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Finance Bill

Finance Bill

The Committee consisted of the following Members:

Chairmen: Frank Cook, Mr. Jim Hood, † Sir Nicholas Winterton
Atkins, Charlotte (Staffordshire, Moorlands) (Lab)
Blackman-Woods, Dr. Roberta (City of Durham) (Lab)
Blizzard, Mr. Bob (Waveney) (Lab)
Bone, Mr. Peter (Wellingborough) (Con)
Breed, Mr. Colin (South-East Cornwall) (LD)
Browne, Mr. Jeremy (Taunton) (LD)
Cable, Dr. Vincent (Twickenham) (LD)
Chapman, Ben (Wirral, South) (Lab)
Eagle, Angela (Exchequer Secretary to the Treasury)
Efford, Clive (Eltham) (Lab)
Field, Mr. Mark (Cities of London and Westminster) (Con)
Gauke, Mr. David (South-West Hertfordshire) (Con)
Greening, Justine (Putney) (Con)
Hall, Patrick (Bedford) (Lab)
Hammond, Mr. Philip (Runnymede and Weybridge) (Con)
Hands, Mr. Greg (Hammersmith and Fulham) (Con)
Hesford, Stephen (Wirral, West) (Lab)
Hoban, Mr. Mark (Fareham) (Con)
Hosie, Stewart (Dundee, East) (SNP)
Joyce, Mr. Eric (Falkirk) (Lab)
Kennedy, Jane (Financial Secretary to the Treasury)
Morden, Jessica (Newport, East) (Lab)
Newmark, Mr. Brooks (Braintree) (Con)
Palmer, Dr. Nick (Broxtowe) (Lab)
Penrose, John (Weston-super-Mare) (Con)
Pound, Stephen (Ealing, North) (Lab)
Pugh, Dr. John (Southport) (LD)
Sharma, Mr. Virendra (Ealing, Southall) (Lab)
Simon, Mr. Siôn (Birmingham, Erdington) (Lab)
Thornberry, Emily (Islington, South and Finsbury) (Lab)
Todd, Mr. Mark (South Derbyshire) (Lab)
Ussher, Kitty (Economic Secretary to the Treasury)
Viggers, Peter (Gosport) (Con)
Wright, David (Telford) (Lab)
Alan Sandall, James Davies, Committee Clerks
† attended the Committee

Public Bill Committee

Tuesday 10 June 2008


[Sir Nicholas Winterton in the Chair]

Finance Bill

(Except clauses 3, 5, 6, 15, 21, 49, 90 and 117 and new clauses amending section 74 of the Finance Act 2003)

