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Lord Goldsmith: I have listened carefully to the concerns expressed by the noble Baroness. In large measure, the answer to the concerns expressed in her amendment is that that has just been given by the noble Lord, Lord Newby. In the Bill as it is, with the ring-fencing of powers in Clauses 6 and 7, there is no need to be concerned about the misuse of powers. I shall explain why in a moment. I shall also point to the existing adequate procedures for dealing with cases where there is a problem and I shall identify what they are.

At Second Reading, I explained the position with relation to ring-fencing of powers. The idea of ring-fencing powers is not new in this field. A number of existing powers are already ring-fenced so that they already cannot be used by officers, even for functions of the same department. Officers are well aware that
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there are certain powers that are particular to certain functions. The idea of ring-fencing as the two departments are put together will not come as a surprise to any officer involved, or cause any difficulties of understanding. Officers are accustomed to distinguishing between powers that are proper to their purpose and other powers.

I also indicated at Second Reading that it was not the intention that officers would overnight become people who would be dealing with every single aspect of tax or duty. So they will not have occasion to seek to deal with powers that are outside their normal day-to-day work. Integration will take place gradually and initially the same people, for the most part, will continue to perform the same functions as now, exercising the powers with which they are already familiar.

There are safeguards to minimise any risks and to ensure that the public know their rights. My right honourable friend the Paymaster General announced at Second Reading in the other place that an advice note would be produced to aid clarity and public understanding of what HMRC's powers for different taxes and tax credits are in different situations. A draft advice note is already in the Library and Inland Revenue and Customs have been consulting on its content. It is intended to provide guidance to claimants and taxpayers. It will cover the main areas of interaction between them and the two departments. The advice note will be made available to customers during inspections and visits by HMRC officers, as well as being available on the HMRC website. There will be good information about this.

Pending the outcome of the review—to which reference has been made by the noble Lord, Lord Newby, and by the noble Baroness—most HMRC officers will continue to work as before, using the same powers, and taxpayers will have their rights explained to them.

What are the procedures for dealing with an error, whether made inadvertently or otherwise? First, there are existing internal complaints procedures that will be followed through into the new department. If a taxpayer believes that an officer has simply ignored the departmental instruction not to use powers inherited from the wrong department, he could make a complaint, which would usually be the quickest means of resolving that problem. The two current departments have similar complaint procedures that will be adopted by HMRC.

I have little doubt that the misuse of powers by an officer is regarded as a very serious matter in both departments and that that will continue to be the case. So there is the internal complaint mechanism. The noble Baroness wondered whether what she had in mind—or perhaps it was the noble Lord, Lord Campbell of Alloway—was not far from an internal complaints procedure. But there is one already, and there will plainly continue to be such a complaint procedure. There are possibilities to involve a legal tribunal. I say that with a straight face because there is more than one procedure and also because I do not accept and agree with what the noble Baroness said about judicial review.
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6.45 p.m.

A genuine dispute between a department and a taxpayer on what the law permits in a particular case could reach a legal tribunal in a number of ways. First, it may be open to the individual to decline to comply with the request, which request is believed to be unlawful. In those circumstances it may be open to the department to seek to impose a penalty. If that penalty is resisted, the matter must be determined by a legal tribunal. Equally, there are bespoke appeal rights which apply to particular powers and which will go to legal tribunals.

There is also the possibility of applying for judicial review. It is a procedure which is used much more regularly these days than it was 10 or 20 years ago. A large number of judicial review applications are made. As a Law Officer, I know very well how much litigation the Government face on that front. But I do not rely solely on judicial reviews being the answer. It may be that that would be a last resort for many people. But the other procedures that I have identified—internal complaints and the other legal procedures which would be available where there are bespoke appeal rights, or the ability simply to contest a particular sanction that is imposed—should provide adequate opportunity for this to be tested.

So, I hope that it has been useful to explore what the procedures are and that the noble Baroness will see that they should meet the concerns that this new clause was meant to deal with.

I cannot sit down without saying that I am afraid I cannot say anything further about the timing of the consultation. For the next occasion that the noble Baroness raises the matter I shall do my best to be in a position to say something more positive.

Baroness Noakes: I thank the noble Lord, Lord Newby, for his support of these important new powers. We shall have an opportunity to debate that in the context of any new Bill in your Lordships' House. Of course if the matter is contained in a Finance Bill we will lose that opportunity. But we will let that pass for the time being.

