Finance Bill

It is a pleasure to follow the hon. Member for Somerton and Frome (Mr. Heath), who has raised a number of important points, which I hope to touch on in the context of the HMRC charter and amendment 6. The group of amendments is rather lengthy, so I shall try to run through my amendments as quickly as possible. Clause 92 and schedule 46 relate to the senior accounting officer and the new responsibilities placed on him. We debated the matter in Committee of the whole House and, indeed, in the Public Bill Committee. My hon. Friend the Member for Fareham (Mr. Hoban) pointed out on a number of occasions how the proposals were produced in the Budget and the Finance Bill without any consultation, yet there are concerns about their impact on large companies and about the scope of the clause. We are grateful that the Government have tabled amendment 43, which applies the measures not to "large" but to "qualifying" companies. That is a step forward, but we none the less have a number of doubts, particularly about the lack of clarity on the administrative costs to affected companies. No proper regulatory impact assessment was done prior to the announcement because the necessary consultation did not happen, so some doubt necessarily remains. We know that the Government estimate that about £140 million will be raised by the measures, but there remains a degree of doubt about whether that will be the case. We have tabled two amendments which I think will help the House to assess the effectiveness of the proposals. Amendment 32 is a simple sunset clause and would enable the provision to fall after four years. If after four years it emerges that it is not causing a disproportionate cost to businesses to establish that the senior accounting officer can sign off the accounts, fair enough. If it proves that substantial amounts of revenue are being raised as a consequence of the provision, there will clearly be a strong case for renewing it, but if not—I have to say that at this stage we cannot be confident one way or the other—it will be dropped. Amendment 33, which relates to schedule 46, would require the commissioners to prepare a report on compliance with the new provisions and the additional tax raised. It would enable us to have a much better view of whether the measure was proving to be effective, given that consultation was not carried out in advance and its origin remains something of a mystery. Clause 95 and schedule 48 relate to the extension of information and inspection powers. We have tabled two technical amendments. Currently, there are powers to inspect property for valuation purposes, which relate to a number of taxes, including stamp duty reserve tax. The Law Society has questioned how those powers will be used, and I should be grateful if the Minister explains how they will be relevant to SDRT. Let me put amendment 8 in context. The tribunal may not approve an inspection under the new powers unless certain conditions apply. They include the ability of the relevant taxpayer to make representations, the ability of the occupier of the premises to make representations, and the supplying of a summary of the representations to the tribunal. Those conditions are disapplied if the occupier of the premises cannot be identified. It is reasonable for the requirement to supply a summary of the representations to the tribunal not to apply if the occupier cannot be identified, but why should it not apply if the taxpayer is able to make representations? If the taxpayer makes representations, there will be no obligation for a summary to be supplied to the tribunal. That seems somewhat strange. We seek to amend schedule 48 so that the occupier would not be given an opportunity to provide representations, but a summary could still be provided if the taxpayer has made representations. Paragraph 15 of schedule 51 provides, broadly, for a 20-year time limit for assessments in a case involving a loss of tax attributable to a failure by a person to make a return under the stamp duty land tax legislation. Normally, the time limit is six years. The Law Society has told us that the period should be extended from six to 20 years only when failure is deliberate, rather than inadvertent and careless. Consequently, we have sought to address that in amendment 9, and similarly in amendment 10 tabled to paragraph 16 of schedule 51, by making the requirement a deliberate failure. Clause 99 and schedule 52 relate to the recovery of overpaid tax, setting out circumstances where a claim is disallowed. One of those—case A—is if a mistake is made in a claim, election or notice. The Law Society made the point that a mistake that gives a right of recovery against HMRC could result in a mistake in a claim, and therefore the unfortunate situation could arise that a mistake by HMRC leads to a mistake in a claim which then, in turn, means that the claim is disallowed. The second concern raised with us by the Law Society is what exactly a mistake means in those circumstances. The Minister might be able to help on those points, which relate to amendment 11. Amendment 12 highlights the fact that there is a separate regime for mistakes relating to capital allowances. Will the Minister explain why capital allowances are singled out? Finally in terms of schedule 52, amendment 13 relates to case F, which excludes amounts paid, or liable to be paid, in consequence of enforcement action. Why are proceedings for enforcement relevant to HMRC's liability under the schedule? Clause 101 and schedule 54 relate to repayment interest on sums to be paid by HMRC. Amendment 14 seeks confirmation that repayment interest is not taxable. Will the Minister respond to that point? Amendment 19 essentially asks why the repayment interest start date should be on 31 January next, following the year in which the loss is incurred, rather than at the end of the accounting period in which the loss is incurred, which is what we have sought to achieve in amendment 19. Clause 105 and schedule 55 relate to the penalty for failure to make returns. Paragraph 25 of the schedule states that where a representative partner fails to make a partnership return, a""penalty in respect of the failure is payable by every"" person who was a partner in the partnership at any time during the relevant period. Amendment 20 would ensure that aggregate penalties are limited to the amount that could have been assessed on one partner. Otherwise, penalties could be more harsh where a partnership is late in making a return than where a company of equivalent size is late in equivalent circumstances. There does not seem to be any particular logic as to why the regime should be harder on a partnership as a whole than a company. Clause 106 and schedule 56 relate to the penalty for failures to make payments on time. Amendment 21 would delete what I believe to be a typo. The Minister is a reasonable man and I assume he will accept it; if he does not, I am perfectly prepared to divide the House, but I am sure he will not make that necessary. The current wording of the schedule is as follows:""that person fails to make or deliver the return on or before by the date by which it is required to be made or delivered"." That first "by" appears to be a typo, and therefore should be removed. In respect of clause 107 and schedule 56, the amendments are of a technical nature. The clause and schedule enable taxpayers to benefit from the suspension of penalties during the time-to-pay arrangements even if they have already incurred a late payment penalty. That ensures that any penalties arising after a taxpayer's approach to HMRC will be suspended. I want to deal with the HMRC charter last because we have now gone through a number of clauses and schedules relating to HMRC powers. It is striking that every year we generally extend HMRC's powers in this area as part of a process relating to powers, deterrents and safeguards. We spend a lot of time scrutinising the powers and deterrents, but very often the argument for the safeguards is that they will be set out in the HMRC charter. We debated the charter in Committee—the first draft of it caused considerable concern, but I acknowledge that the Government have moved on it. There remain some discussions to be had on this important document, and it is important that the House scrutinises how HMRC works and the safeguards that exist for the taxpayer. That is, in essence, the argument made by the hon. Member for Somerton and Frome. The fact is that the House has very little oversight of the HMRC charter. We have had an opportunity to debate it in our consideration of the Bill and I dare say that we will be able to do much the same when we consider future Finance Bills. Amendment 6 would allow the House to debate the charter again before it is published and before it is finalised, so that the views of right hon. and hon. Members can be expressed and there is an opportunity to raise the concerns of constituents. Constituents have also come to me to discuss how they are treated while the Government and HMRC seek to address carousel fraud. That is but one example, and I am sure that hon. Members can identify others. It is important that the House has an opportunity to debate them. I have covered, as quickly as possible, a large number of amendments, some of which are technical, others of which are broader in nature. I reiterate that it is important that the House scrutinises HMRC and that we ensure that the right balance is found between the powers, penalties and deterrents available to HMRC and the safeguards available to taxpayers. I press the Government to share that view, and I hope that we have future opportunities to debate the HMRC charter.