Mr.
Field: The Economic Secretary referred to repealing. Does
he mean simply repealing, or is there a suggestion that something in
the clause could enact, by secondary legislation or otherwise, new
offences under which taxpayers, whether errant or otherwise, could find
themselves falling foul of the
law?
Ian
Pearson: I will cover those points as I discuss the
amendments. Amendment
87 would omit from the clause the whole of subsections 2 to 5, which
contain the provisions to make incidental, consequential or
transitional changes by Treasury order. That would mean leaving the
legislation unclear and prevent a significant number of repeals. We do
not believe that that would be right. The orders proposed under clauses
94 and 95 will enable the repeal of more than 30 pages of legislation
containing powers that are no longer required. We believe that it is a
good thing to repeal
them. Amendment
88 would insert provisions to ensure that an order under clause 94
would not remove or weaken safeguards or increase a penalty or HMRC
power. I appreciate that it is a probing amendment, and
I assure the Committee that the Treasury order provisions merely allow
the repeal of legislation that is made redundant by the powers in the
provisions, and consequentially to amend legislation as a result of
those repeals or to take account of powers in schedule 36 to the
Finance Act 2008, as amended by schedule 47 to the Bill. They will also
ensure transitional arrangements for those repeals. Given the nature
and scale of the changes, the broader power of amendment is needed to
facilitate accurate consequential amendments to untangle a lot of old
and complex tax legislation. I assure the Committee that orders will
not be used to alter safeguards or the powers. Drafts of the proposed
orders under clauses 94 and 95 are before the Committee and show that
to be the case. Amendment 61
would call for the provision to make orders under the affirmative
procedure consequently to amend existing legislation and to repeal
information powers that are no longer needed. The Opposition often
raise that as a debating point. To make orders under the affirmative
procedure would be contrary to normal practice for orders covering tax
matters, which are usually made under the negative procedure. The
consequential, transitional and incidental changes to be made under
Treasury order, even to primary legislation, do not involve changes in
policy and are simply tidying up, but they are essential to ensure that
the law is clear. We believe that the negative procedure is appropriate
because of the narrow scope and effect of the consequential changes
that will be required, so there seems to be no sensible reason to make
an exception to normal
practice. Amendments
62 to 64 would amend clause 95 in the same way as amendments 87, 88 and
61 would amend clause 96. The same reasons for resisting those
amendments apply, and I invite hon. Members to resist them if they are
pressed to a vote. It is important that, in clauses 94 and 95 and the
associated schedules, we have an effective way of employing our tax
legislation in this area. We have listened, and learned from the
operation of schedule 36. We believe that we have the legislation right
and that the proposed amendments are
unnecessary.
Mr.
Gauke: I thank the Minister for his response. I note his
comments that wanting to use the affirmative procedure is a point that
Oppositions frequently make and that Governments equally frequently
reject. I dare say that we may have that debate again at some
point—perhaps with the parties taking different
views. The
assurances the Minister has given the Committee have been clear. If
there was an attempt to use the provisions contained in clauses 94 and
95 in anything other than the manner in which the power was used to
appeal existing provisions to provide transitional rules and very minor
consequential rules, the Minister would be in great difficulty, because
his wording is very clear. I wonder why the provisions could not be
more narrowly defined. Clause 94(2) is still pretty broad, and the
protection contained in the Bill is fairly minor. None the less, every
time such a clause is presented to a Public Bill Committee, it is
valuable to highlight such matters and Ministers should be forced to
give the kind of assurance that we have heard today. On the strength of
that, I beg the Committee’s leave to withdraw the
amendment.
Amendment,
by leave,
withdrawn. Clause
94 ordered to stand part of the Bill.
Schedule
47Amendment
of information and inspection
powers
Mr.
Gauke: I beg to move amendment 66, in
schedule 47, page 345, line 35, leave
out sub-paragraph
(5). I
have only a very brief point to make. Concern was raised with us that
new paragraph 21(9) in schedule 36 to the Finance Act 2008, inserted by
schedule 47 to the Bill, is somewhat vague and adds nothing to the law.
It
states: “In
this paragraph, references to the person who made the return are only
to that person in the capacity in which the return was
made.” Will
the Minister explain what the wording is designed to
do?
