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Session 2007 - 08 Publications on the internet General Committee Debates Finance Bill |
Finance Bill |
The Committee consisted of the following Members:Alan
Sandall, James Davies, Committee
Clerks † attended the
Committee Public Bill CommitteeTuesday 10 June 2008(Afternoon)[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 36Information
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. Clarification
of the measures would benefit and help taxpayers, as they will be asked
to produce documents and to assist the authorities, and they need to
know what they might be asked to provide. There should not be
sub-paragraphs in the Bill that undermine basic right-of-appeal
legislation. Sub-paragraph (3) would prevent an appeal if the
first-tier tribunal approved the notice, but we do not see why the
taxpayer should not
be provided with a right to appeal in those circumstances. Will the
Minister explain the thinking behind the measure? We are not alone in
expressing concern . Other hon. Members may know that the Institute of
Chartered Accountants, the Chartered Institute of Taxation and
PricewaterhouseCoopers are concerned about the lack of leave to appeal
generally for the taxpayer in schedule 36. Although part 5 allows some
appeals, that is only against a notice, and it would not allow the
taxpayer to prevent the inspection of premises and documents in
advance. There is no provision in the Bill to suspend an inspection
until the appeal has been decided. Under paragraph 30, application for
an appeal should be made within 30 days, but given that inspection will
not even require notice, there should be a right of appeal against all
HMRC decisions and actions.
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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