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House of Lords

Monday, 27th January 2003.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Hereford.

Inland Revenue: Interest Rates

Lord Dubs asked Her Majesty's Government:

    In the most recent tax year for which figures are available, what has been the income generated by the Inland Revenue through interest charges for late payment and what has been the corresponding repayment to taxpayers for overpayment.

Lord McIntosh of Haringey: My Lords, in the 12-month period to October 2001, the most recent for which data are available, interest payments received by the Inland Revenue amounted to some 417 million and the Revenue paid out some 397 million in interest.

Lord Dubs: My Lords, I am grateful to my noble friend for that reply. Will he confirm that if the Inland Revenue is owed money by a taxpayer it charges the taxpayer at 6½ per cent interest, whereas if the Inland Revenue owes money to a taxpayer it pays 2½ per cent interest? Will my noble friend justify the difference?

Lord McIntosh of Haringey: My Lords, the first thing to be said is that one person is not being charged interest at a higher rate on what he pays than on what he receives. The rate of interest on late payments does not constitute a penalty; it is designed to cancel any financial advantage for those who pay late. The rate of interest is set to encourage payment on time and to compensate the Exchequer for loss. The rate of interest on overpayments is the average commercial rate for return on deposits. The Inland Revenue is not a source of cheap credit.

Lord McNally: My Lords, does the Minister recall the claim of Ken Dodd that he was a pioneer of self-assessment? Is not the problem now with the Revenue itself? Is the noble Lord aware that some offices are now claiming a three-month delay in processing returns? That is before the big logjam caused by the January rush. Therefore, is not there a case for looking for carrots rather than sticks and giving a positive incentive to those who send in their returns early? I understand that that worked very well in persuading people to submit their tax returns online. There is evidence to suggest that instead of expensive advertising campaigns a little incentive to early payers would work very effectively.

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Lord McIntosh of Haringey: My Lords, I refer to the principal incentive for early payment; that is, if you send in your tax return before 30th September, as I am sure the noble Lord, Lord McNally, does, the calculation is done for you rather than a person having to go through the self-assessment procedure. If the noble Lord, Lord McNally, is suggesting that there should be financial benefits from early payment, I believe that those who have more complex tax affairs would find that rather unfair.

Lord Brooke of Sutton Mandeville: My Lords, if the noble Lord, Lord Dubs, is correct in the two rates of interest he mentioned—I must infer that he is, as the Minister did not correct him—is it not the case, therefore, that the Inland Revenue owes the taxpayer a great deal more than the taxpayer owes the Inland Revenue? Will the Minister explain why that is so?

Lord McIntosh of Haringey: My Lords, my original Answer detailed not the interest charged but the payments received. I confirm the figure of 6½ per cent mentioned by the noble Lord, Lord Dubs. Different figures apply for different kinds of tax. Late payment of inheritance tax is charged at only 3 per cent. However, from the figures available to me, I cannot confirm the rate of interest for overpayment.

Lord Saatchi: My Lords, is it any wonder that we have this merry-go-round of over and underpayments of tax when just one branch of Her Majesty's Government now generates 1,185 pages of claim forms relating to taxable benefits, non-taxable benefits, allowances, credits, reliefs, tapers, disregards—an endless list of paper?

Lord McIntosh of Haringey: My Lords, I assume that as the noble Lord, Lord Saatchi, used the phrase "merry-go-round", he assumes that there is a large figure of overpayments and underpayments. In fact, the Inland Revenue collects 215 billion, so the plus or minus 400 million interest on overpayments and late payments is roughly 0.2 per cent of the total. I do not call that a bad figure.


2.41 p.m.

Lord Avebury asked Her Majesty's Government:

    What action the Attorney-General is taking on the evidence presented to him by the chair of INDICT, Ann Clwyd MP, of criminal offences committed by Iraqi leaders under the Taking of Hostages Act 1982.

