Serious Crime Bill [HL]

moved Amendment No. 123: 123: Clause 75 , page 42, line 5, at end insert— ““(2) The Secretary of State may by order make arrangements for the effective public scrutiny of the use by Her Majesty’s Revenue and Customs of the powers contained in Schedule 11. (3) Schedule 11 shall not be brought into effect until the arrangements mentioned in subsection (2) have been put in place. (4) An order made under subsection (2) shall not be made unless a draft of the order has been laid before, and approved by a resolution of, each House of Parliament.”” The noble Baroness said: The amendment deals in more substance with Clause 75 and Schedule 11. It would insert three new subsections into Clause 75. I shall speak also to Amendment No. 126, which would delete the major part of Schedule 11. These are probing amendments, designed to tease out some of issues about the extra powers that are being given to HMRC. The Inland Revenue was equipped with powers which were appropriate to the paying of tax being a civil obligation. On the other hand, when Customs and Excise was set up, it was equipped with powers which were appropriate to policing our borders and dealing with the physical activity of smuggling. When we introduced VAT, it was, for reasons largely lost in the mists of time, placed with Customs and Excise rather than the Inland Revenue; hence, VAT attracted more extensive powers in relation to business taxation than have ever existed in relation to taxes dealt with by the Inland Revenue. Both VAT and the Inland Revenue taxes are fundamentally civil obligations and for the vast majority of taxpayers the criminal law is irrelevant. The Inland Revenue worked well in the past by involving the police whenever criminal activity involving a tiny minority of taxpayers was suspected. It did not need police-type powers. The Chartered Institute of Taxation believes that there are important public policy reasons for the administration of tax and the enforcement of criminal law being conducted by separate agencies and that changes to that will strike at the heart of the nature of the relationship between taxpayers and tax administrators. The Chartered Institute of Taxation believes that the extra powers for HMRC should not be sought until a fully independent review, such as the one conducted some years ago by the late Lord Keith, is carried out. The view is echoed by the Institute of Chartered Accountants in England and Wales, that if any directional change is made it should be to level down the powers of HMRC to the civil Inland Revenue powers, provided—and this is an important proviso—that the police and agencies such as the Serious Organised Crime Agency have sufficient powers to tackle the important areas of fraud and other criminal activity in relation to tax matters. I emphasise that no one suggests that a full battery of powers should not exist for tax fraud, especially with regard to organised crime. That is why I have tabled Amendment No. 126—so that the powers of HMRC are not increased. The Minister may be mystified why I left in the Bill the first four paragraphs of Schedule 11, which grant more Police Act 1997 powers. I can say only that it mystified me, too, when I came to prepare my speaking notes—but since this is a probing amendment, I decided that the amendment could stand for the purposes of today’s debate. This is the first legislative opportunity for the Government to make their case on new powers for HMRC. I hope that the Minister will deal with the rationale for overturning the underlying premise, which is that the payment of tax is fundamentallya civil obligation that should be matched with appropriate non-criminal powers. I am aware that the Government have also announced that the Finance Bill will include some more levelling-up powers, which increases the sense of dismay among those who believe that the HMRC and the Treasury are pressing ahead without a proper independent review and without meaningful consultation. I have little or no hope that that the Minister will accept Amendment No. 126 or even an improved version of it so, as a fallback position, I have taken the suggestion of the Chartered Institute of Taxation that if additional powers such as those in Schedule 11 are granted, there should be proper independent oversight mechanisms in place. My Amendment No. 123 addresses that point, adding a new subsection (2) to Clause 75, giving the Secretary of State power to make arrangements for the effective publicscrutiny of how HMRC uses the powers grantedin Schedule 11. The amendment is not specific about the nature of the public scrutiny; clearly, there are many options available. I would say only that it should have a proactive scrutiny process and not a reactive one, such as with the adjudicator arrangements with the Inland Revenue, which are directed at specific disputes or complaints. Parliament would obviously want to satisfy itself that the scrutiny arrangements were appropriate, which is why new subsection (4) involves the affirmative procedure, and it would also be important that the new powers in Schedule 11 were not brought into effect until the scrutiny arrangements were in place. New subsection (3) provides for that. I hope that the Minister recognises that concerns are felt about the development of HMRC’s powers. This debate is rather odd in connection with the Serious Crime Bill but, since the Government have chosen this mechanism to introduce the new powers for the first time, we feel that we cannot let this part of the Bill pass without a proper debate. I beg to move.