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Standing Committee E
Thursday 13 January 2005
[Mr. Alan Hurst in the Chair]
The Paymaster General (Dawn Primarolo): On a point of order, Mr. Hurst. During our debate at the previous sitting on the taking of the oath by members of the new department, Her Majesty's Revenue and Customs, the hon. Members for Sevenoaks (Mr. Fallon) and for Chichester (Mr. Tyrie) were concerned that the old Inland Revenue oath was being superseded. I offered to consider the matter again. While I am convinced that the arrangements under the Bill reinforce measures and are better, I have taken note of their comments.
I give notice to the Committee that I propose to table a new clause on Report, requiring new employees on induction to take a declaration in front of a witness in addition to those matters that we have discussed. People presently employed by the two Departments are within the terms because they have already taken the oath and know the conditions, so it will not be necessary to ask them to take it again. I am grateful for your indulgence, Mr. Hurst, as I believe that it is important to let members of the Committee know the position. I shall write to them as soon as possible, because such matters will affect the Opposition's decisions about the Bill at a subsequent stage.
The Chairman: The Paymaster General will understand that what she has said is not a point of order.
Mr. Andrew Tyrie (Chichester) (Con): Further to that point of order, Mr. Hurst, we welcome the Paymaster General's announcement. We are grateful to her for having listened carefully to what was said at our previous sitting and we look forward to the new clause being tabled on Report.
Mr. John Burnett (Torridge and West Devon) (LD): Further to that point of order, Mr. Hurst. I am grateful to the Paymaster General for taking account of the arguments of Liberal Democrat Members in Tuesday's proceedings. We look forward to the new clause and hope that it will cover those people who will have access to sensitive taxpayer information, which includes not only new members of Her Majesty's Revenue and Customs, but others whom we shall be discussing later.
Mr. Michael Fallon (Sevenoaks) (Con): Further to that further point of order, Mr. Hurst. As the person who tabled the amendment concerning these matters, I am grateful to the Paymaster General for listening to what was said in Committee. We welcome the changes that she will be introducing as well as the strength of the duty of confidentiality. The combined package will be acceptable and I am grateful to the right hon. Lady for her speedy consideration. I hope that it sets a precedent for the rest of our proceedings in Committee.
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The Chairman: Order. That concludes the gracious non-points of order. If members of the Committee have mobile phones or other devices, will they ensure that they are turned off?
Amendments made: No. 93, in clause 18, page 8, line 24, at end insert 'revenue and customs'.
No. 94, in clause 18, page 8, line 27, at end insert—
'( ) In subsection (1) ''revenue and customs information relating to a person'' means information about, acquired as a result of, or held in connection with the exercise of a function of the Revenue and Customs (within the meaning given by section 17(4)(c)) in respect of the person; but it does not include information about internal administrative arrangements of Her Majesty's Revenue and Customs (whether relating to Commissioners, officers or others).'.—[Dawn Primarolo]
Clause 18, as amended, ordered to stand part of the Bill.
Clause 19 ordered to stand part of the Bill.
Clause 20 ordered to stand part of the Bill.
Conduct of civil proceedings
Amendments made: No. 47, in clause 21, page 11, line 30, after 'staff', insert—
'(i) except in relation to Scotland,'.
No. 48, in clause 21, page 11, line 32, at end insert—
'(ii) in relation to Scotland, is a reference to a member of staff who has been admitted as a solicitor and who holds a practising certificate.'.
No. 49, in clause 21, page 11, line 33, leave out subsection (6).—[Dawn Primarolo.]
Clause 21, as amended, ordered to stand part of the Bill.
Question proposed, That the clause stand part of the Bill.
Mr. Andrew Tyrie (Chichester) (Con): This very short clause, which looks relatively innocuous, is actually quite important. It concerns the payment of informers who assist the Revenue and Customs, the new department, in the performance of its services. It is of concern, and those concerns need to be given an airing.
Throughout our considerations, I have sought, whenever I could, to tell the Paymaster General the clauses that I intend to discuss at least 48 hours in advance. Unfortunately, on this occasion, because we were both downstairs considering the Child Benefit Bill, and what with one thing and another, I did not tell her office that I wished to discuss the clause until 8.30 am today. I hope she can say a little about it. Perhaps she will want to come back to me if she cannot answer further questions I may have.
This is a money clause, as I understand it; that is why it is printed in italics. It is therefore not amendable in the other place, so it is up to us to
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make sure that we are entirely happy with it. The payment of informers can easily lead to abuse. It is only a short distance from creating circumstances in which it may be alleged that agents provocateur had been paid.
