HC Deb 15 July 1976 vol 915 cc922-1015

Amendment proposed: No. 73, in page 126, line 40 leave out '20B' and insert '20C'.—[Mr. Joel Barnett.]

Mr. Speaker

With this we may take Amendment No. 278, in page 126, line 40, leave out from beginning to end of line 19 on page 127.

Sir Geoffrey Howe (Surrey, East)

The Government's amendment is formal. The Opposition's amendment, No. 278, is intended to give the House an opportunity to have a further look at the extremely important subject of what has come to be known as the snoopers' powers—the tax inspectors' inspection powers provision.

The amendment is intended and designed to strike out from Schedule 6 the basic provisions giving the Inland Revenue powers of entry into private premises at any hour of the day or night. I intend to concentrate my remarks on that issue. I should make it plain at once that the proposals put forward by the Government, and still persisted in, to give the Inland Revenue powers of entry into private households and premises by day or by night are absolutely opposed by the Conservative Party. That was the position that we set out on Second Reading, and it is the position to which we adhere today.

As a result of the prolonged, intense and fierce opposition waged against these proposals since they first appeared in the text of the Bill, opposition sustained by my hon. Friends in Standing Committee, a large number of changes and amendments have been made by the Government. All those changes represent modest concessions to good sense and reason in this matter. The fact that the Government made so many changes in Committee and for Report have tabled 22 further amendments to these provisions amounts to an acknowledgement by them of how right the Opposition and people outside the House were to be as gravely concerned as we have been about the powers that the Government seek to take for the Inland Revenue.

Moreover, grave concern is well justified by the fact that the Government— whether the responsibility rests with the Chief Secretary or the Chancellor of the Exchequer, or those who advise him, we know not—have dared to bring before the House proposals designed and conceived as these were originally. Their admissions of guilt by the changes that they have made demonstrate how ill-judged the original proposals were. They were wholly ill-conceived at the outset.

I take only one example. The original proposals to give the Inland Revenue powers to invade people's homes by night or by day—by force if necessary—were extended to enable documents to be seized in respect of which professional privilege was or ought to have been available. In no comparable provisions of which I know have any Government sought to override and disregard principles which are regarded as making immune to disclosure and discovery documents and advice passing between the citizen and his legal advisers. The fact that those principles have been wholly disregarded and are to be amended by amendments to be discussed later demonstrates how ill-conceived the original proposals were.

There is an important feature of this matter. The launching of these proposals and the extent to which they have been overtly and publicly supported by senior officials of the Inland Revenue—not least by Mr. Plant, the general secretary of the Inland Revenue Staff Federation —have done great damage to the reputation of the Inland Revenue and those who work in it. They have caused many citizens to wonder how far the Inland Revenue, on whose integrity and independence the tax collection machinery depends, is now adopting a political position. That consideration must cause grave concern.

The Government have done that damage initially by their decision to introduce these powers, and that damage has been increased by the way in which Inland Revenue officials and their representatives have sought to speak out in support of them. The point cannot be more crisply put than it appears in a letter to The Times by a former general secretary of the Inland Revenue Staff Federation, Lord Houghton, in which he said: When tax gatherers fall in behind Ministers to demand sterner measures of enforcement they run two risks. One is that their deservedly high reputation for impartiality and fair-mindedness towards the public will be harmed by the slings and arrows which will inevitably follow. The second is that they will get let down when Ministers give ground, as they usually do, under political pressure. Both those risks have been made manifest on this occasion, the first a great deal more clearly than the second.

There is continuing concern about the nature and shape of these powers and about the many concessions and changes that we have demanded, but that have not been made. Last night we debated the need to have some safeguards to the earlier provisions of the schedule relating to the position of a wife or children, the need to take some care to exclude from the range of inquiries companies which had ceased to exist, and the need for further restrictions on the range and kind of papers that can be called for from the client whose affairs are under investigation.

On these proposals we have still to debate the suggestion that the revenue officer should not be allowed to inspect a person's home unless accompanied by a police officer and that only a police officer should be allowed to remove items from a citizen's home. We have suggested, and the Government have failed to accept, that the powers of entry should be limited so that they operate only during the hours of daylight and on weekdays. But the Government insist that the powers must be available throughout the week around the clock—Sundays as well as weekdays.

We have suggested that these powers should be made the subject of an annual report on the way in which the authority is being exercised. But that, too, the Government have chosen to neglect. They have also refused to accept suggestions that the powers should be limited only to frauds of more than a certain size and that the Inland Revenue and its officials should accept responsibility for the security of the premises that they have invaded and explicitly for the damage that they have done. All these suggestions have been swept aside or rejected by the Government. That is why we are concerned that they should want to press ahead with these proposals.

The Government should reflect, as I am sure they must have done, on the damage that has been done to the reputation of officials of the Customs and Excise by the growing public concern about the way in which the VAT inspection powers are being used. When we introduced those powers in 1972 we made it plain that we should want to review the way in which they had been operating and to consider what changes should be made. That argument is now strongly made out.

There is grave concern about the extent to which the invasion by officials of the Customs and Excise in pursuit of VAT has caused shock, damage and distress to members of families who are entirely innocent. If there is concern about that, how much more are we entitled to be concerned about this proposal to give comparable powers to officials of the Inland Revenue?

As was pointed out in our first debate on this matter, there is a great difference between the authority and responsibility of the Inland Revenue and that of the Customs and Excise. The Customs and Excise can at least be seen to be concerned with the collection of tax from citizens who have been acting as tax collectors, because people who handle VAT are part of the tax collection process. Powers may be justified in that respect, but they are certainly not justified in this form—namely, the power to invade the home and premises of a private citizen in respect of his liability to account for income tax.

Ample powers are available in other respects in the taxing statutes. They have proved sufficient for a very long time. Therefore, there is no justification for these proposals.

In any event, this is a remarkable way of introducing these proposals. They are not proposals that should find a place in the Finance Bill at all. They are proposals that could in other circumstances and, we suggest, should have been contained in a special Revenue Bill dealing with the administration of the Revenue.

The advantage, which is an important one, is that this matter would not then have to be considered within the constrained timetable about which the Chief Secretary was talking with such concern —I am sure his concern was genuine—the other day. Finance Bills are hard enough to get through in the time allowed by the Provisional Collection of Taxes Act, and to load them with this kind of proposal, making far-reaching changes in the administration of the Revenue, is to add to those difficulties.

On Tuesday, when we discussed the way in which the Government were handling this matter, I spoke out for those who are gravely concerned about the Government's pattern of handling financial legislation. Since then, I have received a copy of a letter sent to the Chancellor of the Exchequer from the Association of British Chambers of Commerce, which wrote to the Chancellor on 13th of this month, the very day when we last discussed this matter, in these terms: For the second year running we are faced with a Finance Bill which has emerged substantially amended from Standing Committee and which only became available from the Stationery Office last Thursday. Many further important amendments and new clauses have since been put down by you. The House of Commons is expected to deal with what is almost a new Bill in a mere three days this week. This Association like all other interested bodies is in effect denied adequate time to consider the new proposals and to make representations on them: the House of Commons is denied the benefit of the outside expert advice behind such representations. This is a wholly unsatisfactory procedure for the introduction of any legislation and is especially so for fiscal legislation. If that is true about the generality of the Finance Bill, it is even more true about the powers we are now discussing, which ought not to have been included in the Finance Bill and which ought not to have come before this House at all.

The point is that powers of this kind are unnecessary to combat evasion. The Government failed to satisfy my hon. Friends in Committee that there had been any growth in evasion to justify these changes, if they could ever be justified, which we do not accept, during the last 18 months. Both the chairman and the deputy chairman of the Board of Inland Revenue have made plain that their existing powers are adequate for the task that they have to perform. Nor are these powers justified by the case frequently put forward by the Chief Secretary and his ministerial colleaeues—that these powers will not be used except for a few particularly serious cases.

That is no defence, because the Chief Secretary can give no such assurance. The powers will find their way on to the statute book. They are exercisable, subject to the controls contained in the Bill, by Inland Revenue inspectors and officials under the Board of Inland Revenue. The Minister is not able to direct the Board in relation to individual taxpayers as to what it may or may not do, and he can give no such assurance. The powers will come on to the statute book to menace the many, and if it be true that they are designed only to catch a few particularly serious offenders, even that will not work.

The few people against whom the Chief Secretary has designed this massive legislative apparatus are the people who will always be able to avoid confrontation with the law in this kind of way. They are the people whom the Chief Secretary himself has come near to asserting are uncatchable. They are the people who will know well in advance the provisions with which the House is now dealing. But society as a whole will have to face the existence of these powers on the statute book. They are powers which can be used and can strike at many taxpayers at all income levels and at all levels of society.

The Chief Secretary has several times repeated the assurance that these powers will not be abused and that we can rely upon him and upon the beneficence of those who will have the right to exercise them. At the moment there may be some reason for accepting at least part of that assurance when we are feeling in a generous mood, but that kind of assurance is just the kind of assurance that leads so easily down the road towards the invasion of freedoms and towards the removal of liberty.

We have been given the assurance "Do not worry boys, we will not use these powers much. They may look pretty grim but we will not use them except in a few serious cases." But that sort of assurance can all too easily justify powers which are likely to turn out to be quite intolerable. Our position is that if this provision reaches the statute book, it should be struck out therefrom. It should be the task of the House this evening to see that this provision does not reach the statute book. I invite my hon. Friends to support me in this amendment in order to see that it does not.

4.45 p.m.

Mr. Graham Page (Crosby)

Like my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) I wish to address my remarks to Amendment No. 278, which is grouped with the one which has been formally moved by the Chief Secretary. This is an amendment to remove that part of Schedule 6, the whole of which has become known as "The snooper's schedule". It is in many respects, in addition to this last section, objectionable. We discussed some of it earlier this morning—that part of it which gives the power to call for documents of taxpayers and others, the power to call for papers of tax accountants and finally, it reaches its peak of odiousness in the provision which our amendment seeks to delete—the entry with warrant to obtain documents.

For the sake of brevity, I have endeavoured to list as clearly as possible the objections to this part of the schedule. The first is that, as far as I know, there is no other provision in the law which allows a tax officer to break into a person's home. The right of the Customs and Excise officers, who have always been looked on rather as policemen in their sphere, is not relevant to the provision now proposed.

The sanctity of the home should transcend any expediency of collecting evidence in relation to a tax fraud. I stress "collecting evidence", which is about all that is being done in this schedule if the right of entry to a person's home is granted. It is not an entry to prevent crime which is being done and it is not an entry to catch a criminal in the act of his crime but an entry to search, and to fish, for evidence on which to support some claim against a taxpayer.

Secondly, it is not merely a power to enter the home of the allegedly fraudulent taxpayer. It is a power to enter anybody's home merely to find evidence of some fraud, possibly by some other taxpayer.

The example occurs to my mind of an innocent employee of some company suspected of fraud. The inspector might think that if he entered to seize the pay slips of that employee, they would be good evidence of some fraud being carried on by the company. Are we to sanction that sort of thing? The Chief Secretary said that we need not worry, that all sorts of authorities have to give permission for the warrant. But if those authorities are faced with a claim by the tax officer that an employee has pay slips in his house which may be very useful in showing that there has been some fraud by his employer, how can they refuse a warrant in such a case, faced with the provisions of this proposed new section in the Bill?

Third, unless it is the home of an innocent person, it seems to me that the power will be quite ineffective and there will be an invasion of personal liberty for no purpose. The fraudulent person will make certain that no incriminating documents are in or about his house. It is the innocent person, perhaps unaware that he happens to hold documents of this kind, who will be subjected to his home being broken into.

Fourth, when the home is broken into, the tax officer may use the other powers in the schedule to cross-examine the family in the house. This power, if it is used, will be so shocking to the public that there will be an outcry against it.

Fifth, privileged documents which may be found in the house are not protected. If they happen to be in the house of a solicitor, barrister or accountant who has been advising someone, they will be protected, but if they are in the house of the client they will not be protected as the provision stands. We may discuss this on a later amendment, but I wish to make the point now. Let us suppose that a client has been receiving advice from his solicitor, and he has given his solicitor a proof of evidence. The solicitor sends that proof of evidence to be checked by the client. That night, the inspector may find that proof of evidence in the taxpayers' house and, as the Bill stands, he will be perfectly entitled to seize what I believe to be a privileged document. It is not protected as the schedule stands.

I come now to my sixth objection. As my right hon. and learned Friend said, this has been introduced as a tax provision in a money Bill, and it is therefore deprived of proper debate and amendment in another place. It is an amendment to the Taxes Management Act 1970. I emphasise the word "management". It is not an amendment to the Taxes Act. I dare say that there are many precedents for the inclusion of a provision of this type in a Finance Bill and in other money Bills, but I hope that this will be regarded as such an exceptional example that we shall be able to say in future that it ought not to be done, that we ought not to deprive another place of proper debate and opportunity to protect the individual. I say that all the more strongly since we have been rushed into the Report stage without proper opportunity to consider the amendments which the Government have put down.

