The
Chairman: I believe that others wish to speak, so it would
be more convenient to save your point for the stand part
debate.
Mr.
Gauke: Thank you, Mr.
Atkinson.
Ian
Pearson: I hope to be able to provide the assurances and
clarification that the hon. Gentleman seeks. Amendment 67 would require
HMRC to make all reasonable efforts to trace a debtor before using the
formal power. I assure the Committee that HMRC will use that power only
as a last resort in the most difficult cases, where it considers that
all relevant checks have been made. For its own reasons of
cost-efficiency and making progress, HMRC will make reasonable efforts
from within its own resources, including the use of commercial products
and informal requests, before concluding that there is no way forward
other than to issue a formal notice. That is set out in HMRC’s
guidance, which has been published in draft form and supplied to the
Committee. I therefore do not consider it is necessary to legislate on
that
matter. Amendment
68 would put in statute a period of 30 days for the third
party to comply. Again, for clarification, we recognise that that is a
reasonable point to make, but I believe that it can be safely left to
guidance. HMRC has published draft guidance stating that it will
usually allow not less than 30 days for a reply. Although in most
cases, 30 days would be long enough to provide simple information, such
as an address that differs from that on a notice, in exceptional cases
a longer or shorter period might be appropriate. HMRC wants the
information, not the penalties, and will be open to representations to
extend the period if particular requests cause difficulty. Leaving the
time period in guidance is in line with schedule 36 to the Finance Act
2006, which operates in a similar
way. The
probing amendment, 69, would allow the third party to appeal on the
grounds that it does not have the information sought by HMRC. There is
no need to appeal. Confirmation by the third party that it holds no
contact details that differ from those provided by HMRC is enough to
satisfy the notice. Again, that is set out in the draft guidance
published by
HMRC.
Mr.
Binley: I am concerned about vulnerable people who could
be approached by the Inland Revenue for information. Will the Bill give
leeway to the Department, for example in a situation in which an
80-year-old mother is the third party? Will there be some compassion
over the whole business of application? What guidelines will be given
to achieve
that?
Ian
Pearson: We have published extensive guidance through
HMRC. HMRC tries to act compassionately in cases such as the hon.
Gentleman describes. It is unlikely that an 80-year-old woman will have
information that HMRC cannot secure through other means, but if she
did, every effort would be made to secure that information in an
appropriate way. We want the information, not the penalties. We want to
work with people and believe that the system will be voluntary. The
third parties that have such information are not likely to be
80-year-old women, but banks, other financial institutions, tax agents,
landlords, letting agents and other professionals. There might be an
octogenarian letting agent, but such circumstances will be
rare. I
understand that third parties will want assurance that in providing the
contact details, they will not be liable for the disclosure under data
protection law. I do not consider that amendment 70 is necessary to
achieve that. The clause will create the lawful means by which third
parties can provide information to HMRC. The
Data Protection Act 1998 states that when disclosing personal data, it
must be lawful and fair to do so. This provision will provide that
lawfulness. HMRC
considered statutory protection for the third party carefully in
development and concluded that no further protection was needed. That
view is supported by the Information Commissioner’s office,
whose website includes published guidance on dealing with requests
under tax legislation. It states
that “if
you are required to disclose personal information under HMRC
legislation, it will not breach the
Act”, meaning
the 1998 Act. There is no comparable provision in other HMRC
information powers and that has not caused problems to date. Many
organisations already provide such information voluntarily when asked
to do so. I am sure that they will continue to do
so. I
recognise that the amendments are probing and hope that my assurances
and clarifications will enable the hon. Member for South-West
Hertfordshire to not press
them.
Mr.
Gauke: The Minister is right that the amendments are
probing. I am grateful for his responses and I beg to ask leave to
withdraw the
amendment. Amendment,
by leave,
withdrawn. Question
proposed, That the schedule be the Forty-Ninth schedule to the
Bill. Alison
Seabeck (Plymouth, Devonport) (Lab): It is a pleasure to
speak for the first time under your chairmanship, Mr.
Atkinson. I
have a brief query for the Minister to do with how the schedule relates
to the Child Support Agency. It touches on the point made by the hon.
