Select Committee on European Communities Second Report


8.  MUTUAL ASSISTANCE FOR THE RECOVERY OF CLAIMS (8089/00)

Letter from Lord Tordoff, Chairman of the Committee, to Dawn Primarolo MP, Paymaster General, HM Treasury

  Thank you for your letter of 15 July[1] replying to mine of 22 and 29 June.

  I do of course appreciate that the proposal on mutual assistance for the recovery of claims is a single package, which will be voted on in the Council of Ministers as a whole, on a single legal base. What we have been trying to discover from you is which elements of the proposal have caused the Government to judge that the legal base must be one requiring unanimity.

  In response to a previous query on this point, you said (in your letter of 7 June) that the proposal "would have a direct impact on taxpayers as well as affecting the level of tax recovered within the Community and thus the revenues of Member States", and could "affect the burdens and constraints placed upon United Kingdom businesses or have a revenue effects on the Exchequer". Our understanding of the proposal is that it would not impose any new tax burdens, but simply ensure that existing taxes were paid. Accordingly, in paragraph 212 of our recent Report (Taxes in the EU: can co-ordination and competition co-exist?)[2] we have concluded:

    "We hope that the Government will not feel obliged to continue to block the proposal for improved mutual assistance for the recovery of cross-border tax debts on the grounds that it should be subject to unanimity not qualified majority voting. It seems to us a useful administrative measure, which could significantly improve recovery rates for indirect and direct taxes, and it is a pity to lose the potential gains because of a point of dogma. We could not understand how the proposal could have an adverse effect on the revenue of the United Kingdom—and if, as HM Customs and Excise suggest, "it would have a direct impact on the taxpayer who is pursued for their debt in another Member State", the Government is surely in favour of its residents paying the taxes due from them wherever they occur".

  We should appreciate a full response on this point. In the meanwhile, we are continuing to hold the document under scrutiny.

28 July 1999

Letter from Dawn Primarolo MP, Paymaster General, HM Treasury, to Lord Tordoff, Chairman of the Committee

  Thank you for your letter of 28 July concerning the scrutiny of these documents. You asked which elements of the proposal have caused the Government to judge that the legal base must be one requiring unanimity.

  As you are aware, this draft Directive proposes revised arrangements for the recovery of tax and similar debts. It contains provisions which state which debts are to be recovered, when and how recovery shall take place and how costs shall be recouped from the debtor and the requesting Member State. Many of these arrangements (those requiring the recovery of debts even when they are under appeal, for example) are very different both from the existing arrangements for cross-border recovery of debts and from the UK's procedures for the recovery of domestic tax debts.

  So, although the proposal would not impose any new tax burdens on compliant taxpayers, it does propose substantive changes in the arrangements relating to the recovery of tax, and the Government is committed to the retention of the unanimous vote on all tax matters. We have said that qualified majority voting for tax is not something the UK will agree to. And on 19 October, in the debate on the Tampere Special European Council, the Prime Minister made it clear that all EC tax matters should remain subject to unanimity.

30 November 1999

Letter from Lord Tordoff, Chairman of the Committee, to Dawn Primarolo MP, Paymaster General, HM Treasury

  Thank you for your letter of 30 November, which Sub-Committee A considered at its meeting on 14 December. We are still not convinced that it is sensible to insist on unanimity for this measure, but we see no point in prolonging the correspondence further and we clear the document, which we have been holding under scrutiny (8089/99).

  I must, however, express my disappointment that it took you four months to reply to my letter of 20 July. After a long delay in replying to a previous letter on this subject, you apologised for the oversight in not replying sooner, and said (in you letter of 7 June) that you had taken steps to improve co-ordination of Treasury, Customs and Inland Revenue leads for which both Patricia Hewitt had responsibility. I am afraid that the fruits of this co-ordination are not apparent. I should be glad to know what caused the delay on this occasion, and I seek your assurance that it will not recur in future.

15 December 1999

Letter from Dawn Primarolo MP, Paymaster General, HM Treasury, to Lord Tordoff, Chairman of the Committee

  Thank you for your letter of 15 December confirming that the Select Committee on the European Communities has cleared document 8089/99 which you had been holding under scrutiny.

  You ask about the time it took to reply to your letter of 28 July. In that letter you referred to, and quoted from, the recently published House of Lords report Taxes in the EU: can co-ordination and competition exist? In the circumstances it seemed appropriate to consider your letter and the Report together, and we took some time to give full and proper consideration to both. I therefore replied to your letter in November, after the Government's official response to your Report and the subsequent debate on the subject in the House of Lords. That said, we should have written to you in the meantime explaining why there would be some delay before we could send you a substantive response, and I am very sorry that we did not do so.

17 January 2000


1   Printed in Correspondence with Ministers, 17th Report, Session 1998-99, HL Paper 94, p 66. Back

2   15th Report, Session 1998-99, HL Paper 92. Back


 
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