It is regrettable that there is not one Member on the Government Back Benches to listen to the case being put. One hon. Member has just entered the Chamber, but that is all. I hope that he will listen to the rest of the case put by my right hon. and hon. Friends and come to the conclusion that this is a thoroughly odious provision, that it is unconstitutional, and that it ought never to have been included in the Bill.

Mr. Emlyn Hooson (Montgomery)

I strongly agree that this provision ought not to be introduced in a money Bill. In a modern and sophisticated society such as ours, there is inevitable pressure for more powers of investigation. From the Opposition side, there has been tremendous pressure recently for greater powers of investigation against those who defraud our social security system. That is one aspect of fraud in the Welfare State, and there is very little public patience with it. That lack of public patience is reflected in the demand from this side for far greater powers of investigation.

Equally, in a modern State such as ours there is little public sympathy with tax evasion, of which there is a fair amount, as there is a fair amount of defrauding of social security. None the less, the Government have been extremely unwise to introduce the provision in this way, although there have been substantial amendments and safeguards provided.

Is the remedy worse than the evil? In my experience in the law, those whom these Draconian measures are designed to track down are often the very people who escape. If there is a provision that one can invade a person's house to acquire papers and so on in order to prove a certain case, the major swindler will take care that such evidence is not there. When the Conservative Government in 1972 introduced the powers of the VAT men to search houses and so on, assurances were given to the House that those powers would be used only in extreme cases to catch the big fish. In practice, this has not been so. As I understand it from the complaints which I have received and heard of, those powers have in practice been fairly widely used on what one may describe as small fish.

Will there not be unnecessary pressure for greater powers of investigation from people with different kinds of social and political motivation? I have already adverted to the fact that, principally from the Opposition, there has been great pressure recently for powers to catch those who swindle our social security system, and that pressure is perfectly understandable. Yet the very people who press for those powers are the ones who object to them when we come to consider investigatory powers to catch tax evaders.

We have often heard bitter complaint from the Government side about social security snoopers. Why, it is said, should people who are benefiting from social security be subjected to snooping? That argument has been heard many times, principally from the Government side.

The truth is that the House ought to consider, not in a money Bill, the balance between private rights—a man's home being his castle, after all—and the evil which the powers are intended to remedy. The Government would be wise to with- draw this provision and consider it far more maturely.

At the Bar, I have always believed that there is much to be said for the rule which prevents a spouse being a compellable witness against the other spouse. The preservation of family life and the unity of the family, in my view, is infinitely more important than, for instance, tracing the odd revenue fraud or the odd social security fraud. All these things have to be kept in balance.

Will the Government tell us what has been the result of the additional powers given to the VAT inspectors? What have the powers to search houses resulted in? In how many cases has there been such an investigation, how many have resulted in substantial recovery of money, how many have resulted in prosecution, and how many have proved fruitless?

That is only one aspect of the case, for one does not see the effect on family life. A man may be a perfectly decent family man yet still engage in some kind of tax fiddle. One does not see the other side of the coin. The Treasury ought to give figures so that the House may consider this matter.

I cannot understand why the Government object to an annual report on the way the powers are used. There should be an annual report to the House on all these matters. Moreover, if these powers are to be introduced, they should be limited. Why should they be extended to the weekend and the hours of darkness? Has it been found necessary, for example, in VAT investigation? It is well known that police officers will often execute a warrant late at night or even at dawn, but there are obvious reasons there, and those reasons do not seem to me to be relevant or to apply to the kind of circumstance envisaged here. A substantial safeguard would be created if a police officer had to accompany the Inland Revenue inspector.

5.0 p.m.

The provisions are ill-considered. We have no idea what the suspected tax-evasion is. We have no idea what sums are involved to cause the Government to put forward this proposal. Why is it necessary now when it was not necessary before? The Government must explain that before they introduce such an amendment to a schedule of a money bill. There is little public sympathy for tax evaders. But there is a heavy onus on the Government to show why the provision is necessary.

Mr. George Younger (Ayr)

There are many very objectionable aspects of a provision that enables a person's house to be entered on suspicion that it contains evidence of tax fraud. But I shall concentrate on only one issue, which was not properly covered in our debates upstairs. Even if I accepted that these powers were necessary, accepted the methods that the Government are suggesting, and accepted that citizens must recognise the obligation to open their houses on demand to tax officers who believe there might be evidence of tax fraud on the premises, I should first have to be satisfied that there was some overriding public need. I should have to be satisfied that this form of action was at least almost the only method of obtaining essential information for the Revenue.

The hon. and learned Member for Montgomery (Mr. Hopson) asked whether the remedy was worse than the evil itself. The trouble is that we have never been told what the evil is. The Government have not said that the provision will put right a substantial number of cases. The Financial Secretary said that only a small number of cases would be affected. If there is only a handful of cases, he could, if he wanted, tell us exactly how many. He could tell us how many cases his officials know about, how many could have been caught if such powers already existed and how much benefit would have been obtained. I accept that if there are thousands of cases the Minister would not know the details. But if there are only a handful, he and his officials would be able to say that they could have caught particular individuals had they had this power.

Before we pass anything as sweeping as this provision, we must be told something about the cases and the need for it. Are large sums of money being denied to the Revenue which could be brought in if a tax officer were able to walk into private premises? Is it worth creating all this concern? I accept that it is worth it if there are large sums of money involved and if there is a terrific amount of evasion. If, in future, that is proved to he so, the Chief Secretary will be shown to have been talking nonsense when he said that there was only a handful of cases. Perhaps that handful of cases involves vast sums of money, but, if so, the Minister should know exactly what is involved.

We could be criticised if we let the measure go by without a shred of evidence apart from vague generalisations. I hope that the Minister will tell us about the mounting evidence of fraud due purely to the fact that people can keep things in their homes which no one can get out. The Minister has not made his case. I hope that he will not shelter behind the defence that he cannot be expected to quote individual cases. I ask not for names or amounts, but for an explanation of what this difficult measure is meant to cure. We must know that before we accept it.

It is no use the Minister saying that he does not believe that the powers will ever be used unreasonably, or that he does not think that the members of the Inland Revenue Board will give permission to act unreasonably. The Minister will not be in his present post for long enough for that undertaking to be meaningful. He has no control over future members of the board. Although he would be innocent of the charge, if the power were abused, he could find coals of fire being heaped on his head because he was the Minister who assured the House that the provision was an innocent method of catching a few tax frauds.

The provisions could be used maliciously and wrongly and they could be easily extended. It is only worth introducing this power if we are satisfied that it will be of overriding public benefit. Only then would it be worth endangering the sanctity of homes, worrying people unnecessarily and introducing all this paraphernalia. If the Minister cannot tell us that, we should not agree to the amendment.

Mr. Peter Rees (Dover and Deal)

Even after the considerable amendments that have been extracted from the Government through the efforts of my hon. Friends and myself in Committee, Schedule 6 contains some of the least attractive provisions to be found in the statute book. The least attractive provision in the schedule is Section 208. If these provisions had been introduced on their own in some other field, it would have been only after the most prolonged and searching debate.

I have no doubt that the Chief Secretary will remind us that we spent 84 hours in Committee. I remind him and the House that of those 84 hours barely four or five were devoted to Schedule 6. It is nothing short of a public scandal that such measures, which are of profound constitutional significance, should be lost in a schedule of provisions at the end of a long and complex Finance Bill. They deserve separate debate and I hope that the House of Lords will consider them separately from the financial provisions which form the core of the Bill. These are matters that affect the liberty, the privilege and the property of the subject and the Government have no business to palm them off on the House as an unimportant schedule to the Bill.

It is a commentary on the whole conduct of the Government that there has been no time between the conclusion of the Committee stage and the printing of the Bill with its amendments for outside interests to voice their concern about the scope of the provisions and to weigh the efficacy of the amendments that we have extracted from the Government. Against that background, it is right for all of us to come back again to the question that hon. Members have asked on previous occasions—what case has been made out to justify these provisions?

The Chief Secretary has fobbed us off with sweeping and vague generalisations. I have received no satisfactory answer to my request to him to tell us what evidence he is prepared to put before the House that evasion is on the increase. He may have recourse to the interesting public pronouncements of Mr. Plant. I have no doubt that in making them Mr. Plant is actuated by a high sense of public duty. He is the secretary of what he chooses to describe, perhaps not inappropriately, as an old and well-established craft union, but although he is not trammelled by the same official constraints as those by which the Chief Secretary may feel himself limited, he has been unable to produce any hard evidence of an increase in evasion.

I do not think that I am breaking any confidences when I say that I wrote to Mr. Plant and received a courteous reply from a Mr. Christopher in his absence, saying that one had only to use the evidence of one's eyes. What kind of case is that? If that is the case on which the Chief Secretary relies as justification for these odious measures, one almost suspects that, perhaps feeling a little bruised and uncertain after his encounters with the Tribune Group and the TUC, the Chancellor of the Exchequer may be looking for a union to sponsor him next time round. Maybe he will turn to the Inland Revenue Staff Federation. Perhaps that union, like NUPE or COHSE, has set him a short essay, saying "Write not less than 1,000 words on another way of extracting howls of anguish from another body of taxpayers. Candidates are required to cover both sides of the paper." Presumably the outcome is the schedule. No doubt the Chief Secretary will tell us whether his right hon. Friend has had a hand in all this.

I have a second question to which I hope I shall receive a precise answer. With his grasp of all fiscal matters, the right hon. Gentleman is capable if he chooses of giving very precise answers, but in other situations he retires behind a cloud of generalities. I suspect that that will be the tactic he employs now. If he feels a little coy about giving an answer, perhaps we shall hear from the Solicitor-General, who, if I may say so without sounding patronising, made interesting if slightly uninformed interventions in our debates upstairs. I well understand his difficulties. He is trying to advise the Government on a mass of controversial, ill-digested legislation. I wish that he had been more closely involved in our debates earlier. Let us hope that he or the right hon. Gentleman will be able to tell us wherein the existing powers given to the Commissioners of Inland Revenue by the Taxes Management Act, which has been in force for many years, have suddenly proved inadequate under the present Chancellor.

The Commissioners can request a body of appeal commissioners to precept documents, call witnesses, raise assessments and ask the taxpayer to displace not only the basis of the assessment but the quantum. Why suddenly, during the right hon. Gentleman's tenure of his distinguished office, should the Inland Revenue find itself unable to cope with this unquantified increase in evasion?

Let us look again at the odious provisions of the schedule. They deserve the most careful, minute and rigorous scrutiny. The first enables the Revenue to extract documents from a taxpayer and his family. Because many hon, Members were not privileged to take part in our debates in the early hours of this morning, I remind the House and the public that the Government are not even disposed to protect from the inquisitorial methods of the Revenue children under the age of 16. We had a very modest amendment to provide that protection, but the Chief Secretary, in the bland and genial way that he can so often adopt when putting forward the most unattractive of cases, said that it was right and proper that the Revenue should be entitled to pry into the bank books and savings books of children under 16.

Mr. Graham Page

Their piggy banks.

5.15 p.m.

Mr. Rees

Indeed. This is a most disreputable and unattractive course of action. Even the widow of a taxpayer who has remarried may be subject within six years of his death to harassment by the Inland Revenue. Is this the kind of measure we want to see put on the statute book?

The next provision extends the attentions of the Inland Revenue to the papers of a tax accountant. I need hardly remind the House that one slip by a tax accountant, even unconnected with the affairs of the taxpayer which the Revenue have in their sights, can expose him and all his papers to the Revenue's intrusive eyes. The protection of professional privilege, which we debated rather cursorily last night, will prove illusory in its scope. I do not wish to cover that ground again, because the Chief Secretary and the Solicitor-General have promised to receive representations from the professional bodies, which are acutely concerned about these provisions.

But it is fair to ask why these bodies should have to make their representations now. The provisions are not concerned with rates of tax. There could be no abuse as a result of advance publication. Why should not the Chief Secretary and the Solicitor-General have canvassed the professional bodies' opinions more fully before introducing these measures if they had any doubts about them?

Why should not the provisions be introduced by a special Bill to amend the Taxes Management Act? That could be done at any time, perhaps in the autumn, without affecting the smooth flow of the Government's legislative programme. The Patronage Secretary probably would not welcome the introduction of another Bill, but the liberty of the subject takes precedence over his momentary anguish and that of the Leader of the House. They have shown themselves remarkably unaware of the basic principles of the conduct of parliamentary business.

I come to the final provision, now to be entitled Clause 20C, which equips the Inland Revenue with powers which can be paralleled only in the criminal law, under which the police can apply for a search warrant. The Chief Secretary will say that there is a fair analogy with the criminal law because a tax avoider or evader—as we discovered last night, the terms can sometimes become a little blurred in debate—is no better than a criminal and should be exposed to the full rigour of the law. He will say that the Inland Revenue, like the Customs and Excise and police, should therefore be entitled to break in and ravage his possessions.