Member for Northampton, South. The guidance suggests that Departments,
friends, neighbours and relatives do not fall within the power, but
where does the CSA come in all this? It is moving to a position where
private contractors will do a lot of its work and debt collection, but
it clearly holds an awful of information that would be of use to HMRC.
I would welcome my hon. Friend the Minister’s advice on where
the CSA sits and whether HMRC can use the information the CSA holds and
its expertise to pursue
debt. 6.15
pm
Mr.
Gauke: It is a pleasure to follow the hon. Member for
Plymouth, Devonport. May I make a not entirely dissimilar point?
Paragraph 1(3)
states: “This
Schedule does not apply
if— (a)
the third party is a charity and obtained the details in the course of
providing services free of charge,
or (b)
the third party is not a charity but obtained the details in the course
of providing services on behalf of a charity that are free of charge to
the recipient of the
service.” As
the hon. Lady rightly points out, there are similar provisions in
relation to local
authorities. I
should be grateful to hear what the situation is for those who are part
of a non-charity not-for-profit organisation that provides assistance
to people. One can envisage that certain organisations that might fall
within that definition could well find themselves not receiving the
protection contained in paragraphs 1(3) and 1(2). Has any consideration
been given to broadening out the measure, for example, to volunteers
who work for a local authority or non-charity not-for-profit
organisation?
In addition, has any consideration been given to extending that
carve-out along similar lines to those suggested by the hon. Lady? Will
the carve-out be too narrowly defined for some of the circumstances
that could
apply? Ian
Pearson: I thank my hon. Friend the Member for Plymouth,
Devonport for her comments. In general, HMRC can obtain information
from other Departments under the appropriate information gateways. The
terms of those obviously vary, but HMRC will make use of such gateways
before considering using this power. That could apply to the Child
Support Agency, but I do not think that it necessarily applies under
this specific clause. However, the Child Support Agency should be able
to provide information to HMRC if it is needed for HMRC to perform its
duties. The
hon. Member for South-West Hertfordshire raised the issue of whether
charities should be excluded. Charities are excluded where they
obtained the contact details in the course of giving free advice to the
debtor. The exclusion also protects those who staff helplines on behalf
of the charity, even if they are carrying on business elsewhere. The
power will not be widely available and will be used only by specialist
staff in the most worthwhile cases. HMRC will use the power only if
there is or has been a business relationship between the debtor and the
third party. I hope that clarifies the point for the hon. Gentleman. He
also raised a point specifically about local government employees, and
I think that might well depend on whether there is a business
relationship.
Mr.
Gauke: I am concerned about the matter more in the context
of not-for-profit organisations that might not be a charity, rather
than in relation to charities. They do not appear to benefit from the
protection contained in paragraph 1(3) and, indeed, I am not sure
whether volunteers working for a local authority benefit from the
protection contained in paragraph 1(2). Will the Minister say something
specifically about that?
Ian
Pearson: My understanding of the policy intention is that
there should be a business relationship between the debtor and the
third party. That is unlikely to be the case for not-for-profit advice
given on the types of case that the hon. Gentleman is talking about. I
give an assurance that HMRC will treat voluntary bodies that acquire
addresses in the course of providing free advice to the debtor alike,
whether they are a charity or otherwise. I hope that provides the
reassurances that he
seeks.
Mr.
Binley: May I press the Minister a little
further?
Ian
Pearson: No; I have sat
down.
The
Chairman: If the hon. Gentleman wants to speak in the
debate, he
can.
Mr.
Binley: No thank you, Mr. Atkinson.
Question
put and agreed
to. Schedule
49, as amended, accordingly agreed
to. Clause
97 ordered to stand part of the Bill.
Schedule 50 agreed
to.
Clause 98 ordered
to stand part of the
Bill. Schedule
51 agreed to.
Clause 99 ordered
to stand part of the
Bill.
Schedule
52Recovery
of overpaid tax
etc
Mr.
Gauke: I beg to move amendment 71, in
schedule 52, page 377, line 23, leave
out ‘, or ought reasonably to have
known,’. Let
me say first that this schedule addresses the recovery of overpaid tax.
