Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009

The noble Baroness makes a fair point. I cannot go into the details of how the review will work. I make no bones about it: it is an internal review. The crucial part is that it is done by an officer who has had nothing to do with the original decision. No doubt, that person will check, having talked, if necessary, to the taxpayer again to see whether the decision made by HMRC is the appropriate decision. The saving grace of the scheme is the fact that the claimant always has the right to go to the tribunal in any event. It is not suggested that they should go to the tribunal until the result of the review is known, but then they can go. They need no leave or permission to go to the first tier. They go as a matter of course, if that is what they choose to do. One of the significant differences between the old system and this one is that the listing of appeals is now in the hands of the tribunal and not HMRC or its predecessors, as before. The noble Baroness will know better than I do that the control HMRC and its predecessors had over the listing of appeals was a matter of some concern. The noble Baroness said that the exceptionally wide variety of decisions that Her Majesty’s Revenue and Customs makes, from the automatically produced penalty notice at one end of the spectrum to the most complex of decisions, means that a more specific legal definition of the extent and nature of the review is not practical. The key point is that reviews should be proportionate to the circumstances—we do not consider that it is practical to use that word again that this be set out in legislation. We shall set out in guidance the detail of how HMRC intends to conduct reviews. Draft guidance will be published for comment. When that guidance is published, no doubt the noble Baroness will want to check and return on whether it gives enough information about how the review will occur. External review would usurp the role of the tribunal and introduce a further layer of appeal, which we do not want. Quality assured internal review by someone not involved provides the right balance of a second look without unnecessary bureaucracy. I emphasise that in the consultation that was supported by a majority of respondents. The question was asked in another place: why not call direct tax appeals objections or something else until they are sent to the tribunal? As was said there, there are legitimate differing views about terminology. The suggestion that direct tax appeals might be described as objections was carefully considered during the consultation. There was, indeed, a mixed response. Some said that changing the statutory language would create some unnecessary confusion, so it was decided not to do so. On the question of this not aligning between various types of taxes, the differences reflect fundamental differences between the taxes. The order introduces the new review procedure on a consistent basis with existing tax structures. Respondents to the consultation recognised that the proposed system needed to cater for such differences. I was asked about the tax credit position. Appeals were heard by the Social Security and Child Support Appeals Tribunal, which was transferred on 3 November to the Social Entitlement Chamber of the first-tier tribunals. We intend in due course to move tax credits appeals into the tax chamber. We think that is appropriate because tax credit issues relate more to tax than to financial assistance through the benefit system. However, we will not transfer tax credits appeals to the tax chamber until the new chamber and processes have bedded down, and we will take into consideration the points the noble Baroness and other noble Lords have made. I was asked by both noble Baronesses about the draft rules. They will be laid before the House as a statutory instrument in due course. A draft should be available by the end of January or the beginning of February. The rules are currently being finalised by the independent Tribunal Procedure Committee, on which, the House may be gratified to be reminded, the noble Lord, Lord Newton of Braintree, sits, if not plays an even more prominent part. Those rules will be laid by negative resolution. There can be a debate on them if that is wanted. They have been subjected to full stakeholder processes and have been well trialled and discussed. The noble Baroness raised the issue of expense. The new tribunal system is expected to be less expensive to run in the long term. No longer will the tribunal service be required to pay the fees of the clerks, who did an excellent job. The noble Baroness is right; the cost of setting up the new system has been estimated at £1.25 million. We think a consistent set of rules and procedures should produce savings for tribunal users in terms of streamlined procedures and proportionate decision-making. There is a potential slight increase in administrative burdens arising from this for current users of the general commissioners, who tend to be small businesses and individuals. We believe that the potential increased burden is offset by a number of benefits. For ex-general commissioner cases, the appeal will initially be to HMRC. However, as I have said, the taxpayer may appeal to the tribunal at any time and virtually simultaneously if they wish. The system is familiar to most users and ensures the settlement process is activated for the bulk of cases where settlement is desired without recourse to the tribunal. I emphasise that the tribunal service is working closely with Her Majesty’s Revenue and Customs to ensure that guidance is clear and that taxpayers understand where they are at each stage of the system. I have done my best to answer the valid questions asked by both noble Baronesses from the Front Benches. I return to the fact that they both support the new order. I think that it carries broad support, both in this House and in another place. The important thing is that it is up and running from 1 April and that it is seen to be a success. I have no doubt that we will debate these matters again. Motion agreed. 8.09 pm Sitting suspended.