There is one essential difference that appears to have escaped the Chief Secretary's attention. Drawing on such limited experience as I can, and on the experience of my hon. Friends who practise in this field, I remind the House that where a search warrant is issued the police can in most cases point to a crime having been committed. That is rarely so in taxation matters. The Revenue will be bound to act on suspicion. I suspect that, through the sinisterly named Special Offices, the Revenue will undertake a series of spot checks from time to time.

The Chief Secretary will say that that is impossible, that the Inland Revenue does not operate like that because its staff are gentlemen of integrity and public spirit. I yield to no one in my admiration of the Inland Revenue as an administrative machine, but in any machine there will always be people who are a little over-zealous, a little over-conscientious, people whose judgment is a little at fault. They will be tempted to abuse these powers.

The Chief Secretary will say "Of course, but there is the judicial safeguard. That is what the Opposition asked for, and that is what we have given them." I should like to tell the right hon. Gentleman of the limitations of that judicial safeguard. If I overstate the case, the Solicitor-General will seek to put me right and advise the House, as it is his privilege and duty to do.

As I understand it, the procedure is that the Inland Revenue inspectors, authorised, it may be, by the board—I know that the right hon. Gentleman will say that that is an additional safeguard, but the members of the Inland Revenue Board are concerned with the whole range of fiscal problems and the amount of attention that they will be able to give to this sort of application will, I suspect, be rather limited—will go to the appropriate judge, and say "We wish to investigate the affairs of Mr. B. We want to break into his house. We want a warrant. We suspect that many incriminating documents are there."

What sort of prima facie case will they deploy in that situation? How will the judge be able to resist their blandishments? Will the taxpayer have notice? Will he have a chance to be present and to be represented? Will he have a chance to deploy his case?

As I read the provisions—I hope that my eye is not blurred by last night's debates—the Inland Revenue will have to make out only a prima facie case. It will have to convince the judge that a Revenue fraud has been committed and that its representatives should break in and abstract all the documents. Some judges may take a stricter and more censorious view of these applications than others. Time alone will show.

I am not pretending that the safeguard is illusory. It would be quite wrong to do so as I was one of those who pressed the right hon. Gentleman to introduce it. However, it is ridiculous to pretend that this is a complete answer to all the fears that are felt by my right hon. and hon. Friends.

I believe that these provisions should be entirely eliminated from the Bill, but it must be assumed that there are not enough Labour Members to support that proposition. If we had been concerned with police powers, Labour Members would have been flocking into the Chamber to press their point of view on the Home Secretary, but we can assume that they will be noticeably absent from the opposition Lobby on this occasion, and I hope that my right hon. and learned Friend will be pressing this matter to a Division.

I suggest that one or two modest measures are introduced to humanise these otherwise odious provisions. First, drawing from a Bill that has only recently received the scrutiny of the House, I believe that there should be an independent complaints tribunal so that oppressive action by the Inland Revenue can be scrutinised with the same calm judicial care as misdemeanours by the police. Like the hon. and learned Member for Montgomery (Mr. Hooson), I believe that the Chancellor should be required annually to lay before the House a report on the operation of these provisions so that every case where they have been invoked can be scrutinised and, if need be, tested in the Chamber.

Finally, I believe that any taxpayer who has been found to have been treated oppressively and who has ultimately cleared his name should have the right to compensation for the expense and trouble to which he has been put. Surely that is the least we can expect from the Government on these measures.

I have a regard for the Inland Revenue machine, but I believe that these measures will probably not yield a significant amount of tax and, if used extensively, will weaken such sympathy and cooperation as still remains between the taxpayer, his professional adviser and the Inland Revenue machine. The Chief Secretary may say that these powers are reproduced in the fiscal legislation of many civilised countries in the world. I would reply that in the countries where perhaps one can find a faint echo of them there is probably a system of self-assessment by the taxpayer.

If the right hon. Gentleman says that we shall go over to such a system, so be it, but this is not the Bill in which such powers should be introduced. If they are to be introduced, we should have a far-reaching debate at a later stage on a new Taxes Management Bill when the implications of such a move could be discussed. However, if the Inland Revenue wishes to retain the power to assess the taxpayer, it would be well advised to press the right hon. Gentleman to withdraw these provisions. I can say with utter confidence that at the end of the day they will weaken the co-operation that the Inland Revenue presently enjoys. At the end of the day they will operate to the disadvantage of the taxpayer, his advisers and the Inland Revenue's tax gatherers.

It is right and proper for us to speculate from whose disordered imagination these provisions sprang. They cannot be attributed to the Chief Secretary, because we know that he is a man of broad and humane sympathies, a man who has been in private practice as an accountant. No doubt he will soon be returning to private practice. It is not for me to come between the right hon. Gentleman and my hon. Friend the Member for Macclesfield (Mr. Winterton) and to speculate on the sort of advice he will be giving to his clients. I have no doubt that it will be highly reputable, creditable and worth while. No doubt he will be highly rewarded for it. Therefore, we let out the Chief Secretary.

Obviously, the Solicitor-General cannot be responsible as this is not his sphere of law. Responsibility cannot lie with any other junior Ministers because they are not present to lend their moral support. The finger of suspicion points to the Chancellor of the Exchequer.

The hallmarks of the Chancellor as a parliamentary performer are those of a blusterer and a bully. These provisions bear the stamp of the Chancellor of the Exchequer. He has been ever ready to abuse his high office, to abuse the considerable powers with which he has been entrusted on our behalf. He has been ready to make the general body of taxpayers squeak with anguish. He has a disreputable and discreditable record. I believe that at the end of the day he will pass down in history as one of the least attractive Chancellors we have ever had to endure.

Mr. Ian Gow (Eastbourne)

During our debates in Committee, the Chief Secretary justified this part of the schedule by saying The fact is, and I will come back to this point, that what we are talking about in terms of the powers that are being sought for the Inland Revenue … will only be used for the hard core of tax evaders on a large scale. It may be thought significant that he then said: I know it is not written into the Bill…It is inherent in it. The provisions that the amendment seeks to remove contain nothing to suggest that the powers to enter premises forcibly can be used only for what the right hon. Gentleman described in Committee as the hard core of tax evaders. Later in his speech in Committee the right hon. Gentleman said: The fact is, however, that if we exclude the power to search the private home, in the case of these tax evaders".—[Official Report, Standing Committee E, 15th June 1976, c. 794–796.] That was the theme to which he returned constantly, but there is no mention of hard core-tax evaders in the subsection.

It is right that the House should direct Its attention in the most rigorous way to the manner in which these powers can be exercised in conditions that will be much less favourable to the tax inspector than under the benign influence of the Chief Secretary.

As my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) said, the Chief Secretary is not with us for ever. That also applies to the Solicitor-General. When the courts interpret powers conferred by Parliament, they interpret strictly the wording of the Act. Therefore, it is no use the Chief Secretary in Committee, or even later this afternoon, seeking to give assurances about the way in which judicial authority will be exercised, as defined in the subsection which we seek to remove. It is no use the right hon. Gentleman giving any assurances that the provisions contained in the subsection will be exercised by judicial authority. It is not open to the Executive to give any directions as to how the judiciary will exercise powers conferred upon it by statute.

5.30 p.m.

There is one point of supreme importance contained in the provisions that the amendment seeks to remove. In this provision there is power for issue of a warrant by the appropriate judicial authority to authorise an officer of the Board to enter premises. That warrant can be exercised by day or by night. It can even be exercised on the Sabbath, but all the arguments deployed in Committee on that point fell on deaf ears.

What will happen when the first warrant is issued, since it must be acted upon within 14 days? I am sure that the first occasion on which this happens will be treated by the media as a test case of the utmost importance. There will be a knock at the door or a ring at the bell of a suburban house, or—perhaps at a not so urban house—

The Chief Secretary to the Treasury (Mr. Joel Barnett)

In Eastbourne?

Mr. Gow

It could be in Eastbourne. What will happen? The person whose door is knocked upon in the middle of the night is likely to say "Go to hell"a perfectly respectable attitude. The case will become a great cause célèbre because the wretched officer of the Board of Inland Revenue, clothed with the authority given him by the Chief Secretary, will arrive in the most unpropitious circumstances at the citizen's door and is likely to be surrounded by all the attentions of the media.

What will be the result? The growing tendency of the citizen not to co-operate with an unloved and unlovable Executive will be given more fuel. The increasing reluctance of the citizen to co-operate with the tax gatherers will be given added impetus because the media will be alerted. The television cameras will be there outside the door of No. 10 Joel Barnettstrasse. Great attention will be paid to this matter in the Press, on the radio and on television. The Inland Revenue, which we are seeking to clothe with greater respect in terms of the citizen, will be brought into still further disrepute.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

It is surely unlikely to be No. 10 Joel Barnettstrasse because that is likely to be a council house which remains in public ownership. They are bound to pick on a council house which has been sold by the next Tory Government.

Mr. Gow

I am sure that my hon. Friend can develop that point if he is called to speak in this discussion. The point is of great importance because the evil, if there is one, that we seek to remedy—namely, the curbing of what was described by the Chief Secretary as the hard-core tax evaders on a large scale—is already covered by various powers. The possibility of abusing this new power and of driving yet another wedge between Government and governed, with the prospect of increasing the mistrust between taxpayer and tax gatherer, is a serious matter indeed, and very serious at this juncture.

It is no good the Government saying "These powers will be used in only a few cases." They already possess powers where they suspect that a fraud is being committed by a taxpayer. Therefore, there is no need to confer on the Government these additional powers at a time when there is no evidence that they are needed to enforce the tax laws.

For these reasons, I hope that, even at this comparatively late stage, the Chief Secretary will recognise that he is doing a disservice to the cause of tax collection and the feeling of trust between the Inland Revenue and the taxpayer, and is aiming another blow at the confidence that should exist between people and Parliament.

Mr. Joel Barnett

I hope that I may be forgiven if I say, in my customary, benign and moderate way, that I can find nothing in the Bill that has anything to do with what Opposition Members have been saying for the past hour or so. When I hear words such as "evil", "snoopers", "invasion of freedom", "odious provisions", and all the rest of it, I recall my moderate words in the House last night to the effect that some Members of the Opposition were being somewhat naïve.

These provisions are dealing with suspicion of a criminal offence—in other words, tax evasion. It has been said that there could be great abuse of these provisions by some inspectors of taxes. It has been said that as Chief Secretary I shall not be here for ever, and I happily go along with that view. But it does not matter who will be here as Chief Secretary or who will be the inspector of taxes concerned, because we have built into the schedule very adequate safeguards.

It is not a question of some inspector of taxes being able to walk, as has been suggested, into people's premises and to ask for documents as they think fit. That is not the situation and is not the schedule with which we are now dealing. There are considerable safeguards built into the schedule to a much greater degree than in any other comparable legislation, including powers of search and entry. That includes legislation put on the statute book in earlier years by Conservative Governments when the right hon. and learned Member for Surrey, East (Sir G. Howe) was a Law Officer.

I hope that I may be forgiven for having some strong feelings about this matter when it is implied that I personally am putting these allegedly obnoxious provisions on the statute book. At earlier stages I heard arguments directed to making out a serious case and I sought to ensure that adequate safeguards were put into the schedule. As the Bill was originally drafted, one of the safeguards involved an inspector of taxes being required to obtain a search warrant from a magistrate. The criticism was levelled that that safeguard was inadequate. In general magistrates retain the power to grant search warrants in many other cases. I recognised the concern over this matter and tabled a provision to ensure that the safeguard was considerably strengthened. We sought to provide that before an inspector of taxes could obtain a search warrant, he had to obtain the authority of a circuit judge in England and of the appropriate authority in Scotland and Northern Ireland.

The hon. and learned Member for Dover and Deal (Mr. Rees) appeared to be implying that the circuit judges would issue search warrants at the behest of any odd inspector of taxes who said "I think that there are some documents in Joe Bloggs' house at No. 10 Joe Bloggstrasse." It is a nonsense to suggest that a circuit judge will issue a search warrant to any inspector of taxes who comes along to him in these circumstances. That is nothing like the situation. Everything that right hon. and hon. Gentlemen opposite have been saying has been a travesty of the truth. The circuit judge, under this provision, will have to be satisfied by the inspector of taxes, who will be on oath, that there is reasonable ground for suspecting an offence involving any form of fraud relating to tax.

I do not know why the hon. and learned Member for Dover and Deal should suggest that there is a hit and miss attitude here. It is ridiculous to assume that a circuit judge will say to any inspector of taxes "You want a search warrant? All right, here it is." That is asking us to believe that circuit judges behave in a way which is somewhat unlike the way in which I would expect them to behave. Surely when the hon. and learned Gentleman appears before circuit judges in his legal capacity—

Mr. Peter Rees

I do not think that I have ever appeared before a circuit judge. Could the Chief Secretary tell us what standard of proof will be required for a prima facie case? Perhaps if he would direct his mind to that it would enable him to make a more constructive contribution to our debate.