Ian
Pearson: The amendment would remove paragraph
9(5) of schedule 47, which inserts a new sub-paragraph in paragraph 21
of schedule 36 to the 2008 Act. Paragraph 21 provided specific rules on
how the information powers could be used in cases in which a
self-assessment return had been submitted. The new sub-paragraph
clarifies that the specific rules apply only in relation to checking
the person’s tax position in the capacity in which the tax
return was made.
The
provision is needed as there are people who are responsible for making
returns in more than just their own personal capacity—an example
is a trustee who has filed a trust return, but has not filed their own
personal return. As a result of the new sub-paragraph that the
amendment seeks to remove, the legislation would not prevent HMRC from
issuing a taxpayer information notice in relation to the
individual’s personal tax position. It would be wrong to leave
the legislation so that the way in which one return could be treated
was affected by the filing of another, unrelated, return. Without that
provision, the legislation in schedule 36 would not work as originally
intended and would remain unclear. The provision is concise, clear and
helpful and should not be omitted.
It might
help the hon. Member for South-West Hertfordshire and those who follow
these proceedings closely if I explain that we are concerned only about
cases where someone is required to make more than one tax return in
different capacities. For example, the situation of an agent who
submits tax returns for several clients would not be affected by the
provision. I hope that is helpful, given the probing nature of the hon.
Gentleman’s amendment, in explaining why we need the
power.
Mr.
Gauke: I am grateful to the Minister for that response and
beg to ask leave to withdraw amendment
66. Amendment,
by leave, withdrawn.
Ian
Pearson: I beg to move amendment 306, in
schedule 47, page 348, line 11, leave
out from ‘person’ to ‘the’ in line 13 and
insert ‘if— (a) it appears
to an officer of Revenue and Customs that a counteraction provision may
apply to the person by reason of one or more transactions,
and (b)
’.
The amendment
is purely technical and corrects a drafting error in paragraph 12 of
schedule 47. I could speak to it in more detail if hon. Members have
questions but, in the light of its technical nature, I do not feel
compelled to do
so. Amendment
306 agreed
to. Schedule
47, as amended, agreed
to. Clause
95 ordered to stand part of the
Bill.
Schedule
48Extension
of information and inspection
powers Question
proposed, That the schedule be the Forty-eighth schedule to the
Bill.
Mr.
Gauke: The schedule deals with the extension of
information and inspection powers to further taxes. My question relates
to paragraph 5, which deals with the powers to inspect property for
valuation. That is clearly a sensitive area, in that under those powers
HMRC officers may enter private premises, accompanied by
“any person
who...is needed to assist with the
valuation”. The
safeguards are that an inspection can only be carried out with the
agreement of the occupier, who has been given notice of the inspection
in writing; or with the consent of the tax tribunal, when the occupier
must still be given seven days’ notice in writing. I ask the
Minister whether those safeguards are sufficiently robust, given that
the power enables HMRC to enter a person’s private
residence.
In
particular, I put to the Minister concerns raised with us that there
should be a specific right for the recipient of the notice to be heard
by a tribunal, if he or she wishes to object to access to the private
premises. I also ask whether there should be a specific right of appeal
in this area. It is a sensitive matter, as is always the case when the
authorities are allowed access to private premises. I would be grateful
if the Minister let the Committee know what representations he has
received and whether any consideration has been given to additional
safeguards.
