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Session 2008 - 09
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General Committee Debates
Finance Bill

The Committee consisted of the following Members:

Chairmen: Mr. Peter Atkinson, Mr. Jim Hood, Sir Nicholas Winterton
Bailey, Mr. Adrian (West Bromwich, West) (Lab/Co-op)
Barlow, Ms Celia (Hove) (Lab)
Binley, Mr. Brian (Northampton, South) (Con)
Blackman, Liz (Erewash) (Lab)
Blizzard, Mr. Bob (Waveney) (Lab)
Bone, Mr. Peter (Wellingborough) (Con)
Breed, Mr. Colin (South-East Cornwall) (LD)
Brown, Mr. Russell (Dumfries and Galloway) (Lab)
Browne, Mr. Jeremy (Taunton) (LD)
Cable, Dr. Vincent (Twickenham) (LD)
Dobbin, Jim (Heywood and Middleton) (Lab/Co-op)
Duddridge, James (Rochford and Southend, East) (Con)
Engel, Natascha (North-East Derbyshire) (Lab)
Field, Mr. Mark (Cities of London and Westminster) (Con)
Flello, Mr. Robert (Stoke-on-Trent, South) (Lab)
Gauke, Mr. David (South-West Hertfordshire) (Con)
Hands, Mr. Greg (Hammersmith and Fulham) (Con)
Hoban, Mr. Mark (Fareham) (Con)
Hosie, Stewart (Dundee, East) (SNP)
Howell, John (Henley) (Con)
Jenkins, Mr. Brian (Tamworth) (Lab)
Joyce, Mr. Eric (Falkirk) (Lab)
McCarthy-Fry, Sarah (Exchequer Secretary to the Treasury)
Moffatt, Laura (Crawley) (Lab)
Pearson, Ian (Dudley, South) (Lab)
Pugh, Dr. John (Southport) (LD)
Robertson, John (Glasgow, North-West) (Lab)
Roy, Lindsay (Glenrothes) (Lab)
Seabeck, Alison (Plymouth, Devonport) (Lab)
Soulsby, Sir Peter (Leicester, South) (Lab)
Stuart, Mr. Graham (Beverley and Holderness) (Con)
Syms, Mr. Robert (Poole) (Con)
Timms, Mr. Stephen (East Ham) (Lab)
Todd, Mr. Mark (South Derbyshire) (Lab)
Liam Laurence Smyth, Committee Clerk
† attended the Committee

Public Bill Committee

Tuesday 23 June 2009


[Mr. Peter Atkinson in the Chair]

Finance Bill

(Except Clauses 7, 8, 9, 11, 14, 16, 20 and 92)