Mr. Barnett

I try very hard not to get annoyed by the hon. and learned Gentleman's rhetoric, but sometimes it is very difficult. I accept that he has never appeared before a circuit judge and I understand now why he is not too well aware of a circuit judge's work. He can be assured that circuit judges will do a first-class job in these matters. He asks me what evidence they will require. They will require reasonable evidence for suspecting that tax evasion has been committed. The circuit judge is the man who will decide whether there is reasonable evidence, not the odd inspector of taxes. The circuit judge is a very responsible member of the legal profession, and the decision is up to him. Therefore, it is a nonsense for hon. Members opposite to talk about inspectors of taxes just walking into someone's home.

When an inspector of taxes does go to someone's home he will have obtained a search warrant from the circuit judge, and in addition he will have obtained approval from two members of the Board of the Inland Revenue Commissioners in London. That is a considerable additional safeguard. On top of that, the premises which can be searched are limited to those on which there is reasonable grounds for suspecting that evidence will be found.

Then again, only in the presence of a barrister or solicitor, will a search warrant be issued for the seizure of documents. Where the claim for professional privilege can be made, that claim will stand. If there is any doubt in that respect, I have given an undertaking that I will discuss the matter further with the Solicitor-General and the profession. There is another safeguard in the provision which insists that lists shall be made of anything which is seized in the search.

I urge the House to put these powers into perspective and to abjure these exaggerated expressions which hon. Gentlemen opposite like to use from time to time.

Mr. Gow

Would the Chief Secretary tell the House to what extent he envisages that officers of the Board of the Inland Revenue will be given instructions in future about breaking into premises in accordance with the provisions of this Schedule?

5.45 p.m.

Mr. Barnett

They will be given firm instructions, as they are about any legislation. Hon. Gentlemen opposite misunderstand the way in which inspectors of taxes work. If they think that they will go to the commissioners of the board, obtain approval and then go to a circuit judge on some trivial tax evasion offence, they are very much mistaken. Almost entirely —in fact entirely—they will operate in this way only in cases of suspected major frauds. I have been asked how they will know that this situation exists. Anyone with experience about the way in which these things work will know that the inspectors frequently have information which leads them to believe that there are reasonable grounds for suspecting that there has been a substantial evasion of tax.

Mr. Graham Page

Would the Chief Secretary deal with the example which I gave? If the inspector thinks that there are reasonable grounds for believing that there are documents in the hands of an employee in the employee's house, in a case where there is suspicion that the employer is being fraudulent in his tax affairs, will the judicial authority be obliged to grant a warrant?

Mr. Barnett

Yes. But the circuit judge would have to be satisfied that there were documents on those premises and that there was reasonable suspicion of fraud. In these circumstances it would not be unreasonable for the circuit judge to give the warrant. The right hon. Gentleman also asks about the "terrible powers" to cross-examine widows, women and children. I admit that I might be getting a bit tired, but perhaps he could point out to me some time where in the Bill there is any provision for an inspector of taxes to do that. As I read the schedule there is no such power.

Mr. Graham Page

This is a very important point. There are two other provisions in this schedule and, as I read it, once an inspector uses the powers to enter he can go on to use the powers to call for documents and to examine the people who happen to be in the house.

Mr. Barnett

With respect, the right hon. Gentleman has not answered my question. There is nothing in this provision as I read it which gives the Inland Revenue the power to interrogate or cross-examine anybody on the premises. The inspectors do not have any such powers under the search warrant which would be issued.

Mr. Graham Page

I am sorry to interrupt the Chief Secretary again, but this is most important. If the inspector enters under these powers, can he not carry out the powers given to him earlier in this schedule? It seems to me that he has complete power to cross-examine anyone on the premises.

Mr. Barnett

The right hon. Gentleman is very good on these matters and very assiduous in his reading. In fact I think he must have all these Bills under his pillow at night. But I wish he would point out to me anywhere in the schedule where such a power is given. I am sure he did not get this out of the Bill. Perhaps it is coming from on high. There is no power to question people anywhere in Schedule 6. I emphasise that again. One always knows when the right hon. Gentleman is on a bad point. If he is on a good point he quotes every word. The fact that he has not done so in this case indicates that he is on a bad point.

Mr. Younger

The Chief Secretary has unearthed a very important point. Will he confirm that when an officer enters a house under these provisions he will not be permitted to ask any other person —a wife or a child, for example—to produce documents and will not be allowed to ask them where the documents are or to interrogate them in any way? Is that what he is saying?

Mr. Barnett

I am surprised at the hon. Gentleman. We sat through 84 hours of Committee stage during which we read this schedule upside down and inside out at all hours of the night and morning. Any reading of that schedule would indicate that there are no powers to interrogate. We are talking about powers of search and entry to obtain documents. Nothing has been unearthed which was not already there. I am astonished that the hon. Gentleman should say that something new has been unearthed.

Mr. Ivan Lawrence (Burton)

What is there to stop an income tax investigator asking questions anywhere of anybody about any possible tax fraud, provided that he warns them that what he may say may be taken down and used in evidence?

Mr. Barnett

The hon. Gentleman is a member of the legal profession. He should know that that has nothing to do with this schedule. An inspector of taxes can ask all kinds of questions on all kinds of other occasions, but there is no obligation upon anyone to answer him. For the last few months I have been asking the Opposition to explain what they have been saying, but I have had no answers.

Mr. Lawrence

The point is that there does not have to be any specific power under the schedule to entitle an inspector of taxes to ask questions arising from documents that he has found. The power already exists and therefore is dangerous because it is now to be used in respect of documents being found in consequence of this schedule.

Mr. Barnett

The hon. Gentleman should have a word with his Front Bench about this matter. It is absurd for him to suggest that all the other powers elsewhere in our tax legislation should be removed from the Inland Revenue and then to expect it properly to fulfil its duties. The hon. Gentleman is saying that the inspector of taxes obtains documents and later may ask questions related to them. Is he suggesting that an inspector of taxes, having secured the special authority to obtain the documents in a case of suspected tax fraud, should not be able to ask the questions he wants to ask? Does the hon. Gentleman suggest that that should be deleted from our tax legislation? Surely he is not being serious. We are here dealing only with the search and entry powers in the case of suspected fraud. We have written considerable safeguards into the Bill. I find it remarkable that the Opposition, particularly the right hon. and learned Member for Surrey, East with his knowledge and experience in these matters, should want to remove that from the Bill.

Mr. Hooson

The Chief Secretary has dealt with the minor point but not with the major point. Any invasion of privacy is a serious matter. No one would grant that unless it were absolutely necesasry in the public interest. What he has not established or given any grounds for establishing is that it is necessary in the public interest.

Mr. Barnett

I accept that invasion of privacy is a very serious matter. However, powers of search and entry are scattered throughout our legislation without anything like the safeguards which are contained in this Bill. In most other cases search warrants are issued on the basis of a magistrate's warrant. They are issued to all kinds of different people —for example, on social security matters for very tiny sums of money much smaller than the kind of evasion we are talking about here—

Mr. Peter Rees

Mr. Deevy?

Mr. Barnett

I note that name and I am delighted to see that that man is in gaol. I hope that arising out of this debate the hon. and learned Gentleman will go along with me in seeing where there are similar tax frauds such people will also end up in gaol.

We need these powers because in certain cases it is very difficult, if not impossible, for inspectors of taxes to be able to follow through their suspicions and to obtain the necessary documents. I have already said that the Conservatives are being a little more than naïve in these matters. Anyone who has had anything to do with tax matters will know that there are circumstances of substantial tax evasion where documents exist but which are not available to the inspector of taxes.

Mr. Hooson

There must have been pressure from within the Inland Revenue for this power. That pressure must have been supported by evidence that in certain cases the power would have helped to solve those cases. How many such cases were there?

Mr. Barnett

I indicated in Committee that after discussions with the Revenue our understanding was that in the main there would be a comparatively small number of cases in which substantial tax amounts were being evaded. On the other hand, because the powers will exist it is likely that taxpayers will know that the documents will have to be made available to the Revenue in certain circumstances, and that will help the Revenue to administer the tax and to collect the proper payment that is due.

I am as concerned as anyone not to introduce additional legislation to add to the invasion of the privacy of the individual. Equally, I want to ensure that these provisions will not be abused. With the substantial safeguards that we have written into the Bill, I am satisfied that there will not be abuses, and I therefore advise my hon. Friends to resist the amendment.

Mr. Ridley

I wish that I had a better knowledge of the history of the French Revolution. There must have been someone as charming and delightful as the Chief Secretary who played a prominent part in those events. I would not dream of mentioning names, but we are now at 15th July and today five guillotines have been erected in Parliament Square. The tumbrels will be rolling soon. Now we are discussing the knock on the door.

6.0 p.m.

Mr. Peter Rees

Perhaps the exact historical parallel is with the Abbé Sièyes who, when asked what happened to him in the Revolution, said "I survived". I suspect that the Chief Secretary has the same capacity for survival.

Mr. Ridley

My hon. and learned Friend has the advantage over me in historical matters. I am sure that there was someone like the Chief Secretary who said to the aristocrats as they rolled up in their tumbrels to the guillotine that there were adequate safeguards and that they were being naïve. That is a French word, which makes it all the more horrifically likely to be true. The Chief Secretary says that my hon. Friends are being naïve and that there are adequate safeguards, but in a few moments' time the House will divide and he will get his measure on the statute book.

The Chief Secretary's answer is inadequate. I am not a lawyer, but surely there are already powers of search. It is possible for the police to obtain from a magistrate a warrant to search on production of evidence of fraud. When I was in the Department of Trade and Industry I looked at these procedures because when the company law inspectors suspected a company fraud the matter had to be put in the hands of the police, the police made an investigation, and it was so long before a search warrant was issued that the bird had flown.

That does not apply in this case. If a serious tax fraud is suspected there is no reason why the tax inspector should not go with the police and obtain a search warrant. Why are additional powers necessary? I suppose it depends on what we are looking for. The Chief Secretary said that we are looking for major, hard-core tax evaders. But who are these people who are so different that they cannot be treated under the existing powers? I suspect that they are not quite what we shall be looking for.

The part of the schedule which we propose to omit does not mention "hard-core" or "large-scale". There is no reason why the war widow who has failed to declare £10 investment income should not be investigated under these powers. There is no reason why the moonlight painter who has a hundred quid in grubby notes stuffed under the dresser should not be investigated. Although he is not hard-core and not operating on a large scale he comes within the schedule.

The judge will be bound to grant a search warrant if the inspector says that he has evidence that a certain war widow has £20 investment income which she has not declared and that he wishes to search her house to prove it. It is not for the judge to say whether that amount is worth looking for or whether she is the sort of person to whom the provision should apply. He has to have reasonable certainty that the evidence is sound, not that a large amount of money is involved.

I suspect that there is no intention to operate the provision in that way. The Chief Secretary says that he will not stay long in his job and that he is longing to get out of it. We can help him in that worthy ambition as soon as he puts the matter in a wider context. I suspect that he does not intend to use the provision in that way. How wrong that is. We are told that it is a crime to evade tax. Yesterday the hon. Member for Colne Valley (Mr. Wainwright) said that the taxpayer's morale goes up every time a tax evader is caught. That applies only to the big ones. What about the moonlight painters? I know a fisherman who has never paid any tax.

Mr. Gow

What about the painters?

Mr. Ridley

That is a little unkind of my hon. Friend, especially as I have spent most of the moonlight hours in the House.

Will the schedule be used in a politically motivated way? That has always been my fear. The tax inspectors will go for some notorious character not because they need to find the evidence but because it will be a politically motivated public sacrifice. It will be like the French Revolution. Someone will be taken to the guillotine for political reasons. He may be connected with a famous company whose affairs have been recently in the news, or he may be a wart on the face of private enterprise. The ordinary person who has made a fraudulent tax return and has evaded paying his taxes is of no interest to the Chief Secretary.

A morality that goes for the big but not for the small tax evaders is shocking. It is straightforward political bias. What I find most offensive is the Chief Secretary's remark that the Government were not looking for ordinary people and would not use the powers to chase ordinary working people. Why not? Why not search their houses? If it is necessary for big evaders, why is it not necessary for small evaders? Why not go down the whole of Joel Barnettstrasse knocking on every door to see who has been moonlighting, who has been doing two jobs and who has a few pound notes coming in from an evening job? If that is the mentality, it should apply to everyone. That is why that cannot be the mentality. We cannot search everyone's house, and it would be wrong to do so. We should reject that approach.

If the Chief Secretary means to reject that approach, I am with him. We cannot spend time checking to see whether every citizen in the land is being honest by breaking into and entering his house. It follows inexorably and properly in logic that if we cannot do that for every ordinary working man we should not do it for anyone, and we should not bend the law in a politically motivated direction, as the Chief Secretary, for all his blandness and charm, is trying to do.

