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Session 2007 - 08
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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

Thursday 12 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 196 of the Finance Act 2003)
1 pm
The Chairman: I can now begin our afternoon sitting, just a few seconds late, as I can see 11 Committee members, which is the quorum for this Committee. May I congratulate members of the Committee on what I call the constructive way in which matters were dealt with this morning? I delayed the official start of the sitting because a particular hon. Member was not in his place, and he is responsible for moving the first amendment. I have no reason to doubt that the constructive way in which the Committee dealt with this morning’s business will continue this afternoon.

Schedule 41

Penalties: failure to notify and certain VAT and excise wrongdoing
Mr. Jeremy Browne (Taunton) (LD): I beg to move amendment No. 196, in schedule 41, page 406, line 13, leave out ‘decision’ and insert ‘notice’.
The Chairman: With this it will be convenient to discuss the following amendments: No. 305, in schedule 41, page 406, line 13, leave out ‘decision of HMRC’ and insert
‘notice under sub-paragraph (1)(b) of paragraph 16’.
No. 306, in schedule 41, page 406, line 14, leave out ‘decision of HMRC’ and insert
‘notice under sub-paragraph (1)(b) of paragraph 16’.
Mr. Browne: Thank you, Sir Nicholas. I thought, this morning, that I might have to play a nightwatchman’s innings in the short period between the vote and 10.25 am. Instead, it is great to have the opportunity to open the batting after the luncheon interval, and for you to have kept one end blocked before I got to the wicket.
Amendment No. 196 is quite a simple amendment that carries on from this morning’s deliberations on schedule 41, paragraph 17 of which allows for appeal against a decision by Her Majesty’s Revenue and Customs. The amendment would mean that an appeal would not be against a decision but against a notice from HMRC that the relevant person was liable to a penalty. It therefore addresses the same point that I raised in amendment No. 181 to schedule 36—that time should start ticking when the recipient receives the notice rather than when it is issued and sent, because there might be some delay between its being sent and the recipient receiving it, and they might be disadvantaged as a consequence. The Financial Secretary was unwilling to concede that point earlier, and I suspect that she will take the same view now, but we felt that it would be helpful to table a probing amendment to give her the opportunity to consider this concern.
Mr. David Gauke (South-West Hertfordshire) (Con): May I welcome you back to the Chair, Sir Nicholas, to perform your role as umpire—to continue the cricketing analogy? The last time I heard as tortuous a cricketing metaphor in Parliament was in Geoffrey Howe’s speech in 1990, shortly after which the Prime Minister fell, although I do not know whether we should read too much into that. [Interruption.] Yes, let us not dwell on that any longer.
We have tabled the amendments as a consequence of representations received from the Institute of Chartered Accountants, which made the point that taxpayers should have a right of appeal against any penalty notice issued under paragraph 16 of the schedule, rather than against any decision of HMRC to issue a penalty notice. The institute is supportive of the approach taken in amendment No. 196, but we have made two small amendments, so that rather than appeals against decisions of HMRC, there are notices. There should be a right for taxpayers to appeal in those circumstances.
The Financial Secretary to the Treasury (Jane Kennedy): The Bill states that the appeal is against a decision made by HMRC. That is consistent both with how appeal provisions are worded in last year’s Finance Act for the new penalties for incorrect returns and with the effect of other appeal provisions in tax legislation. The three amendments would change that to an appeal against notice of the penalty rather against the decision itself. I know concern has been expressed that the time limit for an appeal against a penalty decision, which is 30 days, may expire before the taxpayer has even received a notice of the penalty—that would clearly be wrong and would undermine this important safeguard—but the legislation already prevents that from happening.
Paragraph 18(2) of schedule 41 states that appeals against penalties
“shall be treated for procedural purposes in the same way as an appeal against an assessment to the tax”
For example, the time limit for an appeal against a direct tax assessment runs from the date on which the assessment is issued. The taxpayer is aware of that date because it is on the assessment notice. Therefore, I can assure the Committee that, as now, taxpayers will always have 30 days in which to appeal, beginning with the day on which HMRC issue the penalty notice. The amendments are unfair.
The hon. Member for Taunton asked why it does not start from the date of receipt of the notice. The time limits run from the date on which HMRC sends a document, because that is the date it can be certain of. There can be no certainty about the date that a document was received. If an appeal is late because of postal delays, for example, the cause of the late receipt would be taken into account in considering whether there was a reasonable excuse for the lateness. If there was a reasonable excuse, the late appeal would be accepted. We have a sensible structure for dealing with appeals and notice and penalty decisions. I hope that the hon. Gentleman will accept the explanation that I have given and not press the amendment to a vote.
Mr. Browne: The Minister replied as I had anticipated. It was not my intention to press the matter to a vote, because I merely wanted to raise the issue—I did not expect her to be accommodating. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: No. 242, in schedule 41, page 407, line 33, leave out from ‘company’ to second ‘may’ in line 37 and insert
‘, the officer is liable to pay such portion of the penalty (which may be 100%) as HMRC’.
No. 243, in schedule 41, page 408, line 5, leave out sub-paragraph (5) and insert—
‘(5) Where HMRC have specified a portion of a penalty in a notice given to an officer under sub-paragraph (1)—
(a) paragraph 14 applies to the specified portion as to a penalty,
(b) the officer must pay the specified portion before the end of the period of 30 days beginning with the day on which the notice is given,
(c) paragraph 16(3) to (5) and (7) apply as if the notice were an assessment of a penalty,
(d) a further notice may be given in respect of a portion of any additional amount assessed in a supplementary assessment in respect of the penalty under paragraph 16(6),
(e) paragraphs 17 to 19 apply as if HMRC had decided that a penalty of the amount of the specified portion is payable by the officer, and
(f) paragraph 23 applies as if the officer were liable to a penalty.’.—[Jane Kennedy.]
Schedule 41, as amended, agreed to.
Clause 119 ordered to stand part of the Bill.
Clause 120 ordered to stand part of the Bill.
Schedule 42 agreed to.
Clause 121 ordered to stand part of the Bill.