Ian
Pearson: The hon. Gentleman is right to say that the
schedule contains a power to enter property for valuation purposes,
which rationalises and aligns several existing powers. Schedule 36 of
the Finance Act 2008 gives a power to enter and inspect business
premises. However, it can be necessary in specific circumstances to
value private premises or the assets on those premises. For example,
the valuation of all types of property is an essential form of check
for inheritance tax. The aligned valuation power contains significant
extra safeguards that go beyond the current legislation. The
legislation will now specify that valuation inspections can be carried
out only with the agreement of the relevant person or the tribunal. The
ability to visit unannounced has been removed. I am happy to clarify
that. 6
pm During
the consultation, the majority of proposals in the schedule were
welcomed. Some respondents were concerned, however, that the involved
third party power could be applied more widely; for example, to the
beneficiaries of someone who had died. I can give
reassurance that that is not the case. Specifying in primary legislation
precisely where the power can be used means that if HMRC did wish to
extend its scope, proposals would need to come before Parliament. I am
happy to respond on that
point. Many
respondents to the consultation noted the difference between
inheritance tax and mainstream taxes. We accepted that and have removed
the proposal for a record-keeping requirement for inheritance tax,
which I know has been a bone of contention. That means that records
created or kept solely for inheritance tax purposes will not be capable
of being inspected. That has allowed us to respond to concerns that
inspection visits might have been made to the vulnerable or bereaved at
short notice. The schedule provides rights of appeal against
information requests and flexibility for any part of the outstanding
lifetime estate to be dealt with alongside the inheritance tax issues
using the same
legislation. In
general, the safeguards are much stronger. Powers already exist to
ensure that there are safeguards to protect the taxpayer from misuse of
the valuation power. All valuation visits to which the occupier does
not agree will have to be authorised by the independent tribunal, which
will ensure that the power is used only when it is necessary and
proportionate to do so. I do not believe that a further appeal process
is needed as we already have an independent tribunal that will have
authorised the visit in the first place. I believe that we have gone a
long way towards addressing all the concerns of respondents to the
consultation. Question
put and agreed to.
Schedule
48 accordingly agreed to.
Clause
96 ordered to stand part of the
Bill.
Schedule
49Powers
to obtain contact details for
debtors
Mr.
Gauke: I beg to move amendment 67, in schedule 49, page
358, line 50, at end
insert— ‘(ba) Revenue and
Customs has used all reasonable efforts to ascertain contact details of
the
debtor’.
The
Chairman: With this it will be convenient to discuss the
following: amendment 68, in schedule 49, page 359, line 24, at end
insert ‘such period
being not less than 30 days from the date of the
notice.’. Amendment
69, in schedule 49, page 359, line 27, after ‘it’,
insert ‘does not have
the information or that
it’. Amendment
70, in schedule 49, page 360, line 22, at end
insert— ‘Application
of data protection
legislation 7A A third party
who provides information to Revenue and Customs as a consequence of the
powers contained in this Schedule shall be deemed to have acted in
compliance with his responsibilities under data protection
legislation.’.
Mr.
Gauke: The schedule relates to HMRC’s powers to
obtain contact details for debtors. I shall run through the amendments
standing in my name and those of my hon. Friends.
Amendment 67
deals with the requirements relating to when a Revenue and Customs
officer may reasonably request contact details for a debtor from a
third party for the purpose of collecting a sum. It would simply
require that Revenue and Customs must first use all reasonable efforts
to ascertain the contact details of the debtor. In other words, it
should check the information that it currently has. It is unreasonable
for HMRC as a matter of course, as the first port of call, to go to a
third party to ask for information which it may have. The amendment
would simply require it to check its information
first. Amendment
68 relates to the requirements to comply with notices. Paragraph 3 of
the schedule currently states: “If
a notice is given to the third party under this Schedule, the third
party must provide the
details— (a) within such
period, and (b) at such time,
by such means and in such form (if
any), as
is reasonably specified or described in the
notice.” We
simply want a little clarity on the duration of that period by
proposing a minimum period of 30 days from the date of the notice. It
would be helpful if the Minister outlined what the Government have in
mind for the duration of that period, but 30 days is not an
unreasonable amount of time to respond to the
notices. Amendment
69 probes the grounds for a right to appeal. At the moment, such a
right exists if it would be
“unduly onerous
to comply with the notice or requirement.”
The amendment suggests
that an additional ground should be stated explicitly—that the
third party does not have the information. One could argue that if one
does not have the information, compliance would be “unduly
onerous”, in which case the amendment is unnecessary. The
amendment might, however, provide a degree of clarity for third parties
that receive such
notices. Amendment
70 would provide some protection for a third party that provides
information to Revenue and Customs as a consequence of the powers
contained in the schedule and that runs into difficulties with data
protection legislation. The Minister may well be able to provide some
reassurance that the amendment is unnecessary. We would welcome some
reassurance that any third party acting in accordance with the
provisions of the schedule would not face any data protection
difficulties. We
have one other concern in relation to the schedule that I would like to
put to the Minister. I should be grateful for your guidance,
Mr. Atkinson, on whether I should mention it now or during
the stand part debate. It is a brief point, and it might be to the
convenience of the Committee if I address it
now.
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