Amendment 71 deals with those circumstances where the commissioners are
not liable to give effect to a claim if particular circumstances apply;
there is a list of those circumstances in the Bill. Specifically,
amendment 71 relates to cases where the
claimant “could
have sought relief by taking such steps within a period that has now
expired, and knew, or ought reasonably to have known, before the end of
that period that such relief was
available.” The
particular words that we have concern with
are: “or
ought reasonably to have
known”. Essentially,
this is an objective test that may exclude from claims those taxpayers
who should have realised that they had an opportunity to act but did
not do so. Consequently, the people most likely to be affected by this
particular provision are the less sophisticated and unadvised. They may
well be caught by this restriction and would therefore not be able to
recover overpaid tax. I would be grateful if the Minister explained why
that is justifiable. For the sake of completeness, the “ought
reasonably have known” test applies in one other place in this
schedule—in paragraph 2(6). I will turn to that in a brief stand
part debate, but I would be grateful if the Minister explained the
purpose of the objective test in these
circumstances.
Sarah
McCarthy-Fry: The provisions are intended to provide a
final opportunity for taxpayers to reclaim overpaid tax. They modernise
a system originally enacted in 1923, which has increasingly been
criticised by the courts as anachronistic and inconsistent with a
rights-based culture. The provisions simplify the recovery of overpaid
income tax, capital gains tax and corporation tax by providing
taxpayers with a single route of claim. Claims will be possible only if
no other statutory steps can be taken to reclaim an overpayment.
External commentators have recognised that that is an area of law that
would benefit from clarification. The proposed changes have been
exposed informally to external stakeholders, who responded positively
to
them. Amendment
71 would widen the scope for taxpayers to make claims still further by
relaxing the restrictions relating to matters that the claimant could
have appealed. However, taxpayers are already entitled to make a late
appeal if they have a reasonable excuse for not having appealed within
the normal time limit. The tribunal also has discretion to permit a
late appeal when it is fair and reasonable to do so, and HMRC has
discretion to allow late claims, elections and notices when
appropriate, and to give full effect to the consequences of the claim.
The amendment would enable taxpayers to reopen a
matter that could have been dealt with on appeal, when they do not have
a reasonable excuse for failing to appeal in time and when the tribunal
does not consider it fair and reasonable to allow a late appeal. The
amendment goes too far and would compromise the effectiveness of the
appeal process as a means of determining disputes, so I ask the hon.
Gentleman to withdraw it. Mr.
Gauke: I note the Exchequer Secretary’s comments on
the appeal process when a taxpayer has a reasonable excuse. That
provides some comfort, but there is concern with such a test—we
have seen it elsewhere—that it may leave the unadvised, least
sophisticated taxpayer in a difficult position. I am sure that the
Government and HMRC are aware of that, and that it is a legitimate
concern to raise. I accept the point about the practical difficulties
if the exclusion were widened too much, and I beg to ask leave to
withdraw the
amendment. Amendment,
by leave,
withdrawn. Question
proposed, That the schedule be the Fifty-second schedule to
the
Bill.
Mr.
Gauke: I want to highlight two other areas where the
commissioners are not liable to give effect to claims. One is paragraph
2(6) of new schedule 1AB to the Taxes Management Act 1970, which is
another occasion when the “ought reasonably to have
known” test applies. The other is paragraph 2(7), which requires
a little clarity, and refers to case F,
which “is
where the amount in question was paid or is liable to be
paid— (a)
in consequence of proceedings enforcing the payment of that amount
brought against the claimant
by” HMRC,
or (b)
in accordance with an agreement between the claimant
and” HMRC “settling
such
proceedings.” I
think that seeks to prevent claims from being made when HMRC has begun
proceedings to recover tax debts—for example, when tax was due
under self-assessment. We have been advised that that is likely to have
quite a wide effect, and that quite a large number of taxpayers will be
excluded as a consequence of the provision. I should be grateful to
hear from the Minister whether that interpretation is correct, and
whether this is quite a significant
carve-out.
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