Mr.
Browne: On a point of order, Sir Nicholas. Amendment No.
190 stands in glorious isolation to be considered separately, but would
it be helpful to pile it in with what we are discussing, as well as the
clause stand part debate, so that everything can be debated in one big
go?
The
Chairman: I am most grateful to the hon. Member for
Taunton for that suggestion, but we have had a pretty major debate
already and I would therefore be reluctant to include the amendment at
this late
stage.
Mr.
Gauke: On a point of order, Sir Nicholas. In my opening
remarks I raised a technical point and sought clarification from the
Minister. There are significant issues to do with clause 109, including
representations that have been made by professional bodies such as the
Law Society, that have not yet been addressed. I do not think that a
lengthy debate is necessary, but I think it would benefit the Committee
to debate those issues if we could have that opportunity. Of course,
your wisdom is not to be
doubted.
The
Chairman: Of course, if there is a demand for a stand-part
debate, I am obliged to find time for it. If there is one, I hope it
will be extremely brief and if there is any way that the hon.
Gentleman, during the remarks the Minister is about to make, can seek
clarification by way of intervention on one or more points, I am sure
the Minister would be very happy to deal with it. Let us see how the
debate
proceeds.
Jane
Kennedy: Thank you, Sir Nicholas. I was conscious of the
fact that the hon. Member for South-West Hertfordshire had indicated he
hoped for such a debate and I was trying to structure what I was going
to say accordingly, but I will try to answer all the points that have
been raised in the debate so far, which I thought was particularly well
developed by the hon. Member for Dundee, East. He raised a number of
very valid questions and I will seek to deal with those as far as I am
able. On
the more general points raised by the hon. Member for Braintree, I do
not intend to be drawn into a discussion around when we anticipate a
report from Kieran Pointer. It is very tempting to respond to some of
the details and the sweeping generalisations that he presented, but I
will resist the temptation. It may be worth noting that the Exchequer
Secretary to the Treasury tells me that information she has received
electronically indicates that right at this moment there is a story
running that 38,000 customers of the firm Cotton Traders have had their
credit card details stolen by somebody who has hacked into its website.
The kind of security breach that we saw at HMRC is not, sadly, as rare
as it should be, but the responsibility on organisations that hold
data, particularly data as important as an individual’s
financial information, is very clear and we have made it clear that the
recent, well-publicised lapse of security at HMRC means that, for HMRC,
data security is at the forefront of everything that it does. One might
say that it should always have been so, but it certainly is
now.
Mr.
Field: The Minister is making a statement and has been
very open about the failings at HMRC, but there is a fundamental
distinction between the public and the private sector. Most private
sector data are kept voluntarily and the individuals who are involved
work with some sort of provider or some sort of other business. That is
in sharp contrast to data kept by the public sector which are kept on a
compulsory basis. It is for that reason that there is, and should be, a
higher barrier for data kept by the state rather than by private
companies.
Jane
Kennedy: I absolutely agree with everything that the hon.
Gentleman just said and I am sure that the report we will receive
shortly will be of immense interest to the House as well as to the
public. However, the existing provisions on which this clause is based
have not given rise to security problems, there are already powers to
deal with computers in the way that this clause is describing and HMRC
staff are trained not to operate a taxpayer’s computer in what
we might call a “live” environment, in other words, an
environment within which the data itself might be affected by the
change. The opposite of a live environment would be a safe environment
within which the data can be read, but not affected by the individual
reading it. That is in order to ensure that there is no risk of data
loss. Clause
109 explains HMRC’s powers where such documents are stored on
computer memory or otherwise recorded and it already applies to all
taxes, duties and other matters for which HMRC is responsible.
Amendment No. 229 responds to a point made by the Law Society to put
beyond doubt that clause 109 applies not only to enactments about
production or inspection of documents, but also to related provisions.