Schedule 36

Information and Inspection Powers
Amendment proposed [this day]: No. 173, in schedule 36, page 357, line 39, leave out from first ‘notice’ to end of line 40.—[Mr. Breed.]
4.34 pm
Question again proposed, That the amendment be made.
The Chairman: I remind the Committee that with this we are taking the following amendments: Government amendment No. 224
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.’
No. 255, in schedule 36, page 358, line 40, leave out ‘6’ and insert ‘4’.
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.’
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’.
I welcome hon. members back to the Committee. It is still a little warm, and I am happy that some members have taken off their jackets to ensure that they remain fresh and competent for the debates ahead. We were on amendment No. 173 when we adjourned at 1 o’clock. The hon. Member for South-West Hertfordshire was on his feet and I ask him to resume the excellent speech that he was making.
Mr. David Gauke (South-West Hertfordshire) (Con): I am very grateful, Sir Nicholas. No doubt you said it was excellent, because at that point I had barely risen. That was probably the strongest part of the speech.
The Financial Secretary to the Treasury (Jane Kennedy): The hon. Gentleman’s speech was so excellent that it has moved me to say that I am minded to accept amendment No. 255, which aligns the treatment of the tax affairs of the deceased person with other arrangements, reducing the six years to four years, and there is no good reason not to do so. In the context of the debate on powers, it is better—if my hon. Friends will allow me to demonstrate my New Labour credentials and just how inclusive I am—to take a conservative with a small “c” approach to the application of powers. If he is inclined to press the amendment further, we would certainly support it.
Mr. Gauke: I am very grateful to the Financial Secretary. I do not know whether we could break for another meal, as perhaps some of my other amendments would be accepted. The Financial Secretary said informally that she would look at the proposal over the lunch break, and I am very grateful for her acceptance of the amendment. I certainly will seek to move the amendment formally at the appropriate time.
In the atmosphere of convivial and good natured deliberations, I will not press the for a Division, but nevertheless I wish to highlight the issue of privilege. The Financial Secretary said she was uncomfortable—perhaps that is putting it too strongly: she recognised the strength of argument that the arrangements replicated in the schedule with regard to privilege create one or two distortions. She highlighted the circumstances of accountancy firms with a legal arm, which enables them to provide advice, whereas smaller accountancy firms are not able to do so. There is also the wider issue of accountancy firms in general compared with law firms. We have set out the accountancy profession’s concerns, which the Financial Secretary has acknowledged and, to some extent, she has accepted that the current situation is unsatisfactory.
The Financial Secretary said before lunch that the Ministry of Justice was keen to include the provisions on legal professional privilege. There was a time when all the other Departments jumped to the call of the Treasury, so perhaps this is joined-up government—we shall see. However, the problem remains. We are not going to press for a Division, but I hope that the Government will look again at the issue of legal professional privilege. I see no particularly strong reason why the provision should not be extended to tax advisers more generally. On that note, may I say how grateful we are to the Financial Secretary for agreeing to accept amendment No. 255?
Mr. Colin Breed (South-East Cornwall) (LD): I am happy to beg to ask leave to withdraw the amendment. May I add that the acceptance of amendment No. 255 shows some maturity on the part of the Government as it is a common-sense measure?
Amendment, by leave, withdrawn.
Amendment made: No. 224, in schedule 36, page 358, line 10, at end insert ‘in relation to the chargeable period’.—[Jane Kennedy.]
The Chairman: Because of the Government’s good sense and graciousness, I ask the Opposition spokesman to move amendment No. 255 formally.
Amendment made: No. 255, in schedule 36, page 358, line 40, leave out ‘6’ and insert ‘4’.—[Mr. Gauke.]
Mr. Breed: I beg to move amendment No. 174, in schedule 36, page 360, line 28, leave out sub-paragraphs (2) and (3).
The Chairman: With this it will be convenient to discuss the following amendments: No. 259, in schedule 36, page 360, line 28, leave out sub-paragraph (2).
No. 175, in schedule 36, page 360, line 35, leave out from second ‘notice’ to end of line 37.
No. 176, in schedule 36, page 360, line 37, at end insert—
‘(1A) A taxpayer to whom a third party notice relates may also appeal to the First-tier Tribunal against the notice or any requirement of the notice.’.
No. 177, in schedule 36, page 360, line 38, leave out sub-paragraphs (2) and (3).
No. 261, in schedule 36, page 361, line 13, leave out from first ‘the’ to end of line 14 and insert ‘First-tier Tribunal’.
No. 262, in schedule 36, page 361, line 25, leave out from ‘Tribunal’ to end of line 28 and insert
‘(such period to be at least 30 days starting with the day after the notification of the decision to the person to whom the information notice was given)’.
No. 292, in schedule 36, page 362, line 6, after ‘records’, insert ‘for VAT purposes’.
Mr. Breed: In tabling amendments Nos. 174 to 177, my hon. Friends and I have sought to strengthen various rights of appeal. The right of appeal is paramount to much of this legislation, and taxpayers and third parties will have the opportunity to challenge HMRC decisions, which is an important aspect of the Bill.
Amendment No. 174 relates to part 5 of schedule 36, which deals with appeals against information notices. Paragraph 27 concerns the right of appeal, and amendment No. 174 would delete the unnecessary sub-paragraphs (2) and (3), which contain exceptions to the right of appeal against a notice. Sub-paragraph (2) prevents an appeal against a requirement to produce documents that form part of “the taxpayer’s statutory records”. We seek clarification on which documents are included in that provision. Such measures are often left deliberately rather loose, which makes it difficult for anyone to ensure that they retain and maintain the right records so that they can be produced at a future date. Are bank statements, mortgage statements and utility bills included in the so-called statutory documents in sub-paragraph (2), which appears to negate virtually any leave to appeal provided in sub-paragraph (1). Given that “statutory records” could include just about anything, there are virtually no grounds for appeal, which makes paragraphs 27 and 28 worryingly otiose.
4.45 pm
Amendment No. 175 would strengthen the third-party right of appeal, and delete the caveat that, under that right, an appeal can be made only against a third-party notice if it
“would be unduly onerous to comply”.
Amendment No. 176 would insert into paragraph 28 a new sub-paragraph (1A) on the right to appeal against the third-party notice, which would allow an appeal by
“A taxpayer to whom a third party notice relates...against the notice or any requirement of the notice”.
We have had lengthy debates about the way in which notices are issued, and the amendment would strengthen the third-party right of appeal.
Amendment No. 177 does exactly the same thing as amendment No. 174, but in respect of the appeal against a third-party notice. There are concerns that the first-tier tribunal may be persuaded to approve a notice requiring a third party to provide documents, and that the taxpayer to whom those documents relate would have no idea that that was happening. It can be argued that these are civil powers and therefore demand an openness that is not apparent in the schedule. The amendments in this group provide some important safeguards in respect of appeals, and strengthen the rights of appeal, which are an important aspect of any taxation legislation. I hope that the Minister can persuade us that these probing but important amendments are unnecessary, although we may have to think otherwise if she cannot do so.
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Prepared 11 June 2008