Clause 122

Enforcement by taking control of goods: england and wales
Mr. Gauke: I beg to move amendment No. 281, in clause 122, page 76, line 13, at end insert
‘except to the extent that the regulations made under that Schedule provide for a minimum period of less than five days, and paragraph 14 of that Schedule shall not apply.’.
The Chairman: With this it will be convenient to discuss amendment No. 282, in clause 124, page 77, line 31, at end add—
‘(6) No such order may be made unless the Commissioners have laid before the House of Commons a report on the procedure they will adopt under section 122(2) and the House of Commons has come to a resolution to the effect that that procedure ensures adequate taxpayer safeguards.’.
Mr. Gauke: Thank you, Sir Nicholas. We had a little trot-through there. It is time to bring that to an end, and this will be a relatively brief innings.
Clause 122 relates to the enforcement by taking control of goods. Clause 124, to which amendment No. 282 relates, is a consequential provision and, for the benefit of the hon. Member for Wirral, West, it is entirely sensible that these two matters be addressed at the same time. The concern here is that under the existing provisions of the Taxes Management Act 1970 section 61, with regard to destraint and the taking control of goods, there are three taxpayer safeguards. First, no entry to effect destraint without a court order. Secondly, HMRC must retain the goods for at least five days to give the taxpayer a chance to find the money. Thirdly, any sale must be made by public auction, with any surplus being restored to the debtor.
The question for this Committee is, what is the new procedure? There is nothing in the Bill that gives us the answer. It is to be prescribed by regulations under schedule 12 to the Tribunals, Courts and Enforcement Act 2007. In this Bill we are agreeing to remove these taxpayers’ safeguards. What we are seeking in tabling these two amendments and having this debate is assurances from the Financial Secretary that the safeguards that have traditionally been in place will continue to be in place and that the taxpayer will not lose some of those safeguards, which are not specified in the Bill. Our question is, what safeguards will there be and what oversight will Parliament have in ensuring that they are satisfactory?
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Prepared 13 June 2008