The effect is that, for example, the protections applying to documents
that we have already discussed in part 4 of schedule 36 also apply to
electronically held equivalents of those documents. The intention is
that the protections that apply to those documents also apply to their
electronic equivalents. Amendment No. 229 makes that
clear. 6.15
pm The
hon. Member for Dundee, East questioned whether the provisions of
clause 109 go too wide. They do not go too wide as it sits under
legislation. For example, protections in schedule 36 apply to requests
under clause 109. He also rightly asked what would happen if an
individual’s documents were created or held on websites
maintained overseas. If the webpage can be accessed from a UK computer,
it can be accessed under the power, as long as it is classified as a
relevant document in a taxpayer’s power and possession. We have
discussed how “relevant” would be
defined.
Stewart
Hosie: That comes to the nub of the matter. The document
is no longer accessible on a computer in the UK, but remains in cache
memory somewhere on a web server hosted halfway round the world. Clause
109(3) appears to give authorised people entitlement to check that
computer, and the amendment would certainly allow any other provision
to do that to be made. That is extra-territorial, unenforceable and
possibly illegal. I wonder why we have an amendment that would allow
nominally something to happen that could not be
done.
Jane
Kennedy: I have no reason to believe, from the advice that
I have received, that that is not doable, as the hon. Gentleman
suggests. I will respond to one or two of his points. Again, there is
the tendency to dismiss the role of an authorised person. An authorised
person will usually be a HMRC employer who has received appropriate
training in information technology. HMRC also has a specialist team
available to give advice. Electronic records are no different to paper
records when it comes to boundaries and borders. For example, if a
taxpayer keeps records in New Zealand, but those records relate to
their UK tax affairs, HMRC can ask to see them. If
the electronic record is stored offshore but forms part of a UK
taxpayer’s records, HMRC can see it. HMRC already has those
powers. Officers will not access taxpayers’ computers
willy-nilly. They will only do so to view documents needed to check a
tax position. Computers will only be removed for forensic examination
in a case being considered for criminal prosecution. I hope that that
gives some reassurance to the hon.
Gentleman. Amendments
Nos. 230 to 234 correct a drafting error in that subsections (2) and
(3) refer to provisions to which the clause applies. The amendments are
necessary to ensure that the provision works as
intended. I
make one final point regarding the hon. Gentleman’ very real
concerns. HMRC officers can travel abroad only with the agreement of
another country’s tax authority. Otherwise, HMRC has to ask
another country to use its power to access the information. I hope that
he will accept that the process is highly regulated and subject to
scrutiny. I
appreciate that there will be a further debate, if members seek to
catch your eye, Sir Nicholas, so I will curtail my comments. I hope
that I have sufficiently answered the questions on our amendments to
the
clause. Amendment
agreed
to. Amendments
made: No. 230, in clause 109, page 68, line 26, leave out ‘A
provision’ and insert ‘An
enactment’. No.
231, in
clause 109, page 68, line 27, leave
out ‘provision’ and insert
‘enactment’. No.
232, in
clause 109, page 68, line 29, leave
out ‘provision’ and insert
‘enactment’. No.
233, in
clause 109, page 68, line 37, leave
out ‘a provision’ and insert ‘an
enactment’.—[Jane
Kennedy.]
Mr.
Browne: I beg to move amendment No. 190, in clause
109, page 69, line 24, leave out
from first ‘is’ to end of line 26 and insert
‘an officer of
Revenue and
Customs,’. Many
of the wider points that I wished to make about the drafting of the
clause have already been touched upon, so I shall make a concise
contribution. The amendment would change the definition of an
“authorised person” in subsection (9), so that instead of
the commissioners being able to authorise a class of person, which
would mean that they could allow anyone, even outside contractors or
untrained individuals, to undertake the work in question, only an
officer of Revenue and Customs could access and inspect
information.
The purpose
of the amendment, as I am sure is obvious to the Committee, is to
define more tightly the category of people who will be able to access
potentially sensitive information. My view, and that of my colleagues,
is that that would go a long way towards addressing many of the
concerns that people have rightly expressed about the sensitivity and
privacy of a lot of the documentation that HMRC will be examining. We
believe that it would be more appropriate for a more limited and
defined category of inspectors to have access to that
information.
Mr.