In saying that there are adequate safeguards and that my hon. Friends have been naive, the Chief Secretary is trying to draw a curtain over one of the most iniquitous pieces of legislation that I have ever seen. It would be far better for him to say that he will withdraw this proposal. There is no doubt in my mind that the only people against whom this part of the schedule will be used are victims who, if caught, will provide spectacular news. It will not be used to enforce the payment of revenue by all citizens. It is a bad piece of biased legislation worthy of 14th July and the attitude of the French Revolution.

Mr. Nigel Lawson (Blaby)

I was grateful to the Chief Secretary for welcoming me to the Chamber at the beginning of his speech. I must confess that I would have been moved to speak even if he had not extended that welcome. This is a monstrous schedule. Our amendment seeks to reduce the monstrosity. The Chief Secretary made an astonishing speech. At no time was he able to produce any evidence to show that the powers he seeks are necessary. What he did—and this is interesting—was to say "We have written in these protections and safeguards." He went on in that vein for a long time, seeking the plaudits of the House.

Why are these safeguards, inadequate as they are, put forward? Such safeguards were not in the Bill originally. They are there only because of the pressures of Conservative Members. The Bill was introduced without any such safeguards or protections. The Chief Secretary has now admitted that they are essential. Having introduced the Bill without the safeguards he asks us to trust him with the schedule as it stands. That is impossible. The little good that there is in the schedule is there because of Opposition pressure. The right hon. Gentleman and his advisers—I do not exonerate them but I put the main blame, as is constitutionally proper, on the Chancellor and the Chief Secretary—have introduced something which is totally offensive and inexcusable and which even the Chief Secretary at his most bland has been unable to defend.

We have asked on many occasions for the evidence which would prove that the powers sought by the Government are needed. At no time have we had an answer. It is true that there are tax evaders who are not caught. We regret that. Whatever the state of legislation there will always be criminals of one sort or another who are not caught. Is legislation to become more and more Draconian and tyrannical until we reach the state when there is not a single criminal who is not caught? That is a nonsensical proposition.

The Chief Secretary suggested in Committee that he needed these powers to enable him to discover the evidence which would prove that the powers were needed. That was the circular nature of his argument. He said that it was because the Government did not have such powers that they had been unable to discover evidence which would prove that the powers were necessary. That shows the circularity of the right hon. Gentleman's reasoning. The Minister of State piloted through Committee yesterday—the Orders are on the Order Paper today—a number of double taxation agreements with Fiji, Romania, Spain and Sudan. All of these agreements have exchange-of-information clauses. The Minister of State has conceded that any information obtained under the powers of Schedule 6 as a result of tax inspectors breaking and entering into premises and seizing anything they find there may be exchanged with the authorities of those countries.

In Committee I pointed out that as recently as last year the Inland Revenue had conducted a management review. The review addressed itself to all of the problems confronting the Revenue. One such problem, quite properly, was that of evasion. The conclusion reached by the review was that what was needed was more fully trained inspectors, not more powers. The review stated that there was a shortage of fully-trained inspectors. That may be true. That is no excuse for taking powers of this kind which are an affront to all those of us who take pride in living in a free society.

6.15 p.m.

My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) raised the point of all those who would be covered by this legislation. We are all equal under the law and everyone is liable to be covered by it. It is no use the Chief Secretary saying that this legislation is meant for only a small number of hard-core tax evaders. If the power is there it could be used against anyone and no doubt will be, as we see the VAT powers being used against anyone. The VAT powers are used against those who could not be described as hard-core evaders in any sense. They are no "Mr. Bigs" or whatever. It will be the same with these powers, except worse because many more people are liable to pay income tax than are registered for VAT.

My hon. Friend the Member for Cirencester and Tewkesbury mentioned moonlighters. The hon. Member for Tottenham (Mr. Atkinson) told the Committee that on his estimate, and he is an important financial authority, there was £3,000 million worth of undeclared income a year involved in moonlighting. This is big stuff, far bigger than any of the so-called hard-core tax evaders. Here is something which will no doubt attract the attention of the Revenue. As I said in Committee, this legislation is a case of the gauleiters in pursuit of the moonlighters. Any idea that the ordinary citizen can relax and feel that he has no need to fear because there are only one or two nasty people, about whom they read in newspapers and the Chief Secretary has them on his little black list and will deal with them with these powers, does so without foundation. These are powers to break into a person's private home, to seize anything which the inspectors may find, and they are taken in respect of every taxpayer in the land—without a shred of evidence that they are necessary.

Mr. Peter Viggers (Gosport)

One always hesitates to take part in a Report stage debate when Members are speaking with all the sophistication and knowledge that they gained in Committee. There are, however, two points that need to be made. The first is that the schedule seems to be exceptionally badly drafted. At the moment it reads: If … there is reasonable ground for suspecting that an offence involving any form of fraud in connection with, or in relation to, tax has been committed on any premises, or that evidence of the commission of such an offence is to he found there That means that it is possible for an inspector to go to premises even if there is no evidence there but simply because he thinks that an offence has been committed on the premises, leaving no evidence. This is nothing more than prurience. What can be the purpose of the inspector's visiting premises where he suspects an offence has taken place if he has no reason to believe that there is any evidence of the offence remaining there? It is completely nonsensical, and deserves an answer.

The Government have been increasing taxation at an unprecedented rate. They have been tightening the screws so that many people are finding it almost impossible to pay taxation. They are being placed in a position in which they are tempted to try to avoid taxation. There is a narrow line between avoidance and evasion. The situation is so bad that we have reached the point where a Chancellor who threatened to soak the rich has tried to soak the war widows. With the help of one or two Government Back Benchers, the Conservative Party managed to relieve the war widow of some of her tax responsibility.

This is a weak Government, floundering about seeking ways of getting more tax into the net. It looks like a weak Government floundering about looking for help from a strong Executive. We are told that this provision is meant to attack hard-core tax evaders of a major nature. The Chief Secretary said just now "I think it will be used only in major cases." But that is not what the wording says. It does not say that it will be used only in major cases. It would be perfectly simple for an amendment to be made to the proposed subsection. If the Government wanted to use the provision only in major cases, they could simply add the word "major" in line 44, so that it would refer to "an offence involving any form of major fraud". But it does not say that. It refers to "any" offence. The result is that anyone can have his premises searched, subject to the safeguards that have been pointed out to us.

If it is major fraud that the Government are after, why do they not legislate accordingly? The Government ought to bear in mind that the really major fraudulent tax evaders will be people who are perfectly capable of looking after their own tax affairs. They will always be prepared for a Government inspector to come along and look at their papers. The really hard operators, the sophisticated operators whom the Government claim to be after, are capable not only of employing accountants to manage their affairs for them but also of having enough intelligence to employ accountants in the Channel Islands, where I believe they are exempt from the provisions of the clause.

As is so often the case, the Government are seeking to close a loophole. They are using as an excuse for closing it the exceptionally bad cases, and missing the real target. They are missing the narrow target for which they should be aiming and are in danger of bringing in legislation that will subject everyone to the possibility of entry.

The Minister may think that we are making a great deal out of this, but, as his hon. Friends, among others, pointed out in the debate on war widows, a great deal of anxiety is and can be caused to people by the very fear that their premises may be entered. It is not the sophisticated operators, the big hard-core tax evaders of a major nature, with whom we are concerned here. We are not too bothered about them. We should Like the Government to have appropriate powers to deal with them. They probably have them already. We are concerned about people who, in their ignorance and uncertainty are afraid of the powers the Government are now trying to obtain. These are the people we are trying to protect. They will benefit if the clause is deleted.

Dr. Alan Glyn (Windsor and Maidenhead)

This is a major incursion upon the rights of the individual. The Government have cited other instances in which similar powers may or may not exist, or powers which could be compared with what is sought here. But that is not the point. The point is that this is a major incursion, a change in the law which will, in effect, allow the breaking and entering of private premises for a particular purpose. It represents a very serious increase in the powers that the Government already possess in many other areas.

In order to justify the need for these powers, the Government ought to produce an absolutely cast-iron case. They ought to be able to say that they have evidence that unless they possess these powers they will be quite unable to catch a particular number of people who are believed to have committed major offences.

I am worried that the Chief Secretary was unable to say how many people he thought might be involved. He seemed to be saying that it was a few, but he was very vague. Is the number five, 50, 500 or 5,000 a year? These are the things we need to know. So far the information has not been supplied.

I should like to know how many people the Chief Secretary thinks he will catch in his net if these powers—even with the safeguards we have tried to put into them—are placed on the statute book. In other words, to what extent would this provision enable the Revenue to increase the number of cases of evasion brought against people?

But I am worried much more by two points already brought up, the first of them by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). He touched upon a cardinal point when he said that any new regulation or law must apply equally to all sections of the community and not just to one section. It must apply not only to the multi-millionaire but also to the moonlight worker or the person who is doing two jobs. It must apply universally.

The drafting of the clause enables inspectors to enter almost any premises, small or large, whatever the nature of the offence, small or large. But I genuinely believe that the clause is not being introduced for the purpose suggested. I believe that the purpose is much wider, and that the Government are looking much further ahead. I believe they are thinking in terms of a capital levy and various other measures, in relation to which an inspector may wish to enter people's houses in order to see whether they have any Rembrandts or Titians, and what is the nature of the furniture.

This is a major change in the law, and it ought first to be applied to everybody. If the safeguards that we managed to insert in the Committee stage are included, as undoubtedly they will be, the provision is still one that I do not regard as necessary. In fact, I believe it to be highly undesirable. In the wrong hands it could be very dangerous indeed in eating into the rights and privileges of the ordinary citizen who is living peacefully in his home, with no intention of committing fraud or anything else.

Mr. Bruce George (Walsall, South)

When I came into the Chamber one and a half hours ago I had no intention of speaking, for a number of reasons. One is that I believe the Finance Bill should be left to specialists. Another is that three weeks after I last criticised the Inland Revenue, I received a demand for £150. I am not suggesting that there is any correlation between criticism of that sort and being chased by the Inland Revenue, but certainly this experience has led me to show some hesitation in opening my mouth on such matters.

But, having listened to the debate for the last one and a half hours or so, it would appear that no group of criminals has had its case espoused with such eloquence and vehemence as I have heard during this period.

We are talking in some cases of people who have committed and are committing criminal acts. It has been said that this legislation, if it goes through, will be a major incursion on the rights of individuals. But surely one can be guilty in this House of having dual standards. We have read much recently in the newspapers about fraud committed by ordinary working people. Many Conservative Members have been falling over themselves in condemning ordinary working people, who are accused in many cases of defrauding the social services.

Mr. Lawson rose

Mr. George

I believe that anyone who defrauds social security deserves to be apprehended. I hope that such persons will receive a very stiff sentence, and not simply a fine. If the nature of the crime merits it, such people must be sent to gaol. Almost all hon. Members on both sides will agree with that. But I cannot accept that there should be one standard of treatment for people who defraud social security not of £30,000 but, often, of £10 or £20, and that they should be pursued with the utmost rigour of the law, but that in the case of full-scale fraud, where people have defrauded the State of millions of pounds—sums of money well in excess of anything stolen by the Great Train Robbers—we have to close our eyes.

6.30 p.m.

Mr. Lawson

The hon. Gentleman says that these powers are taken only in respect of criminals. That is not so. They are taken in respect of those who are suspected of crime, which is a very different matter.

As for the hon. Gentleman's reference to dual standards, in order to establish that he himself has no dual standards, does he suggest that these powers of breaking into and entering premises should be applied in the case of suspected illegal immigration?

Mr. George

The hon. Member talks of "breaking and entering". I am not aware that this legislation will allow hordes of policemen or income tax inspectors to knock down doors or climb through windows. They will have to go through a process of law in respect of which the Government have, in my opinion, made far too many concessions. The Minister has spoken with kid gloves on about the way in which these alleged criminals are to be treated. Inspectors will have to go to a county court judge. In many ways, this group of criminals will be treated much too fairly.

There are many people who are guilty of displaying double standards. People are defrauding the State of millions of pounds, yet their case is put forward as if to defend them is to defend the sacredness of the constitution. If we are to pursue people as rigorously as, for example, DHSS inspectors do, we should have comparable standards in pursuing other classes of criminals.

Dr. Glyn

The whole point of the argument of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) is that what applies to one must apply to another. However, the Minister made it clear that he was prepared to use this power only in major cases. That is the distinction.

Mr. George

The Minister said, I think, that it would not be used just in cases of major fraud. However, I am not on the Treasury Bench and, therefore, I cannot speak for the Government.

I draw a comparison between the rôle of income tax inspectors and that of wages council inspectors who are given very few powers to protect people working in wages council industries. When wages council inspectors seek to check the records of people whom they suspect of committing criminal acts, very often the records disappear.

