House of Commons
|Session 2008 - 09
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General Committee Debates
The Committee consisted of the following Members:
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)
Publishing details of deliberate tax defaulters
Mr. David Gauke (South-West Hertfordshire) (Con): I beg to move amendment 81, in clause 93, page 45, line 27, leave out £25,000 and insert the greater of
(i) £25,000 or
(ii) a percentage of the persons income as determined by an order made by the Treasury..
The Chairman: With this it will be convenient to discuss the following: amendment 82, in clause 93, page 45, line 30, after deliberate, insert and concealed.
Amendment 83, in clause 93, page 45, leave out lines 32 to 40.
Amendment 84, in clause 93, page 46, line 14, at end insert
(5A) No information may be published without the consent of the Chief Executive of Her Majestys Revenue and Customs..
Amendment 85, in clause 93, page 46, line 18, at end insert and
(c) inform the person of his right of appeal under subsection (11A) below.
Government amendment 305
Amendment 86, in clause 93, page 46, line 36, at end insert
(11A) No information may be published until the person has had the opportunity to appeal to the First Tier Tribunal for an in-camera hearing against the decision to publish details of that person.
(11B) The Treasury may by order made by statutory instrument make provision for and in connection with appeals to the First Tier Tribunal under subsection (11A)..
Mr. Gauke: I welcome you to the Chair, Mr. Atkinson. From the outset, I make it clear that we do not necessarily object to the use of the naming and shaming provisions in clause 93. However, we have a number of specific concerns, some of which we have addressed in this group of amendments.
Clause 93 sets out a new regime for publishing details of deliberate tax defaulters. This is, as we will debate at slightly greater length, an arrangement that was not consulted on before the Budget and, with the publication of the Finance Bill, a number of specific concerns have been raised about the regime. I will briefly set out the concerns that we attempt to remedy in the amendments,
Consequently, amendment 81 seeks to make the £25,000 test a bit more sophisticated, if I can put it that way, in the sense of still having a de minimis requirement of £25,000, but for an entity or for a person with a large income there shall also be a test of a percentage of that income. That would prevent the concern, raised by a number of outside bodies, that persons may be caught for what is, in their overall tax liability, a small amount of money.
We are keen to hear the Ministers assessment of why the £25,000 figure was chosen and whether it is possible to have a differential rate so that we can assess the scale of the mischief, or the scale of the tax default, by the person concerned.
Amendments 82 and 83 look at the issue of a relevant tax penalty and what sort of activity should fall within that. It is an attempt to tighten this definition set out in clause 93(2). We are not wedded to any particular wording in this area, but we would like to explore the thinking here. There is a reasonable argument to be made that a new penalties regime has just come into effect, that this naming and shaming regime is being bolted on to it and that, at least in the initial months and years of this regime, it should be focused upon the very clearest cases of tax default, where we are looking at deliberate inaccuracy and concealment, rather than being broader. A criticism could be made of this regime that it is not focused as much as it might be, but I would put this in the context of a new regimewhy not start it off in a fairly narrow circumstance with a view to broadening it out?
Mr. Todd: I may have misunderstood the hon. Gentleman, but the thrust of his amendments appears to be to protect the privacy of those with very substantial net worth who may have significant tax liabilities on which they deliberately default. Am I right in thinking that that is the thrust of what he is attempting to do here?
Mr. Gauke: I think that the concern that he is raising is with amendment 81, rather than 82. The concern behind amendment 81 is a relatively small error on the part of a large taxpayer. I suspect that the hon. Gentleman is going to make the point about deliberate inaccuracy, and, do not get me wrong, these are not people whom we are desperate to protect. None the less, this is a new
Mr. Todd: Surely the test is deliberateness, is it not? One would agree that honest errors are dealt with in a different way. Quite how one establishes deliberateness, other than by a paper trail showing that someone conspired to achieve this, is another matter, but that is the critical test.
Mr. Gauke: Of the various levels of misbehaviour, the highest test is deliberate inaccuracy and concealment, and we are suggesting focusing on that because that is the clearest case of what, not to put too fine a point on it, most of us would consider to be of a fraudulent nature. Why not focus on the most egregious cases? Outside bodies argue that the measure is broader than it might be, so let us explore that.
The other amendments, which are less controversial, focus on the issue of publication and the circumstances in which publication should be made. Amendment 84 proposes that consent should be given by the chief executive of HMRC before information is signed off with regard to a tax defaulter. Again, this is partly a probing amendment. I hope that the Minister will be in a position to reassure the Committee that publication will occur only after a senior executive from HMRC has signed off these matters. Naming and shaming should not be a decision that is taken lightly.
Amendments 85 and 86 relate to the issue of a right of appeal. It is worth making the point that naming and shaming in this way is very much a penal action. It is likely to have a very significant effect on the reputation of the person being named and shamed. In the stand part debate, I hope that we will be able to examine in a little more detail the potential human rights angle to this and concerns about a breach of privacy. Clearly, in defending their case against an action brought on the basis of the Human Rights Act 1998, it will be helpful to the Government to have a satisfactory appeal mechanism. Clause 93, as currently drafted, does not seem to address that particular concern. It may well be that the Minister can give the Committee some reassurance on that particular point. The need for an appeal mechanism is addressed by amendments 85 and 86.
I have various broader points that I do not intend to go into at this stage, but we would be grateful for the Ministers response on a number of points that seek to ensure that clause 93 works as effectively as possible.
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): Welcome back to the Chair, Mr. Atkinson. Clause 93, as set out by the hon. Member for South-West
The clause relates to a deliberate intention to give HMRC inaccurate documents or not to meet obligations so as to gain a tax advantage. Careless errors or failures, whether or not penalised, will not trigger publication whatever their size, nor will taking a reasonably arguable view of the tax situation, even if it is not upheld. There will be exemption from publication for those who make a full disclosure of their defaults, either unprompted or prompted by HMRC. That means that everyone will have the chance to escape publication by coming forward and making good.
Mr. Mark Field (Cities of London and Westminster) (Con): Although I am reassured that there has to be some deliberate intent, is there not a concern that powerful people with deep pockets and concern about their reputation and libel laws will be able to muscle their way in to ensure that their position is protected. Notwithstanding any Human Rights Act opportunities, it will be the less powerful who fall foul of the measure. The overwhelming concern is that individuals who realise the potential for reputational damage and the risk of going to courtthe cost and everything elsewill have an opportunity to ensure that officials are persuaded not to put them on a list, whereas the less powerful will be voiceless in that regard.
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