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The problem arises when allocating to committees, to sub-committees or to members of the MMO who have been given a particular job to do, and someone else is given a job under sub-paragraph (3) to do the same thing. It does not say that, under sub-paragraph (1),
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Lord Hunt of Kings Heath: That refers to the authorisation. We are in danger of getting ourselves in a tangle. Clearly, the circumstances may differ. There may be circumstances where, because of an emergency situation, a person has had to take out an action which was not originally covered by the authorisation, in which case one might assume that, it having been carried out, the original delegations will continue. There might be other circumstances where it might be reasonable to add more names to the list. There has to be flexibility in order for the organisation to decide that.
Lord Greaves: No one is arguing about any of that. The tangle arises from this amendment. The Minister is in a tangle in trying to defend the wording. Will he please go away and get one of his draftsmen to write a paragraph that means in practice what he wants to happen? That is all we are asking. This is not a major issue of principle. There is clearly a case to be made that this paragraph is, in the Minister’s words, “a tangle”. Will he please take it away and look at it? The Minister is shaking his head.
Lord Hunt of Kings Heath: I am saying that we do not need to get into a tangle in the debate. My advice is that this is standard wording which is found to be perfectly appropriate. I have said that I will take this away and look at it. I will write to Members of the Committee to give more clarification. I have no reason to suppose that this will not be proven to be satisfactory in previous legislation.
Lord Greaves: If Committee stage is to work, on things like this the Minister should go away and rewrite the provision. My final point is to ask the Minister to write to us providing the information about where this wording occurs in other legislation. He claims that it does. It would be interesting to know where. On that basis, I beg leave to withdraw the amendment.
14: Schedule 1, page 217, line 10, at end insert “and how it has taken steps to deliver its general objective, in particular to further sustainable development”
Lord Greaves: Still on Schedule 1, we now move on to the annual report. I shall speak to Amendment 14, which is grouped with Amendments 15 and 18 tabled by the Conservative Front Bench. I shall not say anything about those until they have spoken to them. Paragraph 25 of Schedule 1 states that,
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This amendment would add a reference to delivering its general objective,
which anticipates later amendments on furthering sustainable development. I therefore do not want to speak to that part now. Amendment 15 adds a reference to discharging its general objective.
Under Clause 2, which we have not yet reached, general objectives are set out at a higher level than the functions of the MMO. It would include the requirement that in the annual report the MMO should report on how it delivers its high level general objectives, which I have no doubt will be discussed in great detail fairly soon. I think that many noble Lords feel that the general objectives as set out at the moment are not strong or broad enough, but that is not the point of this amendment. It assumes that the general objectives are in place and that the annual report should refer to them rather than just to functions such as producing plans and the regulation of licences. I beg to move.
Lord Taylor of Holbeach: I support Amendment 14 moved by the noble Lord, Lord Greaves, and I shall speak to our Amendments 15 and 18. It is of the utmost importance to ensure that the MMO remains transparent and reports on the steps it has taken to achieve its general objective. Indeed, I feel that the MMO should go further, and that is why Amendment 15 would place a duty on it to produce a report detailing its objectives for the new financial year, setting out a business plan on how it intends to achieve them and, most important, whether the objectives for the previous year were met. Paragraph 25(2) of this schedule already provides that the MMO must prepare an annual report. However, without the specifications set out in this amendment, there is a risk that a report might not include the vital information that anyone scrutinising the MMO would need. Does the Minister agree that this would be a disadvantage because weaknesses in the organisation might go unnoticed and unimproved?
The MMO will be a powerful body with a broad remit of functions and a high-profile central objective. It is therefore important that it is seen to be as transparent as possible. A report detailing objectives for the next year, how they are to be met and how the body fared in the previous year will help to make sure that it remains as transparent as possible and thus prevent it becoming just another useless quango. The marine programme plan would appear to be a suitable template for the type of report that it would be useful for the MMO to produce. It includes sections such as “progress so far” and how future progress will be measured, and “our future work programme—key milestones”. These all contain detailed information with clear timescales showing both progress and objectives. Is this the sort of report the Minister hopes and expects the MMO to generate? How will he ensure that this happens?
The quest for transparency is also why we have tabled Amendment 18. It has been included to make sure that the Secretary of State has to present reports produced by the MMO on how it has discharged its functions throughout the year before each House of Parliament within 12 months of the end of that year. This is in order to ensure that reports do not get
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The success of the marine Bill and its commitment to sustainable development will necessarily depend in large part on the integrity of the MMO and its success in discharging its functions. It is therefore crucial that this large and important organisation is monitored and called to account for its actions, whether to praise its successes or question its failures. While the Secretary of State can play a part in this, does the Minister agree that parliamentary scrutiny is also very important? In order to carry out such scrutiny effectively, reports must be made available in a timely manner.