It is very amusing to hear that we should not pursue these people on the Sabbath. If people commit criminal acts, they should be searched out on any day of the week. Is it suggested that the police may go into a council estate and interview people suspected of criminal acts only between Mondays and Fridays? If that were the case, it would allow people to take appropriate action to avoid investigation.

Mr. Graham Page

The hon. Gentleman's remarks have been addressed to the entry of the premises of suspected criminals. However, this clause goes a great deal further. Any premises may be entered, not merely those of an alleged criminal. Any premises may be entered if there happens to be a suspicion that there is some piece of paper there which will help uncover some fraud.

Mr. George

They will not find much in my house. They are very welcome to come.

Mr. Lawson

What about the £150?

Mr. George

I hope that the Minister does not give way to the blandishments of the Opposition. There are millions of people outside this House who would recoil in anger if they felt that we were succumbing to the pressures of Opposition Members, some of them accountants, and others of them who know how to find their way round our legal system. There are millions of honest working people who would recoil in anger if they felt that there was one set of standards for them and another set for other people.

In this country, there are two types of crime. There is ordinary crime and there is what is often described as "middle-class crime". Those who commit middle-class crimes are treated very differently from people who commit ordinary crimes, such as stealing small sums of money. They are pursued vigorously by the police. But there are many crimes about which we say "This is not really crime at all". I refer to people who defraud the work force, where there is an attempt by the wages council inspectorate to pursue them. It is not regarded as crime. The same applies to tax evasion and tax avoidance. In many cases, we are inclined to smile benignly and say "Well, everyone does it, anyway."

I welcome what has been done by the Government. I am reassured that the liberties of the individual will not be destroyed as a result of the enactment of this schedule. I feel that if we are to condemn people who defraud the State we should not defend those who blatantly defraud the State in the way that we have heard today.

Mr. Cecil Parkinson (Hertfordshire, South)

I am sorry that we have not heard more from the hon. Member for Walsall, South (Mr. George). However, I suspect that right hon. and hon. Members on the Treasury Bench are relieved that he has not been here more often. He has had two effects on our debate. There is no doubt that he has livened it up, but, what is more important, he has encouraged a number of my hon. Friends to feel that we have not really made long enough speeches or punched hard enough, if there are still hon. Members in the House who can make speeches of the kind that he did, having listened to the debate.

The Revenue argument and the Treasury argument on Schedule 6 and the new Section 20B are based on three assertions. The first is that the Revenue is severely handicapped at present. I shall tell the hon. Member for Walsall, South straight away that this is not the only power that the Revenue has. It has very substantial powers already for pursuing the taxpayer and for making sure that we all pay our taxes. The idea that the Revenue has managed to put about that, somehow, it has been fighting for the past few years with one hand tied behind its back, that it is hopelessly handicapped in its dealings with the taxpayer, and that all the cards are stacked against it, does not bear examination.

In Committee, I said that I was one of the trustees of a fund known as the Taxpayer's Defence Fund. It was established for one simple reason. It was established because the Revenue has tremendous resources at its disposal and is accordingly in a position almost to blackmail the taxpayer into settling a claim, because the taxpayer knows that he has not the resources to carry on the fight. The Revenue is not inhibited about taking a case to the House of Lords, whereas, for the individual taxpayer, the cost is prohibitive. Many taxpayers settle claims against them not on the basis that they are just or sensible but on the basis that they dare not pursue them further, because they could run into substantial costs which, in addition to the tax involved, are likely to be such as to deter them from proceeding further. The fund was established in an attempt to redress the balance, so I hope that the hon. Member for Walsall, South will think a little further about this and realise that at present the scales of justice are weighted very heavily in favour of the Inland Revenue. I hope that the hon. Member will not believe, as he seems to, that it is the Revenue that needs protection from the individual taxpayer. If there is a need for protection, it is very much the other way.

The second assertion is one that has been made by various people, including Mr. Cyril Plant. It is that hundreds of millions of pounds of taxes drift past the eyes of tax inspectors, and they cannot get their hands on them. We have no way of knowing whether that assertion is true, any more than Mr. Cyril Plant has. If he can really quantify it, he should be chasing the people who should be paying it. But no figures have been produced to say that there are hundreds of millions of pounds of unpaid tax. The reason is simple. If the Revenue could pin down the sum involved with the precision that Mr. Cyril Plant pretends he can, it should be out getting it—otherwise it is making an assertion based not on any knowledge of facts but simply on suspicions.

The third assertion is the one that the Chief Secretary uses regularly, which is that we are after only a tiny handful of people. Here, I agree with him. But I am not in favour of one law for the tiny handful and another for the rest. We are all equal before the law. In any event, that assertion does not time in with Mr. Cyril Plant's view. Is Mr. Plant really suggesting that a tiny handful of people are robbing the Revenue of hundreds of millions of pounds? The two things do not make sense. If there are hundreds of million of pounds involved, it is obvious that many people are in the evasion business and that these powers will not be used, as the Chief Secretary says, against a tiny handful of people. They will be used against much more than a tiny handful of people if they are to produce the return that the Inland Revenue claims will result from their use.

The Chief Secretary's honeyed words about a tiny handful of major evaders and the Inland Revenue's assertion that the powers will enable them to collect hundreds of millions of pounds do not hang together or make sense.

There is a strong feeling among taxpayers, underlined by some of the speeches at the annual conference of the Inland Revenue Staff Federation, that we have an increasingly politically-motivated Inland Revenue. Some of those speeches indicate that the Inland Revenue regards itself not only as part of a bureaucracy but as developing powers that it ought to have to produce the sort of society in which it believes. We are beginning to see a strong, politically-motivated Inland Revenue at a time when we have a weak and gullible Government.

The Chief Secretary has steered through this House some terrifying powers for the Inland Revenue. Last year's legislation on transfer prices gives the Revenue almost unbelievable powers. If a person is not suspected of being a criminal, but is carrying on the same business as a suspected criminal, the Inland Revenue can go through his books to get a better idea of the sort of amounts they should be charging a person whom they regard as guilty. The Revenue can assert its right to go through the books of an innocent taxpayer and use any information found there to persecute someone else. The attitude of the Revenue is that if it finds something to use against the innocent taxpayer, that is a bonus and its good luck.

Under Schedule 6, children can be compelled to give evidence against their parents. The Chief Secretary resisted an amendment yesterday which provided that children under 16 should not have to give information. The Inland Revenue says that this power is necessary to enable it to do its work. Does the hon. Member for Walsall, South think that children should be compelled to give evidence against their parents?

Under this schedule accountants and lawyers can be compelled to break professional confidences and betray their clients to the Inland Revenue. A person seeking advice in the preparation of a defence against the Inland Revenue takes his life in his hands if he goes to a lawyer. That lawyer could be put under an obligation to hand over any evidence made available to him by his client. Does the hon. Member for Walsall, South believe that it is proper for the Revenue to demand and get a situation in which professional confidences and relationships can be undermined? The schedule also gives the Inland Revenue the power—with safeguards that we have obtained—to invade the privacy of a person's home.

Does the hon. Member for Walsall, South give his blessing to a schedule that sets children against parents, enforces the betrayal of professional confidences and gives the Inland Revenue power to invade people's homes on reasonable suspicion that it might find something on the premises?

Schedule 6 is a case of massive legislative overkill. The Inland Revenue has identified a tiny nut and has asked the Chief Secretary for an enormous hammer with which to crack it.

An ever-stronger, more ambitious and rapacious Inland Revenue is taking advantage of the fact that we have a weak Government to take to itself powers which no sensible and strong Government would allow it to have.

6.45 pm.

Sir G. Howe

By leave of the House, I shall reply to the debate. I was prepared earlier to acknowledge that there was some chance that the Chief Secretary, having made so many changes in this provision as it was disastrously introduced, might be able to persuade us that there was a case to be made in its defence. Having heard the way in which the right hon. Gentleman has brushed aside the fundamental complaint—the presence of tax inspectors and Inland Revenue officials with a roving commission in the privacy of a person's home—I am convinced that our opposition to this clause throughout has been abundantly justified.

The right hon. Gentleman has failed to understand the real complaint. There was a moment when I thought that this provision had been slipped in by another Treasury Minister who had inadvertently allowed himself to be put upon by importuning from the Inland Revenue while the Chief Secretary's back was turned, and that the right hon. Gentleman was acting in a sort of automatism and did not know what he was doing—that he was guilty, but insane. But it is worse than that. The right hon. Gentleman did know what he was doing.

This is a profoundly unattractive and dangerous clause. It is no use saying that it will be used only against a small, hard core of offenders. It is available for use against a wide range of people, including the moonlighting painters to whom my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) referred, and against all those in the classes referred to by the hon. Member for Walsall, South (Mr. George). I shrink from the suggestion that this provision will enable us to catch middle-class criminals. This attitude may underline the thinking that brings the clause before us. If so, that makes it all the more dangerous.

This kind of clause is the inevitable consequence of a society in which tax rates have been allowed to go far too high and become far too widespread in every kind of social and private activity. Citizens who were prepared to pay their due obligation are being driven by the intemperance and extremity of tax legislation into resisting and avoiding it.

The antithesis of that is the worrying attitude of some staff in the Inland Revenue. I do not seek to denounce all those who work in the Revenue. Many of them must be horrified at some of the things being uttered on their behalf by Mr. Cyril Plant and his friends. A report of the Inland Revenue Staff Federation annual conference is headlined: Why the tax men are clamouring for all-out war". A society in which officials, who are acting on behalf of us all in raising revenue im- posed by Parliament, consider themselves to be conducting an all-out war with the taxpayer is becoming an unhealthy society. Mr. Cyril Plant, who has played such a dominant part, has gone far beyond his representative rôle as the leader of people exercising a quasi-judicial duty and holding the balance between taxpayer and the State. These are not people who should be mobilised into a course of all-out war. How would hon. Members opposite feel if the judiciary were being mobilised into an all-out war against any class of society? Our society would be in peril.

It is said that only one in 20 of the self-employed admits to earning as much as £60 a week. This is the premise of Cyril Plant's case. It follows that the many self-employed who, in his eyes, admit to less are to be regarded as potential criminals—the middle-class criminals, to whom reference was made. Mr. Plant said: 'We know that they are lying' … his eyebrows bristling with indignation. 'Do they think that we are mugs? The man who pays PAYE, and that means most people in this country, doesn't get away with anything like that'. Here is the division between the PAYE earners and the rest who are regarded as prima facie liars by this representative of the Inland Revenue Staff Federation.

There are other even more disturbing features. The report continues: 'Our critics condemn the proposed powers of search. Why? They will be used sparingly and with discretion and I don't care if the warrant is signed by a judge or Father Christmas, as long as it gives us the powers we need. It is all to do with the deterrent factor, too. If dodgers realise that we can put them under the microscope, and go to their banks they might be more truthful in future. What's so wrong about trying to make people tell the truth?'. Here are echoes of language that we had not expected to hear in this country: "We have methods of making people talk."

Mr. Plant is the Chairman of the TUC. The Chief Secretary to the Treasury mutters ominously that I must be careful what language I use.

Mr. Joel Barnett

I did not say that. I said that the kind of language that the right hon. and learned Gentleman was using about the Chairman of the TUC was the same kind of language as he used about trade union leaders generally.

Sir G. Howe

No. The Chief Secretary must face the gravamen of our complaint. These words are not merely being uttered by a representative of those who collect the taxes, but by the Chairman of the TUC. He is urging that course of action on a Government who place so much store on the co-operation of the TUC. Those are the standards by which we must judge whether it is right to place these powers in the hands of the Revenue.

My hon. Friend the Member for Cirencester and Tewkesbury was afraid that these powers would be used in a political sense. The observations from the Government gave some substance to that fear. I refer to the pursuit of those committing middle-class crime.

However, another observation is reported. Another delegate to the conference said that many respected pillars of society were nothing more than tax criminals. Do we not see there the attraction of being able to winkle out a respected pillar of local society as an example so as to deploy the deterrent factor proposed by Mr. Cyril Plant against the millions of people whom he believes to be lying? It is by those standards that we must judge whether we should give these powers to the Inland Revenue.

The Chief Secretary said that those powers may only be exercised after judicial authority has been given, and that that amounted to a proper safeguard. But the safeguard is not one in respect of which the taxpayer may be heard. The application on a formal affidavit will be made to a judge in chambers before starting his ordinary business, among many other routine applications. By the application of summary judgment an ex-parte writ will issue. No one will be there to argue against it. There is no certainty that even the most conscientious judge will protect us from a well set out affidavit or an amply deployed affidavit which says "I have reason to believe that the taxpayer may have certain documents in his house." What may a judge say in face of that? The statement is made on oath. It presents a prima facie case. The judge will have no alternative. There may well be a genuine belief.

Millions of people who may be subject to these powers may have a warrant issued in respect of their homes on a bare statement on oath. The statement may be genuinely believed, but that will not be a substantial safeguard. The interposition of the judge will not provide a substantial safeguard. He will only need to say "Is the affidavit duly set out and signed?"

