners to justify
the making of the assessment or the withdrawal of the relief, have come
to their
knowledge.’. Amendment
No. 255, in schedule 36, page 358, line 40, leave
out ‘6’ and insert
‘4’. Amendment
No. 256, in
schedule 36, page 358, line 41, at
end insert— ‘20A An
information notice given for the purpose of checking the tax position
of a company that has ceased to exist may not be given more than 6
years after the company ceased to
exist.’. Amendment
No. 258, in
schedule 36, page 359, line 6, at
end insert ‘or (b) such a claim
could have been maintained if the information or document had been
obtained in the course of correspondence between a lawyer and a
client’.
Mr.
Breed: Amendment No. 173 is very simple. We believe that
the cut-off period of six years should be absolute, with no caveat or
indication that it could be extended in any way. Part 4 of schedule 36
concerns restrictions on powers and amendment No. 137 would delete
words from the paragraph that deals with old documents. Paragraph 18
deals with old documents states that HMRC cannot issue an information
notice requiring a person to produce a document if that document is
more than six years old on the date that the notice is issued. However,
that wording provides a caveat. We believe that the inclusion of those
words will unfairly allow HMRC to require a person to produce a
document that is more than six years old. The Chartered Institute of
Taxation has argued that older documents may legitimately have been
destroyed and replacements not possible to get. Six years is a lengthy
period and it is well known by many people, who believe that once they
have got to that stage, they can get rid of documents.
It is not
reasonable for taxpayers to have to keep documents for potentially a
very long time just in case they may be required at the whim of an
authorised officer. The six-year period, which has persisted for some
time, is appropriate and should not be qualified or subject to caveats
in any way. Six years should be the absolute cut-off and amendment No.
173 seeks to make it so.
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