7.15 pm
Lord Hunt of Kings Heath: The noble Lord, Lord Greaves, seeks to impose a requirement that the MMO in its annual report to the Secretary of State on the discharge of its functions should include the steps it has taken to deliver its general objectives, in particular to further sustainable development. I hope that I can reassure the noble Lord that the general objective of the MMO as defined in Clause 2 is inextricably linked to the discharge of its functions in that they have to be exercised in a manner that is consistent and co-ordinated, and with the objective of making a contribution to the achievement of sustainable development. Any organisation producing an annual report on its activities will necessarily set those activities in the context of its general objective, and to do otherwise would be to obviate the need for an overall objective. This will be no different for the MMO.
The noble Lord, Lord Greaves, is seeking an amendment to the standard procedures for a non-departmental public body for presenting its annual report to Parliament. As is normal, the body concerned needs to report and be accountable through the Secretary of State to Parliament. The MMO is being set up to deliver functions on behalf of the UK Government. Some of those functions may be matters relating to the implementation of EU or international obligations which would require the MMO to take a co-ordinating role on behalf of the UK Government. In such cases, we would expect the MMO to undertake consultation with whoever would be affected throughout the UK area, and to include such matters as necessary in its report. So in all cases it would be appropriate for the MMO to report to this House and the other place.
The noble Lord, Lord Taylor, seeks to impose an additional requirement that the MMO in its annual report to the Secretary of State on the discharge of its
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On timing, we would expect an annual report to be produced well within 12 months of the year end, and we will make clear in guidance to the MMO that that is our expectation.
Lord Taylor of Holbeach: I think the noble Lord will find that that is set out in Clause 28 rather than Clause 27. Without being nitpicking, there is a general requirement under Clause 28.
I am a little concerned about the reluctance to provide for a 12-month deadline in the Bill.
Lord Hunt of Kings Heath: I think that I referred correctly to Clause 27, which sets out the provision of information by the MMO to the Secretary of State.
Lord Taylor of Holbeach: I apologise to the Minister; I was trying to be helpful. I am also trying to be helpful in speaking to these amendments because I think that they would strengthen the Secretary of State’s position in respect of the MMO. In dealing with the nature of an annual report, it is important that we should provide here in Parliament some of the issues we think it should address. A general principle, which the Minister has suggested is sufficient, may not be enough for Parliament, so I would suggest that Parliament should have an opportunity in enacting legislation to oblige the MMO to adopt a form of practice that I think it would consider to be satisfactory. I also regret that the Minister, while acknowledging that 12 months is a perfectly regular length of time for a report to be received within, is not prepared to see that in the Bill. I am grateful for the Minister’s observations. No doubt we will discuss this matter again.
Lord Greaves: There is some confusion between paragraph 28 of Schedule 1, which refers to the provision of account-type information to the Secretary of State, and Clause 27, which refers to general information. I think they both apply in different ways, and probably overlap. I was interested in the amendments tabled by the noble Lord, Lord Taylor, and the Minister’s reply.
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On my amendment, I heard what the Minister said. Clearly, “functions” refers to objectives. I do not quite understand why the Minister is opposing the idea that the Bill should say that there should be a report about the general objectives. This would particularly be the case if the wishes of some of us—expressed in later amendments—to expand those general objectives came about. For the moment, I certainly beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Lord Brougham and Vaux): Amendment 18 has been wrongly marshalled.
House resumed. Committee to begin again not before 8.22 pm.
Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009
Motion to Approve
7.22 pm
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bach): My Lords, I am moving this Motion on behalf of my noble friend Lord Myners. A draft of this order was laid before Parliament on 26 November 2008. The order takes a major step in the implementation of the reform of the tribunals that consider tax appeals, under the Tribunals, Courts and Enforcement Act 2007. This is also an important step in realising the benefits of the merger of the Inland Revenue and Customs and Excise into Her Majesty’s Revenue and Customs.
Under the provisions of the Act, the existing tribunals concerned—in particular, the general commissioners, the special commissioners and the VAT and duties tribunals—are being brought together into a single, two-tier tribunal structure, which will be manifestly independent of Her Majesty’s Revenue and Customs. This means that, for the first time, all tax appeals will be dealt with by a single tax jurisdiction. Tribunal users should benefit from a more manifestly independent, consistent and coherent tribunals system, with improved quality of tribunal services and better supported judicial decision-making.