Clause 91

HMRC Charter
10.30 am
Mr. David Gauke (South-West Hertfordshire) (Con): I beg to move amendment 75, in clause 91, page 45, line 2, leave out ‘aspire’ and insert
‘use all reasonable endeavours to achieve’.
The Chairman: With this it will be convenient to discuss the following: amendment 76, in clause 91, page 45, line 3, at end insert
‘and set out the rights and responsibilities of taxpayers and other persons with whom HMRC deals’.
Amendment 77, in clause 91, page 45, line 5, leave out ‘regularly’.
Amendment 78, in clause 91, page 45, line 5, after ‘review’, insert
‘at least once every year’.
Amendment 79, in clause 91, page 45, line 5, after ‘review’, insert
‘at least once every 3 years’.
Amendment 80, in clause 91, page 45, line 5, leave out ‘and’ and insert—
‘(b) consult with stakeholders in carrying out the review, and’.
Mr. Gauke: Welcome to the Chair, Mr. Atkinson. May I also welcome the Exchequer Secretary to her new position in the Treasury team and to the Finance Bill Committee? I am sure that we all applaud the fact that she is to respond to the debate on the next few clauses. She has experience of previous Finance Bills, having been a Parliamentary Private Secretary, which I am sure will stand her in good stead. She must be as delighted as she is surprised to find herself on this year’s Finance Bill Committee.
Clause 91 relates to the HMRC charter. I will make various comments about the charter’s purpose during the stand part debate, but it might be helpful to touch upon its purpose in relation to amendments 75 and 76. Is the charter’s purpose to set out HMRC’s responsibilities and its mission statement; or to set out the rights and responsibilities of taxpayers; or a bit of both?
“The Charter must include standards of behaviour and values to which Her Majesty’s Revenue and Customs will aspire when dealing with people in the exercise of their functions.”
The draft charter’s content on the rights of taxpayers may be regarded as similar to that statement, but the obligations, which the charter also outlines, are not reflected in the subsection. The subsection does not refer in any way to the obligations of taxpayers; its focus is entirely on what HMRC will do. We will have an opportunity during the clause stand part debate to argue about whether that is right or wrong, but we think it would be a better description of both the draft HMRC charter that was published last week and the February draft if the subsection provided for the charter to
“set out the rights and responsibilities of taxpayers and other persons with whom HMRC deals”
as proposed in amendment 76.
Clause 91 gives the charter statutory recognition—I hope to talk at greater length about that and the reasoning behind the clause in a moment—but if the clause is to accurately reflect the charter’s nature, amendment 76 would be helpful in clarifying that purpose. New section 16A(2), as drafted, does not fully or adequately explain what the charter is about. We can debate what we think the charter should be about. There is a strong argument that what is in subsection (2) should be an accurate description of what the charter is about, or we could argue that that is deficient. I submit that subsection (2) is inadequate as a description and would be better if amendment 76 were accepted.
Amendment 75 toughens up the wording of subsection (2), which refers to
“standards of behaviour and values to which Her Majesty’s Revenue and Customs will aspire with people in the exercise of their functions.”.
We suggest that that could be improved and strengthened by removing the word “aspire” and, instead, say that HMRC will
“use all reasonable endeavours to achieve”
those standards. The intention is to strengthen the requirements of HMRC to comply with the charter. If we have a charter to which people merely have to aspire, as opposed to actually and properly seen as a key objective that HMRC will go to great lengths to achieve, one may question whether the charter will have as much effect as it should have. Consequently, amendment 75 deletes the word “aspire” and inserts the words
“use all reasonable endeavours to achieve”.
Amendments 77 to 80 deal with review. New section 16A(3) states that
“The Commissioners must...regularly review the Charter, and...publish revisions, or revised versions, of it when they consider it appropriate to do so.”
The term “regularly review” is vague. How frequently is regularly? Perhaps the Minister can give some guidance to the Committee on that point. We suggest two alternative approaches—they obviously contradict each other. In amendment 77 we propose the removal of the word “regularly”. In amendment 78, we suggest that the review should be annual, tying in more neatly with new subsection (4), which refers to the Commissioners making
“a report reviewing the extent to which Her Majesty’s Revenue and Customs have demonstrated the standards of behaviour and values included in the Charter.”
Given the obligation to make a report annually, we suggest that a review of the charter be performed at the same time—again, annually. I do not think that the Government intend that that be done annually and that the review of the charter itself should be tied up with the review of compliance with the charter, which is why we tabled amendment 79, which proposes that the review be undertaken every three years. That would regularise and formalise a proper review and deal with the vagueness, which has been a concern. The Minister may well provide some comfort through her comments to the Committee, but I think it is right to raise the issue of vagueness in the present wording.