There is always the danger of serious, unacceptable collusion between an informer, a prosecuting authority and Her Majesty's Revenue and Customs in trying to catch someone. The danger is that an informer and HMRC may become convinced that someone is guilty of a serious offence. A community of interest between them may be created, and they may end up harassing and persecuting someone in order to secure a conviction because they are absolutely sure that he or she is guilty. That person may not be guilty at all, or guilty of only a minor transgression, but will nonetheless be put through the wringer if there is abuse of the powers in the clause.
The issue of rewards has always been controversial, most seriously because it can lead to pure corruption and unacceptable collusion, whereby an HMRC official—I am not suggesting that this has gone on, but I am sure that the scope for it is always theoretically there—may himself be rewarded in some way for securing a reward for an informer. That would be serious.
It is well worth taking a close look at the clause, and I have a number of questions on it. First and most importantly, does it level up or level down the existing powers, which are slightly different from those in the legislation under which informers are permitted for the Revenue? I cite the relevant, short, passage from the Customs and Excise Management Act 1979:
''Subject to any directions of the Treasury as to amount, the Commissioners may at their discretion pay rewards in respect of any service which appears to them to merit reward rendered to them by any person in relation to any assigned matter.''
I ask Committee members to compare those words with those of clause 22 on page 11. The equivalent Inland Revenue Regulation Act 1890 reads slightly differently. Under section 32—''Power to reward informers''—it states:
''The Commissioners may at their discretion reward any person who informs them of any offence against any Act relating to inland revenue or assists in the recovery of any fine or penalty, provided that a reward exceeding fifty pounds shall not be paid in any case without the consent of the Treasury.''
The Treasury has to give explicit consent for such rewards, and I shall come on to that. The phrase in the explanatory notes suggests that the clause grants similar powers to the new body. If one looks carefully at those two sections, one sees that that is about as far as one can go. In fact, those two powers are really quite different.
We have had the same sort of problem with the issue of powers for HMRC generally. I shall not run through all the points again, but when we debated clauses 4 to 6 we discovered that although the intention was to amalgamate sets of powers for two different organisations in a manner that left no overall change, that was very difficult to do. That is also what we have found on this issue. The important difference is that in both the previous pieces of legislation there was a reference to Treasury oversight. In this Bill,
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Treasury oversight has disappeared altogether, as far as I can tell. It seems that we are creating a power to hand over very large sums without any limit from the Treasury.
I have concerns about that; everybody should until we have had more detail on how restraint may be imposed. The first obvious question is about who will vote for such sums to appear. Will the Treasury have any power of restraint whatsoever, even though that is not included in the Bill? Will the Treasury, even ex post, have the power to ask questions about whether the HMRC has exercised appropriately its powers under this clause? Again, we do not seem to have any information about how accountability for the clause will be exercised.
I have started to consider this issue in more detail in the past 48 hours, and have begun to come to the conclusion that—even with that reference to the Treasury being able, at least in principle, to withhold consent for Revenue rewards of more than £50 and to exercise some control on Customs—the existing arrangements, never mind the new arrangements, are inadequate. We in the public domain are not provided with the information on whether such powers are being exercised adequately.
Will the Paymaster General, at some point, supply me with a number of pieces of information about the exercise of the existing powers historically? Then we will have a mark in the sand for monitoring what might happen in the future. For example, how many claims have been made by informers on aggregate in any one year? How many claims have been paid on? How many claims have been paid on in full? Perhaps I could ask the Paymaster General for information on, say, the last three years. I do not want to make this an extraordinary task, but we may find that a particular year is disturbed by one particularly large payment for a special event. If we have a run of three years, we will get a feel for it. We can then work out from those numbers how much has been paid out on aggregate so we will know how many claims there have been, how much has been paid out and what proportion of those claims has been paid on aggregate.
I would also like some information—I realise this will not be that easy, but it should be possible to do—on the range of payments. Are they all a couple of hundred pounds for someone talking about some cigarettes that have come off the back of a lorry down the pub, or are these claims about very large cases? If we could have some idea of the range, and what proportion are in the order of nought to £500, £500 to £5,000 and so on. Of course, not knowing the numbers, I cannot possibly say what those ranges should be.
I fully understand that there is no way the Paymaster General will want to give me data on individual cases. That would indirectly lead to a breach of confidentiality, because someone who was paying attention, particularly the informer, would be able to work out quite a lot about the tax affairs of the person on whom he or she had informed. I certainly do not want to ask for the information to be presented in a way that could lead to such a breach. The questions I have asked, however, should enable that information
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to be collected. Because the Treasury has to be consulted in each case, and we know that from existing legislation, this information must be in the Treasury somewhere.