European Communities (Definition of Treaties) (Cooperation Agreement between the European Community and its Member States and the Swiss Confederation to Combat Fraud) Order 2006

My Lords, this debate has ranged wider than I assumed that it might. I will start with the point that the noble Lord, Lord Howard, made. I also thank him for his support—seemingly somewhat grudging—for this instrument. The noble Lord referred to fraud in the EU. This agreement is not just about VAT fraud in the UK. It covers a whole range of things which potentially affect all our partners, including the likes of charging or retention of structural funds. That is one of the key elements preventing the Court of Auditors routinely signing off the accounts. Progress is being made—the double-entry book-keeping system has apparently been a change in the system—and the UK has been at the forefront of pressing some of those developments, but I think your Lordships would agree this is not satisfactory, and more progress needs to be made. There is no doubt that this, and the access it gives to information, particularly about funds that are drifting into Swiss bank accounts, is potentially very helpful in that direction. Whatever the argument about the rebate, I do not see that it is impacted by this. So far as we are concerned, the big gain is to tackle VAT fraud, but I hope that his party is not saying that, should it come to government, it would wish to scrap the VAT system. That would be an interesting assertion and an interesting development. The noble Lord, Lord Newby, supports the order, and I thank him for that. He talked about changes in the VAT accounting regime. That might have been a reference to something called the reverse supply, a mechanism that may mitigate some of this fraud. I believe it was a mechanism that dealt with fraud when gold was going through similar processes, but if it is something other than that I will be happy to write to him. The noble Lord referred to the agreements with Switzerland and what they cover. On 31 January, HMRC announced an agreement at official level of a protocol to the 1977 UK-Swiss double tax treaty, which covers income tax, capital gains tax and corporation tax. We hope the protocol will be signed shortly and then published. It builds on the commitment on the savings directive agreement. I am not sure whether it will provide comprehensively all the flows of information we need, but it is an important step on the way. As well as this EU agreement, the continual growth of improved double tax bilateral agreements is important. The noble Lord asked about the issues of banking secrecy, and whether this agreement would give greater access to banking information. It will enable the UK to gain access to information on Swiss bank accounts of both intelligence and evidential use. In most indirect tax cases that is not possible. In particular, it should be noted that the contracting party to this agreement cannot invoke banking secrecy as grounds for rejecting a request for co-operation. Again, that is an important step. The noble Lord probed more widely about the state of audit of the UK accounts. I can say only that that is not covered by the brief I have before me. I commend this order to the House. On Question, Motion agreed to.