I believe that there is still a concern about how the powers will be used. People think that the new organisation, with which we understand the Government wish to press ahead from the beginning of April, will start to act across taxes to try and deliver some kind of seamless operation to taxpayers. If that happens, the concern arises that powers might perhaps inadvertently, or over-enthusiastically, be used.

The Institute of Chartered Accountants of Scotland, which I cited as the source of the concerns that led to my tabling the amendment, has seen the draft advice note. I believe that it is available on the website. The advice note failed to resolve any concerns and possibly made the institute more worried.

I am very grateful to the noble and learned Lord for setting out all the ways in which a taxpayer might seek to ascertain how powers could be correctly used if a dispute arose. I shall certainly go back to the Institute of Chartered Accountants of Scotland and ask it to
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consider again whether it believes that that provides an adequate answer. I think that that is the right way to go forward. I thank the noble and learned Lord for his answer and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Clause 8 [Power to transfer functions]:

Baroness Noakes moved Amendment No. 23:

"( ) After section 5(1) of that Act insert—
"(1A) No Order in Council which—
(a) provides for the transfer to any Minister of the Crown of any functions previously exercisable by the Commissioners for Her Majesty's Revenue and Customs or by the officers of Revenue and Customs, or
(b) directs that functions of the Commissioners for Her Majesty's Revenue and Customs or of the officers of Revenue and Customs shall be exercisable concurrently with another Minister of the Crown, or shall cease to be so exercisable,
shall be made under this Act unless, after copies of the draft thereof have been laid before Parliament, each House presents an Address to Her Majesty praying that the Order be made.""

The noble Baroness said: Clause 8 deals with the possible transfer of functions both in and out of Revenue and Customs once it is created. This area has caused much concern. The Treasury Select Committee in another place and a number of lobby groups have raised concerns about the clause. I acknowledge that the Delegated Powers Committee, which published overnight, did not raise concerns about the way in which Clause 8 is constructed, but I am not prepared to accept that as a conclusive reason for not debating the issues, which is why I wish to raise the concerns in your Lordships' Committee.

We have read the debates in another place and feel unconvinced by what appears to be the Government's basic argument about the necessity for Clause 8 as currently drafted; it is that the provisions from transfers in and out of non-ministerial government departments already exist in other legislation, so why not this one, and that any transfers would be no less rigorous than those that already exist. I hope that the noble and learned Lord will be able to give examples of legislation that covers non-ministerial government departments in this way.

Non-ministerial departments are different from ordinary government departments. They are created deliberately without a Minister at their head because of the nature of their activities. It is the nature of Revenue and Customs, and its activities and relationship to individual taxpayers in this case, that causes concerns at heart. A member of the Treasury Select Committee in another place described this clause as having the effect of a licence allowing Ministers to transfer powers willy-nilly under the Ministers of the Crown Act 1975. The 1975 Act transfers functions subject to the negative procedure only, thus restricting Parliament's ability to scrutinise fully any changes that are proposed. The Treasury
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Select Committee in another place recommended that transfers should be subject to the affirmative procedure and that is what this amendment is about.

While dealing with this amendment, there are some issues that I would like to clarify in relation to Clause 8. First, in Clause 8(1), subsection (4) of new Section 5A to the 1975 Act appears to treat commissioners and officials as if they were Ministers of the Crown, which is presumably a comparison that is not the current status quo. We were mystified why this provision should be created under subsection (4). If it is necessary now, why was it not necessary in 1978 when the Government of Wales Act was originally mooted?

The power in Clause 8 allows pretty well anything to be transferred. There are some exceptions, but they are narrowly drafted, and it is difficult to tell what is and is not within the power to transfer. One is looking for the Minister to be absolutely clear about the powers that could be transferred under the Ministers of the Crown Act 1975. Can we be absolutely clear about what can and cannot be transferred?

Our amendment steers a middle way between what the lobby groups want, which is the clause removed completely and transfers to be subject to primary legislation; and the current draft, which has minimal parliamentary scrutiny, which is the negative procedure. We have steered a middle way, because we think that it is proper to have some parliamentary oversight of functions and powers being transferred in and out of Revenue and Customs, without going so far as to restrict completely how things should work.

As a technical point, we recognise that the amendment does not cover Scotland and Wales; but as a probing amendment, it allows the issues to be debated. I beg to move.

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