Gauke: In light of the amendment, may I ask the Financial
Secretary why we have in the clause a definition of “authorised
person”, rather than of “authorised
officer”, which is used in schedule 36? No doubt she will pick up
that point in responding to the hon. Member for
Taunton. I
have two practical questions. First, will any guidance be produced to
explain how the definition of “authorised person” will be
applied and exactly whom we are talking about? Secondly, if a taxpayer
is having their computer checked by someone performing the powers in
the clause, how will they be able to ascertain whether the
representative of HMRC or other person is an authorised person? What
comfort will the taxpayer have in those circumstances that he or she is
dealing with an authorised
person?
Jane
Kennedy: Those were thoughtful questions. The amendment
deals with a matter that I started to explain in my response to the
debate on earlier amendments. As I said, an authorised person will
usually be an HMRC employee or officer who has received appropriate
training in information technology. HMRC also has a specialist team
available for advice. However, there may be exceptional circumstances
in which it is necessary to engage a specialist agent from outside
HMRC. The clause is drafted to enable that to be done. That answers the
question why we are using the word “person” rather than
“officer”. It would apply if a taxpayer’s record
keeping systems were of a kind that HMRC did not have the necessary
internal expertise to check. I can envisage a number of circumstances
in which that would happen, but it would be
rare. Appropriate
steps would necessarily be taken to ensure that the taxpayer was
certain of the legitimacy of the person concerned and that
confidentiality was maintained. I shall want to give some thought to
the exact question I was asked, which was how they will know that. I
will respond to the hon. Member for South-West Hertfordshire later,
perhaps in writing if he will allow me to do so. It was a sensible
question and was rightly put. HMRC will want to be very clear about how
that legitimacy will be determined. I hope that the amendment will not
be pressed to a
vote.
Mr.
Browne: I have some concerns about the Financial
Secretary’s assurances, not just on this amendment, but
throughout the Bill. She gives them entirely in good faith, but they
rely on guidelines and the good will and decency of HMRC and its
employees, rather than on being defined in legislation. Having made
that point, I beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Amendment
made: No. 234, in clause 109, page 69, line 29, after
‘includes’, insert ‘an enactment contained
in’.—[Jane
Kennedy.]
The
Chairman: I have received information through the usual
channels that they will seek to go on after 7 o’clock.
If there are two Divisions of 15 minutes each, that will take us to 7
o’clock. I say to the Committee and to the usual channels that I
will have been in the Chair for three hours at 7.30. If it is the
intention to adjourn the Committee at approximately that time, which is
up to the Government Whip, I am happy to give the leeway of a few
minutes. Other than that, I shall allow a break for dinner and
refreshment. Does the Government Whip wish to comment on
that?
Mr.
Bob Blizzard (Waveney) (Lab): I think I made a comment in
the note that I sent you, Sir
Nicholas.
The
Chairman: Indeed, and I will read it to the
Committee: “Sir
Nicholas, It is my intention to make up today all the time lost through
Divisions in the Chamber. I have agreed this with the
Opposition.” I
have indicated my intention, whether or not the Committee can meet
that. I think that after three hours’ debate a break will be
appropriate. Question
proposed, That the clause, as amended, stand part of the
Bill.
Mr.
Gauke: Bearing your strictures in mind, Sir Nicholas, I
will keep my comments as short as possible. Clause 109 contains powers
for HMRC to gain access to computer records. It works on the basis that
documents stored on computers or copied to another form of electronic
media should be treated as though they are documents or copies
themselves. That seems a perfectly reasonable way to deal with the
matter. Subsection
(3) gives an authorised person powers
to “obtain
access to, and inspect and check the operation of, any computer and any
associated
apparatus”. There
does not appear to be any limitation on that power. Computer records
are equated with documents and there are protections with regard to the
production of documents, which we have been debating. However, those
protections do not appear to apply to the powers to inspect and check
the operation of computers. First, why are those protections not in
place? Secondly, is it the intention that guidance will restrict the
operation of subsection (3)? Thirdly, as she has done during the
debates on part 7, will the Financial Secretary provide some comfort to
the Committee by setting out how HMRC will operate these powers in
practice to ensure that individuals whose records are held on computer
as opposed to hard copy are not disadvantaged? I would be grateful for
the Minister’s response, either now or after a few moments, when
she may have had an extended opportunity to think about these questions
and then inform the Committee.
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