The Chief Secretary says that we are talking nonsense when we refer to the right to question the taxpayer in those circumstances. However, on entering the premises with a warrant the officer may seize and remove anything found there which he has reasonable cause to believe may be required as evidence.

Let us consider the cases, reported in the Press, of the way in which the VAT men exercise their powers. This is not a gentle visit by one well-mannered, smartly clad tax inspector looking gently for documents. Six or seven people at a time will spend from seven to 10 hours in the home of the citizen, opening, as we have seen with the VAT men cases, the satchels of children going to school and the handbags of mothers on their way to work. Is it to be supposed that for seven or eight hours at a time the Inland Revenue officials will be doing that in total silence?

Mr. Neil Kinnock (Bedwellty)

They may be singing the "Red Flag".

Sir G. Howe

At the present rate of progress, they might.

We must face realities. The citizen may have a group of people in his house for hours at a time. They will certainly not maintain a stolid, stoic silence. As the Chief Secretary conceded, the Revenue officials may ask as many questions as they like. They are under no duty to warn the citizen that he may not reply. They will be around the house saying "What is this? What is that?" For hours at a time the citizen will be faced with a visitation of that kind and, according to the euphemism to which we must look forward, will be helping the Revenue with its inquiries. The questioning power of the Revenue officials will be exercisable in the home of the taxpayer as soon as the warrant has been issued. The officials will be in the person's home for as long as they like and will have powers of search which are as wide as they like.

The Chief Secretary purports to recognise that we should not give those powers lightly, but he does not recognise the extent of what he is doing. If we are to move away from the necessity for this kind of odious legislation we must try to draw back from a society where tax rates are so high. The Revenue officials feel themselves to be at war with the taxpayers. There is no prospect of correcting the position if the Government

remain in office, piling tax upon tax, and tyrannous power upon tyrannous power.

I invite my hon. Friends to vote against the Government amendment and to support the Opposition amendment.

Question put, That the amendment be made:—

The House divided: Ayes 160, Noes 151.

Division No. 252.] AYES 6.58 p.m.
Abse, Leo Fraser, John (Lambeth, N'w'd) Park, George
Archer, Peter Garrett, John (Norwich S) Pavitt, Laurie
Armstrong, Ernest George, Bruce Ferry, Ernest
Ashiey, Jack Golding, John Phipps, Dr Collin
Atkinson, Norman Graham, Ted Prentice, Rt Hon Reg
Barnett, Guy (Greenwich) Grant, George (Morpeth) Richardson, Miss Jo
Barnett, Rt Hon Joel (Heywood) Grant, John (Islington C) Roberts, Gwilym (Cannock)
Bates, Alf Hamilton, W. W. (Central Fife) Robinson, Geoffrey
Benn, Rt Hon Anthony Wedgwood Hardy, Peter Rodgers, George (Chorley)
Bennett, Andrew (Stockport N) Harper, Joseph Rooker, J. W.
Bidwell, Sydney Harrison, Walter (Wakefield) Roper, John
Boothroyd, Miss Betty Hayman, Mrs Helene Rowlands, Ted
Bottomley, Rt Hon Arthur Hooley, Frank Sandelson, Neville
Bradley, Tom Huckfield, Les Sedgemore, Brian
Brown, Robert C. (Newcastle W) Hughes, Robert (Aberdeen N) Selby, Harry
Brown, Ronald (Hackney S) Irvine, Rt Hon Sir A. (Edge Hill) Shaw, Arnold (Ilford South)
Butler, Mrs Joyce (Wood Green) Irving, Rt Hon S. (Dartford) Sheldon, Robert (Ashton-u-Lyne)
Callaghan, Rt Hon J. (Cardiff SE) Jackson, Colin (Brighouse) Shore, Rt Hon Peter
Callaghan, Jim (Middleton & P) Janner, Greville Short, Mrs Renée (Wolv NE)
Carter, Ray Jay, Rt Hon Douglas Silkin, Rt Hon John (Deptford)
Carter-Jones, Lewis Jeger, Mrs Lena Silkin, Rt Hon S. C. (Dulwich)
Cartwright, John Johnson, Walter (Derby S) Silverman, Julius
Castle, Rt Hon Barbara Jones, Barry (East Flint) Skinner Dennis
Cocks, Michael (Bristol S) Kerr, Russell Small, William
Coleman, Donald Kilroy-Silk, Robert Smith, John (N Lanarkshire)
Colquhoun, Ms Maureen Kinnock Neil Snape, Peter
Conlan, Bernard Lamborn, Harry Spearing, Nigel
Cook, Robin F. (Edin C) Lamond, James Stallard, A. W.
Corbett, Robin Lestor, Miss Joan (Eton & Slough) Stewart, Rt Hon M. (Fulham)
Crawshaw, Richard Lipton, Marcus Stoddart. David
Cronin, John Litterrck, Tom Strauss, Rt Hon G. R.
Crosland, Rt Hon Anthony Luard, Evan Thomas, Mike (Newcastle E)
Crowther, Stan (Rotherham) Mabon, Dr J. Dickson Tierney, Sydney
Cryer, Bob McCartney. Hugh Tinn, James
Cunningham, G. (Islington S) MacFarquhar, Roderick Tomlinson, John
Davidson, Arthur MacKenzie, Gregor Torney, Tom
Davies, Bryan (Enfield N) Madden, Max Walker, Harold (Doncaster)
Davies, Denzil (Llanelli) Mallalleu, J. P. W. Ward, Michael
Davies, Ifor (Gower) Marks. Kenneth Watkins, David
Davis, Clinton (Hackney C) Marquand, David Weetch, Ken
Deakins, Eric Marshall, Jim (Leicester S) Weitzman, David
de Freitas, Rt Hon Sir Geoffrey Maynard, Miss Joan White, Frank R. (Bury)
Dell. Rt Hon Edmund Mendelson, John Whitehead, Phillip
Doig, Peter Mikardo, Ian Whitlock, William
Dormand, J. D. Miller, Dr M. S. (E Kilbride) Willey, Rt Hon Frederick
Douglas-Mann, Bruce Morris, Rt Hon J. (Aberavon) Williams, Alan (Swansea W)
Ellis, John (Brigg & Scun) Mulley, Rt Hon Frederick Williams, Alan Lee (Hornch'ch)
English. Michael Murray, Rt Hon Ronald King Williams, Rt Hon Shirley (Hertford)
Evans, Fred (Caerphilly) Newens, Stanley Wise, Mrs Audrey
Evans, Ioan (Aberdare) Ogden, Eric Woodall, Alec
Ewing, Harry (Stirling) Orbach, Maurice
Foot, Rt Hon Michael Orme, Rt Hon Stanley TELLERS FOR THE AYES:
Ford, Ben Ovenden, John Mr. James Hamilton and
Forrester, John Owen, Dr David Mr. Thomas Cox.
Fowler, Gerald (The Wrekin) Palmer, Arthur
Atkins, Rt Hon H. (Spelthorne) Braine, Sir Bernard Davies, Rt Hon J. (Knutsford)
Bain, Mrs Margaret Bryan, Sir Paul Dodsworth, Geoffrey
Beith, A. J. Buck, Antony Douglas-Hamilton, Lord James
Bell, Ronald Butler, Adam (Bosworth) Drayson, Burnaby
Berry, Hon Anthony Channon, Paul Dykes, Hugh
Biggs-Davison, John Clegg, Walter Emery, Peter
Blaker, Peter Cockcroft, John Fairbairn, Nicholas
Boscawen, Hon Robert Cooke, Robert (Bristol W) Farr, John
Bowden, A. (Brighton, Kemptown) Cope, John Finsberg, Geoffrey
Boyson, Dr Rhodes (Brent) Costain, A. P. Fletcher-Cooke, Charles
Bradford, Rev Robert Crawford, Douglas Forman, Nigel
Freud, Clement Marten, Neil St. John-Stevas, Norman
Fry, Peter Mates, Michael Scott, Nicholas
Galbraith, Hon T. G. D. Maudling, Rt Hon Reginald Shaw, Giles (Pudsey)
Glyn, Dr Alan Meyer, Sir Anthony Shersby, Michael
Godber, Rt Hon Joseph Miller, Hal (Bromsgrove) Silvester, Fred
Goodhew, Victor Mitchell, David (Basingstoke) Sims, Roger
Goodlad, Alastair Moate, Roger Smith, Dudley (Warwick)
Gow, Ian (Eastbourne) Molyneaux, James Speed, Keith
Grieve, Percy Montgomery, Fergus Spicer, Jim (W. Dorset)
Grimond, Rt Hon J. Morgan, Geraint Spicer, Michael (S Worcester)
Hawkins, Paul Morgan-Giles, Rear-Admiral Stanbrook, Ivor
Hayhoe, Barney Morris, Michael (Northampton S) Stanley, John
Henderson, Douglas Morrison, Charles (Devizes) Steel, David (Roxburgh)
Higgins, Terence L. Morrison, Hon Peter (Chester) Stewart, Ian (Hitchin)
Holland, Philip Neave, Airey Taylor, Teddy (Cathcart)
Hooson, Emlyn Nelson, Anthony Tebbit, Norman
Hordern, Peter Neubert, Michael Thomas, Dafydd (Merioneth)
Howe, Rt Hon Sir Geoffrey Newton, Tony Thompson, George
Howell, David (Guildford) Nott, John Thorpe, Rt Hon Jeremy (N Devon)
Howells, Geraint (Cardigan) Onslow, Cranley Townsend, Cyril D.
Hurd, Douglas Page, Rt Hon R. Graham (Crosby) Trotter, Neville
James, David Paisley, Rev Ian Vaughan, Dr Gerard
Jessel, Toby Parkinson, Cecil Viggers, Peter
Johnson Smith, G. (E Grinstead) Penhaligon, David Wainwright, Richard (Colne V)
Johnston, Russell (Inverness) Percival, Ian Wakeham, John
Kellett-Bowman, Mrs Elaine Peyton, Rt Hon John Walker, Rt Hon P. (Worcester)
Kilfedder, James Powell, Rt Hon J. Enoch Walker-Smith, Rt Hon Sir Derek
Kimball, Marcus Price, David (Eastleigh) Weatherill, Bernard
King, Tom (Bridgwater) Prior, Rt Hon James Wells, John
Kirk, Sir Peter Pym, Rt Hon Francis Welsh, Andrew
Lamont, Norman Raison, Timothy Whitelaw, Rt Hon William
Lane, David Rees, Peter (Dover & Deal) Wiggin, Jerry
Langford-Holt, Sir John Renton, Rt. Hon Sir D. (Hunts) Wigley, Dafydd
Lawrence, Ivan Renton, Tim (Mid-Sussex) Wilson, Gordon (Dundee E)
Lawson, Nigel Rhys Williams, Sir Brandon Winterton, Nicholas
Lewis, Kenneth (Rutland) Ridley, Hon Nicholas Younger, Hon George
MacCormick, Iain Ridsdale, Julian
Macfarlane, Neil Rifkind, Malcolm TELLERS FOR THE NOES:
MacGregor, John Roberts, Wyn (Conway) Mr. Carol Mather and
Macmillan, Rt Hon M. (Farnham) Ross, Stephen (Isle of Wight) Mr. Spencer Le Marchant.
Madel, David Ross, William (Londonderry)

Question accordingly agreed to.

Mr. Joel Barnett

I beg Ito move Amendment No. 75, in page 126, line 46, leave out from 'committed' to and 'in line 48 and insert 'and that evidence of it is to be found on premises specified in the information'. This amendment was put down following an undertaking I gave to the hon. Member for Braintree (Mr. Newton) in Committee.

Mr. Graham Page

I want to ask one question in respect of this amendment. During the course of the previous debate the Chief Secretary said that where the search warrant was issued there would have to be reasonable grounds that a crime or fraud had been committed on the premises. I think that was a slip of the tongue, because, by this amendment, those words have been moved out of the original draft so that the alleged crime does not have to have been committed on the premises; there merely has to be a document, or some other thing, on the premises which may be evidence of the fraud. I think it was a slip of the tongue on the part of the Minister. I hope I am right.

Mr. Barnett

With the leave of the House, Mr. Deputy Speaker, as I recall, I was actually reading from the legislation when I was dealing with the point raised by the right hon. Member for Crosby (Mr. Page). I actually quoted from the section. I assure the right hon. Gentleman that if I made a slip it was a slip of the tongue, because I was seeking only to quote from the section that has now been amended in this way.

Mr. Graham Page

The Chief Secretary read the words that were printed in the Bill as drafted and that are now removed by this amendment, so that it is not a case of a crime having to be committed on the premises; it is a case of the documents having to be there before the warrant is issued.

Mr. Barnett

We discussed this matter in Committee, when the hon. Member for Braintree made this point and I undertook to look at it in order to see if I could put an amendment down to meet that point. This amendment does just that.

