Serious Crime Bill [HL]

I am happy to give the noble Baroness, Lady Anelay, a more comprehensive answer on these issues than perhaps I came ready to give. I see that the amendments are exploratory so that she can gain a fuller answer on the Government’s rationale. I hoped that I had partly satisfied her on Second Reading, but I am more than happy to assist the Committee at this stage as I think that it will help us as we go forward. As the Committee will know, these measures are about making the existing surveillance powers of Her Majesty’s Revenue and Customs available against all tax crime where it is serious and organised. There are comprehensive safeguards around the use of these powers, which can be used only for investigations into serious crime. The noble Baroness asked a number of questions, as did the noble Lord, Lord Burnett. The first was: why do we need the changes and what benefit will they bring? The changes are needed to allow HMRC to effectively tackle serious criminal attacks on ex-Inland Revenue taxes and tax credits. They will allow HMRC to more effectively tackle these crimes and bring the individuals involved to justice. When HMRC was established in 2005, Parliament made it responsible for investigating crime connected with taxes and duties, including serious crime. To tackle those crimes effectively, specialist knowledge of the taxes and duties is required as well as the investigative skill. As I think the Committee will agree, HMRChas that specialist knowledge. There are more than50 police forces in the United Kingdom and it would be extremely difficult to equip them all with the tax knowledge needed to deal with these crimes. It could lead to a loss of economies of scale and a dilution of experience and knowledge. The proposal to make these surveillance powers available for investigations involving ex-Revenue matters was covered in the HMRC consultation document published in March 2006. Of the 58 responses to the consultation, 15 commented specifically on making the powers available for the investigation of serious tax crime related to Revenue matters; and 11 of those 15 respondents supported the proposals providing that they continued to be subject to the same safeguards and controls. I can confirm that the safeguards and controls will be unaltered and the powers will be used only for criminal investigations into serious tax crime. The powers have been reviewed to see whether they are appropriate to HMRC. That review has considered these powers and fully consulted, and most people agree that these changes make appropriate powers available. We therefore think that the framework is sound. As the noble Baroness will remember, when HMRC was set up, the powers of the Inland Revenue and Customs and Excise were transferred but ring-fenced so that they could be used only for the purposes for which they were previously used. Customs and Excise had access to those powers for criminal investigations but the Inland Revenue did not, so the situation was preserved. When Parliament considered the Bill to establish HMRC, it was announced that the powers would be reviewed and, where necessary, that appropriate changes would then be made, rather than making changes in haste. Those powers, as I indicated, are the ones that have been reviewed, and I have tried to give the Committee a little information about the consequences. I know that the noble Baroness, Lady Noakes, and the noble Lord, Lord Burnett, will understand the serious crime that takes place in attacking tax credits and the way in which we now have to address those issues. I was glad to receive affirmation that that is seen as something that should be addressed and is of serious intent. Serious crime involves other ex-Inland Revenue responsibilities as well as tax credits; for example, serious crime can involve dishonest advisers, a professional preparing false income tax repayment claims, or gangs dealing in forged tax certificates. The powers are needed to effectively tackle those serious crimes as well as where tax credits are involved. The law ensures that the powers can be used only where they are proportionate and necessary to tackle serious crime. Where those tests are met, the availability of the powers should not depend on whether a serious fraud involves VAT or income tax. For example, atthe moment these powers could be available where appropriate to tackle a VAT fraud involving£10 million, but would not be available for a fraud involving £10 million of income tax even where the criminal behaviour was the same. I know that noble Lords will see the unfortunate consequence of that. The extension of the powers was appropriate, and they have been dealt with sensitively. The noble Lord, Lord Crickhowell, says that there is nothing to restrict the use of these powers to investigate serious crime. Legislation such as the Regulation of Investigatory Powers Act 2000 restricts the use of the powers to criminal investigations into serious crime, so that provision exists. It is not something about which noble Lords need to be concerned. The noble Lord also asked about training and whether the powers could be used for civil matters. The training provided to HMRC staff investigating serious tax crime and the stringent safeguards and procedures that come with these powers will ensure that the powers are used appropriately. The procedures ensure that any possible use of one of these powers is subject to strict internal scrutiny before an application can even be made for its use. The powers are used only where other methods of investigation have failed or would clearly not succeed in obtaining the intelligence being sought. I hope that I have been able to reassure the Committee about the structures, the way in which the powers will be extended, and the fact that we see it as important to mirror the safeguards that have been created to reflect the new structure and new ability to bring further criminal activity under proper control by these provisions. Amendment No. 123 concerns the public scrutiny of the use of these powers by HMRC. Several stringent safeguards—some of which I have referred to—and systems of oversight are already in place for these surveillance powers. Clause 75 and Schedule 11 make no changes whatever to those. In particular,use of the powers is already subject to scrutiny bythe independent Interception of Communications and Office of Surveillance Commissioners, and the scrutiny provided by those commissioners covers the use of the powers by a number of agencies including HMRC and includes the publication of annual reports. There is also an independent tribunal to consider complaints about the use of these powers. HMRC is also subject to inspection by Her Majesty’s Inspectorate of Constabulary and is within the remit of the Independent Police Complaints Commission. We therefore think that further arrangements for scrutinising the use of these powers are unnecessary. Amendment No. 126 would remove paragraphs 5 to 31 of Schedule 11. These paragraphs update references to Her Majesty’s Customs and Excise and the Inland Revenue in the Regulation of Investigatory Powers Act 2000. This amendment would not prevent the clause fulfilling its intended purpose of making the relevant surveillance powers available where appropriate for all criminal investigations by HMRC into serious crime. However, it would make the legislation difficult to understand and interpret. Although the powers would apply consistently to HMRC, they would still refer to Customs and Excise and the Revenue as though differences remained, which could lead to mistakes and misunderstandings. For these reasons I cannot accept that amendment either, but I absolutely understand that the noble Baroness tabled them to give us a vehicle through which we could debate these matters, as she said. She is not suggesting that they are accurate or appropriate but they enabled a proper debate to take place. For the reasons I have given, I hope that she will be content to withdraw these amendments.