Examination of Witnesses (Questions 60-79)
DAWN PRIMAROLO MP, MR DAVE HARTNETT AND MR STEPHEN BANYARD
WEDNESDAY 19 JUNE 2002
60. Will the review of, for example, non-domicile status for tax purposes, which the Chancellor announced in the Budget, be fed into this counter-fraud strategy or will that be a completely separate exercise?
(Dawn Primarolo) That is a separate exercise under the review of residence and domicile and at the moment we are in the position of taking written submissions and ourselves internally assessing the position with regard to those status and then reporting further to Parliament at the Pre-Budget Report. We are taking that separately.
61. That is being led by the Revenue?
(Dawn Primarolo) It is.
62. Thank you. Minister, I am sure you will have seen suggestions that the company, the special purpose vehicle company, which has taken over the responsibility of running the Revenue's tax offices
(Dawn Primarolo) The special vehicle companies are also a tax status and I got confused for a moment, sorry.
63. That company does not itself pay tax because it is registered overseas. Now you will, I am sure, see the public relations problem that results if that were to be the case.
(Dawn Primarolo) Indeed, but, as we talked earlier on, the Taxpayer's Confidentiality Act means precisely that. I have seen the reports but I do not have access to the details of any company information. How do any of us know whether that is the case or not?
64. Have you asked for an inquiry as to whether that is correct?
(Dawn Primarolo) I cannot. It is beyond my remit as a Minister to ask. We have a care and management division and under the protection of the tax system I cannot enquire of anybody's tax status or returns, individual or company. I am specifically not allowed to do that as part of the protection of confidentiality.
65. How do you intend to report to Parliament on the work of this particular company and its performance and the profits it makes?
(Dawn Primarolo) I will report to Parliament in terms of its performance in managing the estate of the Inland Revenue. I do not report to Parliament individually on taxpayers. I am not accountable to Parliament and I am not accountable as a Minister for individual taxpayers or companies. The requirements specifically exclude that. It would be an abuse of power if a Minister was able to make enquiries of any individual's tax returns or company's tax returns on any basis and the security of the system could not be protected. That is why the Revenue has Commissioners and they are separate from me and it is their responsibility to maintain that.
66. In this annual report you will, of course, see that there is a report on the Revenue's use of its assets which shows at Annex 4, page 43, a figure for land and buildings which in the 1999-2000 year was 295 million and which in the two subsequent years goes from six to five and in the current year is shown as nil. That presumably is the impact of that transfer.
(Dawn Primarolo) Yes.
67. Do you not think some explanation needs to be given on the rate of return, the performance of the company that has acquired such a significant chunk of your assets?
(Dawn Primarolo) Indeed, and this would be a matter for the National Audit Office. I imagine that as they look at every other area of management of any Government department's assets they will look very closely at that and the way that the division of responsibilities are apportioned in Parliament as, as the parliamentary watchdog, they have inquired into many issues, not just in Revenue.
68. Are you aware of an NAO inquiry ongoing into this?
(Dawn Primarolo) I am not at the moment but NAO would not notify me of such an inquiry. They are not required to, they are independent.
69. I am asking if you are aware of it. It is not an improper question.
(Dawn Primarolo) I am not, no, but it does not mean there is not, I am just not aware of it.
(In the absence of the Chairman, Mr Nigel Beard was called to the Chair)
70. The National Minimum Wage, Minister, was being administered by the Inland Revenue on behalf of the Department of Trade and Industry but there were no targets or achievements as to how well you were doing in enforcing it.
(Dawn Primarolo) No. The National Minimum Wage is accounted for within an annual report which is a joint Inland Revenue and DTI report. If you like, the Inland Revenue administer the enforcement of that and the report is available on the DTI website, they are the lead department for the National Minimum Wage. The results in terms of enforcement, this report would cover policy aspects, what activities the Inland Revenue have been undertaking, outputs and explanations. It counts as part of the DTI report but if the Committee would like details of the targets set for 1999-2000 to 2002-03, along with the results achieved for the first three years to 2002, I am happy to provide that.
71. I think that would be useful.
(Dawn Primarolo) That is the DTI that would be commissioned to do that.
72. Is it not true that the Inland Revenue will be responsible for measures to improve the enforcement of the National Minimum Wage?
(Dawn Primarolo) Yes, in consultation with the DTI. If we look at the figures that we will be able to supply to you, if we look at the incident of non-compliance identified, it has risen from 20 per cent in 1999-2000 to 36 per cent by 2001-02.
73. Non-compliance has risen?
(Dawn Primarolo) The identification of non-compliance. That is what we are looking for. The value of arrears of wages identified has risen from 1.25 million to 5.1 million in 2001-02. This information is available and we can make sure that your Committee has copies of it.
74. Given that response, would it not be a good idea in the future to report it in this report as it is a responsibility of Inland Revenue?
(Dawn Primarolo) Yes, we can consider that. I do not see that there is an issue there. When the National Minimum Wage was set up under the structure that was set up the DTI was the lead department, not ourselves. I do not see why we could not find a way of having that included in some way in the report.
75. Could you explain what the Integrated Citizen Tracing Facility is? It is on page 25. What is it all about and who is going to have access to it?
(Dawn Primarolo) It is just the Inland Revenue that has access. DWP and the Inland Revenue. It is a new facility to sit above the IT systems. It basically allows us to trace customers using a unique identifier. It is to do things like verify the National Insurance number or references to complete where we only have part names, part addresses or we do not have all of the material that we need. It enables us to check across and to make sure we have a total picture of a taxpayer where we do not have all the information and therefore we cannot provide the service that they would be entitled to.
76. It is only accessible by Inland Revenue and the Department of Work and Pensions?
(Dawn Primarolo) Yes. It is a pooling of our information to make sure that we have got a complete picture, it is no more than that, so that we can deliver assessments like the Tax Credits and things like that. It is through a statutory gateway.
77. Finally, Minister, the Valuation Office Agency, one of its major tasks is reported here "as a step on the path to more public acceptance of valuations in Revaluation 2005 [is to] implement the recommendations coming out of the evaluation of the local ratepayer panels pilots". Why is there a need for more public acceptance of valuations?
(Dawn Primarolo) Currently appeals are made against approximately 40 per cent of business property valuations and what is happening is that the ratepayers are effectively using the appeals system to check the valuation accuracy and obviously you then get problems in backlog pressure on the system. Having looked at this, what we think is happening is people are encouraged to do this by rating advisers, many of whom may be working on a no-win, no-fee basis, and clearly this is inefficient both for the valuation office and, indeed, from a business perspective if it is not necessary. What we are looking to do is to modernise the process and to do much more in helping the ratepayers understand how the assessment, the valuation, was reached before they get into the rating list. If they still want to go through the system of course that is their prerogative, we are not going to do anything to prevent that, but we think perhaps there is something that we can do at an intervention level to have more information and perhaps reassure people more at that stage because we do get complaints about how long it takes to get through and hear these valuations, which is incredibly inconvenient and sometimes worse for the businesses concerned.
78. Of the 40 per cent of appeals how many were upheld?
(Dawn Primarolo) It is a very small percentage. I do not have that but I can find it. It is not close to 40 per cent. The difference is substantial enough to lead us, having analysed the outcomes, to believe this type of intervention would be helpful. I will make sure that you have got that figure.
79. It would be useful. Minister, thank you very much for another interesting and helpful session.
(Dawn Primarolo) Can I say that since this Sub-Committee started its work I had no idea how much I would need to know about my Department, thank you very much, it has been a great education to me as well. Thank you.
Mr Beard: Thank you.