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 applyin other words, special exemptionsbecause 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 errorssurprising, 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 premisesagain, 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 legislationa 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
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 insignificantfor example, someone taking work homewill 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 visitedfor 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
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 leavedo I beg it or seek it, Sir Nicholas, or just request it?
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 Committees attention. I do not think that it is a killer argument as suchthe 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.
Had the final consultation period not been quite so rushedI do not want to go over old ground, nor do I wish to be churlishthe Governments 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 persons.
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 persons 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
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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