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At present, in addition to appeals on the different taxes being heard by different tribunals, there are different HMRC internal review and appeal processes, depending on the nature of the tax in dispute. This order takes the opportunity to bring greater consistency to these provisions across the great majority of HMRC business. Benefits include making Revenue and Customs dealings with taxpayers more open, improving quality and consistency in decision-making and encouraging dispute resolution between the parties to avoid the expense and anxiety of unnecessary hearings. The order is made under powers contained in the Act and in Section 124 of the Finance Act 2008 and comes into force on 1 April. It is subject to the affirmative procedure, both here and in the other place, where it was approved on 16 December.
The order transfers the functions of the existing tax tribunals to the new tribunal, and transfers special commissioners and members of the VAT and duties and Section 706 and 704 tribunals to the new tribunal. It also makes a large number of consequential amendments to legislation relating to tax tribunals and the appeals that they consider. Noble Lords have had the opportunity to read Schedules 1 and 2 to this order. In particular, the order introduces a right to an optional statutory review of appealable decisions across the great majority of HMRC business. It also makes related administrative changes to the way in which appeals are handled. Finally, the order contains transitional provisions to allow a smooth transition to the new tribunal and review systems.
These changes, in particular those concerned with providing a new statutory right to a review of a Revenue and Customs decision before an appeal reaches a tribunal, have been the subject of extensive consultation, which was very much in favour of the optional review system. A consultation document was issued with the 2007 Pre-Budget Report. After meetings with 20 representative bodies and other interested parties, it was followed up with a response document at the time of the 2008 Budget. Last June, HMRC published a draft of the main provisions made by this order, together with a supporting technical note. A response document on the comments received on those documents was published when this order was laid. We are most grateful to those who took time to respond—either in writing or at meetings—during this process, which has contributed significantly to improving the legislation before us.
Noble Lords will notice that, at some 150 pages, this order is considerably longer than the draft published in June. The earlier draft focused, of course, on the main provisions in the direct and indirect taxes, the intention always being to complete the picture after consultation. The order before the House amends over 110 Acts and statutory instruments and revokes 22 further statutory instruments. I am advised that, although it is a lengthy document, the revocations mean that it does not increase the overall length of legislation.
The work on this order, and to prepare for the implementation of the changes, has required close co-operation between Her Majesty’s Revenue and Customs and the Tribunals Service of the Ministry of Justice, as well as with the judiciary and a wide range
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7.30 pm
Baroness Noakes: My Lords, I thank the Minister for introducing the order, which we will not be opposing, although I have some questions in connection with it. I should say, though it is not strictly relevant to this order, that I mourn the passing of the general commissioners, having been brought up on them as a part of the tax system. I wonder whether the impact of their departure on small businesses and their small practitioner advisers has been properly estimated and taken account of. In particular, the network of tribunals will have only 130 venues, compared with the general commissioners’ 400 sites. The new venues may well have better facilities, but there is sometimes no substitute for proximity. I have myself occasionally taken part in videoconferencing, which I am told is one of the proposed solutions to the smaller number of venues. I believe that the technology still has some way to go before it seems like a natural communication process.
Doubtless we will see in due course whether or not the paper review process and video cameras are an adequate substitute for widespread and local general commissioners, who, for all their faults, were locally based. Are there any plans to review the layer of the tribunal system that has taken over the general commissioners’ functions in order to ensure that the needs of small businesses and individuals are not steamrollered in the name of modernisation? Of course the tax system exists fundamentally for tax and legal specialists on both sides of the fence, and the new tax tribunals will doubtless be configured around their needs.
A core part of the new arrangements for tax appeals is for HMRC to review its decisions when taxpayers are in disagreement, as the Minister has explained. That seems sensible; indeed, given that significant costs are imposed on the taxpayer when there is a disagreement—for example, in legal and professional fees—it seems only fair that HMRC should review its position before the tribunal system is involved.
There is a big problem with the review process, however, which derives from its lack of definition. In particular, proposed new Section 49E in paragraph 30 of Schedule 1 to the order says that,
- “the nature and extent of the review are to be such as appear appropriate to HMRC in the circumstances”.
That does not create the certain environment in which taxpayers should be entitled to operate.
The Minister will doubtless be aware of the shopping list of things that the Institute of Chartered Accountants in England and Wales and the Low Incomes Tax Reform Group have said ought to be in this order. It includes a lot of procedure so that the taxpayer will know where he is in the whole process and what information he should have. They believe that it should contain a definition of the required distance between the reviewing officer and the decision-making officer
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The order is not amendable but the points, in our view, are valid. How will the appeal process work and what are taxpayers entitled to expect from it in its various stages? More importantly, what is the purpose of the review? Is it just to confirm that HMRC is up for a fight, or is it to give an independent internal review of the case so that HMRC will proceed only in cases of clear and correctly determined disagreement? Have the Government closed their minds to using the existing powers in Section 124 of the Finance Act 2008 that would allow them, by order, to specify matters that are to be considered in the context of reviews?
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