The Attorney-General (Lord Goldsmith): My Lords, INDICT asked me to grant consent to the commencement of prosecutions against Saddam Hussein, Tariq Aziz, Ali Hassan Al-Majid and Taha Ramadan. Having considered the material and with the benefit of the advice of Treasury counsel who

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reviewed it all, I wrote to Ann Clwyd MP at length on 24th January to explain my conclusions that in none of these cases is the admissible evidence that INDICT provided by itself sufficient to commence a prosecution now and that a full police investigation would be needed. Saddam Hussein is in any event immune from criminal jurisdiction here while serving head of state of Iraq.

Lord Avebury: My Lords, does the noble and learned Lord agree that many lawyers would disagree with his attribution of immunity to Saddam as head of state and that, as a matter of public and international law, crimes against humanity and war crimes, whether committed by a head of state or not, are not granted that immunity? Does he also agree that in addition to the evidence which has been submitted by Ms Ann Clwyd, statements have also been made by 1,800 people who were traced and interviewed by the Ministry of Defence in relation to Operation Sandcastle? Is he really saying that in spite of all this mass of evidence, there are not sufficient grounds on which to prosecute Iraqi leaders? Will he place a copy of the letter to Ann Clwyd in the Library of the House so that others may judge the validity of his conclusions?

Lord Goldsmith: My Lords, the noble Lord raises three questions. First, I do not agree that other lawyers would take the view that Saddam Hussein was not immune from prosecution. The immunity of heads of state was confirmed by the judgment of the International Court of Justice in Democratic Republic of the Congo v Belgium on only 14th February last year. I understand that INDICT's advisers agree with that view.

Secondly, the noble Lord raises a question about the adequacy of the evidence. Someone believing that they know what happened is one thing, but proving it in a criminal court is a wholly different proposition. Having taken the advice of experienced Treasury counsel and considered the matter myself, although the evidence that INDICT has presented to me is telling at face value, I am not satisfied that it goes sufficiently far to justify a prosecution now.

Thirdly, having regard to the confidentiality of prosecution matters and the fact that the evidence came from Ann Clwyd herself, I shall consider the noble Lord's question about whether I would place in the Library of the House a copy of the letter that I have sent.

Lord Campbell of Alloway: My Lords, the noble and learned Lord's explanation of the Government's attitude appears to be wholly satisfactory, but I cannot understand why it should now always be assumed that the evidence would warrant a prosecution. Why should Her Majesty's Government have to prosecute? Is there no one else who would wish to prosecute?

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Lord Goldsmith: My Lords, of course I am grateful for the noble Lord's statement that he finds what I said satisfactory. However, I ought to point out that what I have said is not a government statement: it is a statement of my view as an independent Law Officer, having considered the detail of the evidence in the case.

Lord Hooson: My Lords, while Saddam Hussein is head of state he is immune from prosecution, but would the noble and learned Lord tell us whether, if he were displaced, he would be liable for offences that he might have committed while head of state? Surely he would be.

Lord Goldsmith: My Lords, I have been asked to consider the question as of now, and as of now the point that the noble Lord makes is entirely hypothetical.

Lord Stoddart of Swindon: My Lords, the noble Lord has raised a very interesting question as to who could be prosecuted for war crimes. What would be the position if, for example, there was an intervention in Iraq in which civilians were killed by British and American troops operating together, and that was considered a war crime? Would President Bush be immune from prosecution, but Tony Blair liable for prosecution?

Lord Goldsmith: My Lords, that question, raising a number of hypothetical issues as it does, seems to me to fall outside the terms of the Question tabled by the noble Lord, Lord Avebury.

Lord Avebury: My Lords, would the Minister kindly answer the other question that I put to him, which was whether he had examined the evidence accumulated by Operation Sandcastle, conducted by the Ministry of Defence at a cost of more than 400,000, in which 1,800 witnesses were traced? I believe that statements were taken from more than 1,000 of them. Does he not take all that evidence into consideration, in addition to that submitted by INDICT, in determining whether prosecutions should be instituted?

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