The other concern relating to the review process is that there is nothing in the Bill that states that there will be consultation with stakeholders. Clearly, in producing in the draft charter, the Government have consulted stakeholders. We will turn to the charter in more detail in the stand part debate, I hope, but there has been extensive consultation and the original draft of the charter responds to the remarks made by the Chartered Institute of Taxation and the Institute of Chartered Accountants in England and Wales. If HMRC is to review the charter regularly, it would be sensible to consult stakeholders. I am sure the Exchequer Secretary will be able to reassure the Committee that any reviews will be undertaken with proper consultation, but it would be helpful if that were in the Bill and I see no reason why it should not be. We tabled amendment 80 to address that point.
Clause 91 is important, raising a range of issues which I would like to turn to in the stand part debate. We tabled amendments 75 to 80 in an attempt to be constructive, to provide greater clarity and to allow the Exchequer Secretary to expand on some of the more technical points, before we turn to a wider debate.
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): I am pleased to serve under your chairmanship, Mr. Atkinson, and to join the Bill Committee, although it was a bit of a surprise, as the hon. Member for South-West Hertfordshire said. I thank him for his kind words.
We will come later to the stand part debate on clause 91, but I have a couple of introductory remarks. The clause introduces and maintains the charter in statute for the first time, ensuring that the charter cannot lapse. It also ensures that HMRC will be specifically accountable to both Parliament and the public for its performance against the charter. Commissioners must report annually on how well HMRC is doing in meeting the standards in the charter. That will be included in HMRC’s departmental report, opening it to scrutiny by both the Public Accounts Committee and the Treasury Committee. That imposes on the commissioners and all officers of Revenue and Customs the strongest obligation to comply with the charter’s requirements and aspirations. I assure the Committee that the charter will have a high profile at HMRC and be at the heart of everything it does.
John Howell (Henley) (Con): Will the hon. Lady give way?
Sarah McCarthy-Fry: Can I just finish the point, as it leads me to amendment 75, which would change the wording of the provision to describe the standards in the charter? Instead of standards to which HMRC will “aspire”, they would become standards HMRC will
“use all reasonable endeavours to achieve”.
If there is a standard in the charter to which HMRC must aspire, it goes without saying that HMRC must use all reasonable endeavours to achieve it. In my view, the accountability mechanisms I have just described meet that obligation.
John Howell: Given the general nature of the behaviours described in the charter, will the hon. Lady say a little more about how she is going to measure them? It seems impossible to measure some of them. There are no firm numbers and no comparisons one can make. How will she approach the measurement, against which we will tell whether HMRC has met its obligations under the charter?
10.45 am
Sarah McCarthy-Fry: I shall speak about that later when I respond to amendment 80, because we intend to set up an advisory panel.
We do not think it necessary to change the wording as proposed in amendment 75 because we think the obligation is already there. Amendment 76 would require the charter to
“set out the rights and responsibilities of taxpayers”.
That is too sweeping. It is intended that the charter will set out those rights that do not lend themselves to being enshrined in statute, such as the rights to be treated with respect and to be presumed to be honest. However, the charter cannot be expected to set out all the rights that already exist in law, such as the right to appeal in certain circumstances. On the responsibilities of taxpayers, the charter is not the right place to say that a tax return must be completed correctly and by a given date. Although it may include, for example, a general statement that a taxpayer is expected to be honest, it is not appropriate for the clause to suggest that HMRC can dictate values to which the public must adhere.
The hon. Member for South-West Hertfordshire expressed the hope that I would give some comfort and clarity in relation to amendments 77 to 79. Taken together, they propose omitting “regularly” and inserting one of two alternatives. “Regularly” clearly implies that HMRC must review the content of the charter reasonably often, which does not mean once every five years. As I have said, the charter will be at the heart of HMRC’s relationship with taxpayers and other persons it deals with. It is a pivotal document. I assure the Committee that the terms of the charter will be kept under review and the annual reporting obligation makes it inevitable that such reviews will take place at least once a year. It is not necessary to put that in the Bill.
On the point made by the hon. Member for Henley, we are already working to review what performance data should be published. That involves looking at what customers have told the Department is the information they care most about and reviewing what it would be most helpful to publish. In the light of those remarks, I invite the hon. Member for South-West Hertfordshire to withdraw the amendment.
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