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The noble Lord said: In every sense, this is a probing amendment. I wish to apologise to the Committee for not having been able to attend Second Reading to put down a marker for the amendment, as was my intentionand my name was on the list. I also apologise for having spoken today and not having apologised before.
The object of the amendment is to include in the Bill a safeguard for retention of the excellent discretion of the commissioners for Her Majesty's Revenue to make arrangements as to compositionwhich includes, of course, the concessions that they make. The amendment is complementary to Amendment No. 23 in the name of my noble friend, which I wholly support. A further object of the amendment is to seek to achieve compatibility with the convention that I will come to in a moment.
At Second Reading the noble Lord, Lord Thomas of Gresford, kicked this ball into play when he spoke about the need for the independence of the prosecuting authority such as would protect the interests of the individual taxpayer. The noble Lord, Lord Barnett, picked up the ball to ask whether his assumption that the two departments would carry on as before was right. He passed the ball to his noble friend, the noble Lord, Lord Sheldon, who ran with it and touched it down for a try, which could only be converted at a later stage of the Bill.
"Another important difference between the two departments is the kind of expertise they have of necessity acquired in the course of so many years with their very long pasts. The history of Customs and Excise, which comes from intercepting smugglers and dealing with criminals, is something that we know and is well recorded in so much of our history. Although the present day approach has over the years altered the attitude of that department, it is still rigorous; more rigorous than the Inland Revenue. The Inland Revenue's history comes from dealing with mostly honest but certainly unwilling taxpayers. It is not easy to see how these two different kinds of expertise will survive, still less be transferred with success from one part of the new department to another. It is still more difficult, given the present level of work by each of these two departments, which are under considerable strain.".[Official Report, 7/2/05; col. 597.]
"Returning to the different cultures between the two partners, I have a question for the Attorney-General. The Inland Revenue has always been seen as having a somewhat lighter touch than Customs. I wonder whether that will continue or whether there will be a harmonisation of approaches. If so, which culture is likely to prevail?".[Official Report, 7/2/05; col. 602.]
That was in response to what my noble friend had said about the coercive investigatory powers and the draconian position of Customs and Excise compared to the Revenue at cols. 608 and 610, to which I have already referred.
With great respect to the noble and learned Lord, what he said was not satisfactory. It was at the end of a long speech, which dealt with many other things. However, there are matters here that require serious consideration. Why? Because the Bill provides no procedural safeguards and no relevant criteria to regulate decisions as to enforcement by any identifiable person. The resort to such powers relates to the use, exchange and disclosure of information relating to an individual taxpayer's private life. As being confidential, it without doubt engages Article 8 of the Convention on Human Rights.
The HMRC, as it is called, is a public authority for the purposes of Article 8(2), and it may not interfere with the taxpayer's exercise of this right, except in accordance with the law, and if necessary in a democratic society in the interests of national security, public safety, or the well-being of the country for the prevention of disorder or crime, or for the protection of health or morals, or for the protection of the rights and freedoms of others. None of those exceptions applies, or begins to apply, to the ordinary, run-of-the-mill case of assessing and collecting taxes and making an arrangement by composition or by concession.
There is a problem here that cannot just be ignored. There is a want of clarity. Safeguards ought to be built into the Bill. For the HMRC to exercise certain powers under this Bill if those exceptions do not applyand none of them will apply in the ordinary, run-of-the-mill case at allthere would be a breach of Article 8(2) and it would be incompatible with the convention, and the courts would so rule. The specific concernsthere is not time to deal with them here and I shall not attempt to do soon which the onus is on the Government to satisfy that the Article 8(2) exceptions apply, are referred to in the report of the Joint Committee on Human Rights. I declare an interestI cannot call it a disinterestas a Member. I shall refer to the specific aspects to save time and repetition when dealing with Amendments Nos. 32, 35, 36 and 37 to Clauses 17 and 18, because theirs is a generic application.
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The question isand I conclude with itshould not the safeguard as proposed by this amendment be on the face of the Bill in some form? I pretend to no expertise in drafting, and someone could do it very much better than I, but there must be some form of safeguard. It must be drafted by someone who realises that in the ordinary run-of-the-mill tax assessment, collection and composition the exceptions will not clear; they will not apply. There is a risk the whole time of incompatibility and unenforceability. It is suggested that there should benot necessarily in these words but in some terms probing in every waya statutory safeguard on the face of the Bill as a break on the Orders in Council that are in Amendment No. 23 proposed by my noble friend, which I support. I beg to move.
Baroness Noakes: I do not pretend to have the competence of my noble friend on matters of human rights and Article 8, or any other article. At the start of his speech, he was talking about the Inland Revenue's discretion, which was the nature of the amendment. That led me to realise that I did not know what was going to happen to extra-statutory concessions, which are an extraordinarily valuable part of the way in which the Inland Revenue, but not by Customs and Excise, operates at present. Can the noble and learned Lord say something about how thatwhich by definition would not find its way into statute but is an important part of the way in which tax law is operated by the Inland Revenue but not by Customs and Excisewill find its way into the new body? Or will that be lost in the wash when the two are merged?
Lord Goldsmith: I listened with great interest to what the noble Lord, Lord Campbell of Alloway, has said. Of course, I am well aware of his membership of the Joint Committee on Human Rights. There are some aspects of what that committee has said that we will want to come back to. I accept and entirely agree with him that Article 8 on the right to privacy will apply to the new department as it applies to other government departments. Those protections will apply. I will return to the detail of their application and to why certain disclosures are, in the Government's view, perfectly proper. Those are the subject of particular amendments, to which we will come later.
I will say two things on the general question of the Bill's compatibility with the Human Rights Act. First, as I explained at Second Reading, there is an important ring-fencing of the powers. Secondly, the safeguards contained in the Human Rights Act and the Data Protection Act are not in any way overruled by the Bill. I therefore do not share the noble Lord's view that there are not appropriate safeguards in place. There are strong and appropriate safeguards.
That is not the most important point on this amendment. This amendment touches on the discretion which presently is exercised in relation to compounding or otherwise negotiating settlements of particular liabilities. I share the noble Lord's view that it is important that the new department should continue where appropriate to deal flexibly with the errors, omissions and sometimes frauds which it discovers. I can
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assure him that flexibility will continue under the Bill as currently drafted and it is not necessary to make any specific provision for it.
Both departments have powers to conclude agreements to settle arrears of tax, including interest and penalties, without the need for formal proceedings. Where proceedings have been commenced, there are various powers to conclude them informally. Both departments, for example, can settle civil appeals by agreement. Both departments can offer the prospect of a civil settlement instead of criminal proceedings, provided that full disclosure is made. All of those powers will be vested in the new department under Clauses 5, 6 and 7 as currently drafted. I can therefore say to the noble Lord that he need not be concerned that those powers will cease to exist for the new department because they will continue to have such powers and there is no need to make further provision to that effect.
In answer to the question from the noble Baroness, Lady Noakes, on whether extra-statutory concessions will continue, the answer is yes. The commissioners' powers of collection and management will enable them to continue the policy of extra-statutory concessions. Again, those powers are being transferred through.
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