Amendment agreed to.

Mr. Joel Barnett

I beg to move Amendment No. 76, in page 127, line 1, leave out 'he' and insert the authority'. This again is a purely drafting amendment that was referred to in Committee, when I undertook to look at it.

Amendment agreed to.

Mr. Younger

I beg to move Amendment. No. 78, in page 127, line 2, at end insert: accompanied by a police officer'. This amendment enables us to examine, I hope not too lengthily, but very importantly, the most sensitive and critical moment that will take place as a result of what the Government are introducing in this schedule—that is, the moment at which the tax inspector arrives, armed with his warrant, at the front door of a house that he intends to enter and search. I do not think it needs very much imagination for hon. Gentlemen to visualise the mountain of difficulties that could arise in a situation like that. Let us think of a house in which there is an occupier, or his family, who is apparently suspected of being involved in some tax fraud and the Inland Revenue officer arrives at the front door to enter that house forcibly and take away documents or other evidence that he may find. I ask hon. Gentlemen to think briefly about what is likely to happen.

We know, from what the Chief Secretary has said—although we on the Opposition side of the House may take it with a pinch of salt—that this will be a very rare event, which will arise only in a mere handful of cases. According to the Chief Secretary's assurance we are not talking about thousands and thousands of cases; we are talking about a small number of important cases that the Inland Revenue will decide to proceed against with the approval of a circuit judge. But we have to recognise that because of the way the Government have drafted this schedule the officer may have to gain admission to the house by force.

I wonder how much thought the Chief Secretary and other Ministers have given to what that means. We have an Inland Revenue officer, who may have no experience in these matters, arriving, pos- sibly for the first time in his life, to gain entrance to a house by force. How will he do it? Will he break in the door? Will he break the window and climb in through it? How will he effect entry? He will have to use his best endeavours, within what the schedule allows him to do, to try to obtain entry by force, but in all probability he will do considerable damage.

7.15 p.m.

There is also the question of who may be in the house. It may be the occupier, whose documents the tax officer is trying to get, or it may be the occupier's family. It could perfectly easily be acquaintances, relations or friends of the occupier. Is there likely to be argument? It does not follow that the person in the house at the time will know that a warrant has been issued and that an officer will arrive. It may be said that the person suspected of tax fraud might have reason to know that something of this sort would happen, but there is no reason to think that the man's son or daughter, or his uncle or aunt, or friends, or anyone else in the house, should know.

This is another perfect field for dispute, argument and difficulty. The person in the house, whether it is the occupier's brother or someone else, may feel obliged to offer some resistance. What will happen if force is used to try to prevent the inspector getting in, if he is caught climbing in through the window? What will happen if the occupier tries to throw him out again? What will happen in any subsequent case, involving assault or dispute of one sort or another?

It is no use our saying that this will not happen. It is implicit in the Bill that this sort of thing will happen. What about access to the documents? A person does not just walk into a house and find a large notice labelled "Documents", or an arrow showing where they are. The inspector will have to search the house.

Sir G. Howe

I cannot even find my own documents.

Mr. Younger

My right hon. and teamed Friend says that he cannot even find his own documents. I am sure that he is being unduly modest. This is a very worrying point. I ask hon. Gentlemen who may take this lightly to bear in mind what it would be like if someone came to search their homes. I wonder how many hon. Members have had someone search their home? I am glad to say that I have not, but it is an unpleasant and nasty experience when it happens. If the inspector has to rifle various chests throughout the house to try to find the documents there will be an unfortunate possibility of a dispute taking place.

Mr. Paul Hawkins (Norfolk, South-West)

I have not had my house searched in that sort of way, but being in another Government's possession at a certain time, for four or five years, I have often had my room and my possessions searched. It is a most unpleasant experience, whether one is a prisoner of war or a private citizen, to have one's belongings turned upside down. It can undoubtedly result in many other things being disturbed or destroyed. It cannot be justified. I believe it right that this fact should be drawn to the attention of the Government.

Mr. Younger

I am grateful to my hon. Friend for that telling description of what it can he like. Plainly, it is distressing in the circumstances that he outlined, but I ask all hon. Members to think what it would be like if such a thing happened in one's own home.

What happens if the documents are suspected of being in a piece of furniture that is locked up? What happens if the person in the house at the time genuinely does not know where the keys are? I think that I am probably in much the same position as my right hon. and learned Friend in this respect, because it is quite likely that I do not know where keys are. What happens if there is a filing cabinet, which the inspector wishes to open but which cannot be moved to opened? Is the inspector entitled to extend his powers of force, beyond entering the premises, to the forcing of locks and using equipment to open such things as filing cabinets? I shall not labour the point. I hope that I have said enough to show that these events are extremely likely—indeed, certain—to create genuine difficulties.

Next, there is the question of what is to be removed. The schedule makes it clear that not only documents but anything whatever may be removed if it is suspected of containing information about tax fraud. That includes furniture. A person suspected of tax fraud may have been buying and selling antique furniture, or the like, over the permitted level of value, and he may be suspected of failing to declare it. Will the inspector be empowered to remove chairs and tables, priceless ornaments, vases and pictures? If he does, what is likely to be the reaction of the people in the house?

With all those matters in mind, one must agree that the situation I have described, which is always likely to arise, will be extremely difficult. The inspector may not have any previous experience of work of this sort, but he will have the duty of breaking into a house to remove documents and other things.

I shall not go further into the question of what the inspector is entitled to do by way of asking questions of the people in the house. That matter was inadequately discussed earlier, and the Chief Secretary was extremely muddled about it. I do not think that he had the faintest idea what would happen, or whether the inspector would be able to demand of a person in the house that he or she should give him information about where documents were. We had no clear answer about that, but, as it was ventilated at least to some extent in the earlier debate, I shall not go into it now.

Since all the difficulties that I have outlined are very likely to arise, it is essential that someone of responsibility other than the two parties to the farce being carried on in the house should be present. One has only to think for a moment of the scope for dispute later on. As one of my hon. Friends later earlier, in any dispute afterwards it would be the private citizen, without massive resources, but trying to get justice out of the legal machine, against the Inland Revenue, with, in these circumstances, unlimited resources, both legal and financial, fighting the case against him.

What will be the position of the householder if, in his submission, lots of pieces of furniture and equipment have been damaged? How will he have a chance of proving his case in a claim for damages if it is just his word against that of the inspector, or his word accompanied by that of his wife or perhaps his family who may be suspected of being on his side?

The point of the amendment is that there should of necessity be a police officer present who, with his customary efficiency, will be able to take notes and act as a confirmer or otherwise of any later allegation regarding charges of damage or matters of dispute. Dispute can arise in many ways—I have not outlined them all—and if we are to allow this to happen at all we should at least try to minimise trouble at a later stage.

I submit, therefore, that the presence of a police officer is essential. He can give corroboration later if there are charges of one kind or another. To a great extent, he will understand the rules of evidence, and so forth, and he can be of immense help later, in reducing areas of dispute. Also, he can help in getting Justice for the person whose house is broken into.

I stress the need for help for the citizen to get justice because—the Chief Secretary ignored this earlier—it is quite possible that, in the end, the occupier of the house will turn out to be entirely innocent of fraud. That may be unlikely, but it is perfectly possible. The warrant is given on suspicion, and it is therefore possible that the person concerned will be shown to be innocent.

Mr. Graham Page

The proposed section as it stands allows entry into premises of a person who is not even accused of the alleged fraud but is perfectly innocent. He could be the employee of someone accused of fraud.

Mr. Younger

I was concentrating on the person suspected of fraud, but my right hon. Friend is absolutely right. Any other house may be entered, and the person we are talking about may be entirely innocent.

If a police officer were present, at least there would be someone there of authority, someone universally respected both by the law and by the public generally, and he would be able at least to help to see that justice was done.

My hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) pointed out to me earlier that, as a Scot, I should ask for two police officers, and I believe that two would be necessary under Scots law. However, I leave that to the Chief Sec- retary to put right if he accepts the spirit of the amendment.

I hope that the Chief Secretary will put behind him the disputes we have had about whether these powers are desirable in general—we have already argued that—and address himself genuinely to the practical problems. Even if we accept the need for these powers, those problems are bound to arise as a result of their implementation. If the right hon. Gentleman refuses to recognise what is likely to happen, he will do a great disservice to a lot of people who may find themselves quite wrongly put to damage, inconvenience and expense, with very little means of redress. It is essential that a police officer should always be present.

Mr. Harry Selby (Glasgow, Govan)

We have been listening to a stout defence of the Englishman's home as his castle. I suppose that that applies to Scotsmen and Irishmen.

Mr. Nicholas Fairbairn (Kinross and West Perthshire)

To some of us.

Mr. Selby

To the hon. and learned Gentleman of course.

I cannot remember a stout defence being put up, or the same arguments being used, when it was proposed, when we were discussing the affairs of Northern Ireland, that people should be detained—detained for two days and then for a further four, on suspicion. I cannot remember you taking the same line then. Of course, the crime is of a different kind, but, as the Roman poet Junius said, a precedent once established becomes accepted, and you have accepted a precedent that certain things can be done.

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. The hon. Member must address his remarks to the Chair, but not in that fashion.

Mr. Selby

Hon. Members opposite have accepted a precedent that such things can be done.

The law of Scotland requires corroboration, but I do not think that it would require another policeman. One policeman, if it should be agreed there should be one, would be enough, because there would be someone else there as a witness, but the point is that hon. Members opposite are putting up a case and drawing distinctions between crimes of different kinds, suspicion having been aroused. They have accepted the precedent in one field, and they should accept it in another.

Mr. Lawrence

I hope that a non-Scotsman may enter the debate. I support the amendment so superbly moved by my hon. Friend the Member for Ayr (Mr. Younger), and I do so for this reason. The presence of a police officer would do something to allay public fears about the operation of this legislation.

The schedule leaves a bad taste in the mouth. I believe that it leaves a bad taste in the mouths of Conservatives, of my hon. Friends who have been striving so valiantly against its introduction, and that it would leave a bad taste in the mouths of the vast majority of hon. Members on the Government side if they would stop to consider what they are doing. It will leave a bad taste in the mouths of people generally in the country who support one side of the House or the other. They will feel that something pretty distasteful has happened if we allow the schedule to pass.

7.30 p.m.

We have reached a stage in our society when people, not just Conservatives, are beginning to say "What on earth is happening to us when the tentacles of the law and the operations of the State are reaching out into every facet of our existence and life?" Of course, the law must pursue people who break it, but for generations there has not been the right—except in exceptional circumstances—which is now being grotesquely extended for the forces of the Executive to go into somebody's home. That threat to the sanctity and privacy of the home is the essence of what will be distasteful to the overwhelming majority of people. Not only may an innocent person have his door broken in and his privacy invaded but, as the public outside will come to realise, if they have handled somebody else's papers they themselves may be involved, even if they are neither criminal nor even suspect.

I give credit to the Chief Secretary for accepting the urgings of my hon. Friends to introduce safeguards. I would rather a circuit judge than a lay magistrate decide whether a warrant should be issued. However, the safeguards do not safeguard the liberty or the privacy of the individual, nor do they safeguard the sanctity of the home. All they will ensure is that as far as possible the procedures voted by Parliament are being properly observed. Those very procedures may themselves be bad and objectionable.

Those involved by this provision will not be just those who in due course will be accused of serious crimes: there will be pressure against the measure being used only to attack those concerned with big tax frauds. There will be pressure from all over. People will say "If it is to apply to the big boys, to the upper or middle classes, and the successful business men, what about the small business man and the working man with his moonlight job?"

It would be fair but impracticable for the provisions of Schedule 6 to be enforced throughout the population because there are not, and never will be, enough Inland Revenue officers to operate them across the wide spectrum of our society.

When the door is opened or knocked down by an inspector, the person inside will want immediate assurance that such events are in accord with the rules of our society. Such people will only be reassured if they see the uniform of a police officer. In my practice I have frequently appeared in court for people who have assaulted police officers in plain clothes. They have properly said, with probably more justification than the courts give them credit for, "I did not realise that the person who was seizing or assaulting me was a police officer". In evidence, the police officer will say that he told the man that he was a police officer. But, when people are excited or irritated they often do not react with cool judgment. That is particularly so when their homes are invaded by strangers. They will not be able to see the difference between an authorised person and an unauthorised person coming into their home. In many homes in this land the reaction to a stranger coming in through the door will not just to say "Go to hell". The usually cool British person may well react when his home is invaded—with force, or perhaps with violence, and certainly with scant consideration for the authorisation of the stranger.

If I were sitting in my lounge at night and the door were kicked in and a stranger entered, I would not say "By what authority, pray, have you entered my house? Will you show me your authorisation?" I would leap to my feet and seize the nearest piece of furniture, and I would be forgiven for behaving in a violent manner against anybody who had thus gained entry. But, I would hesitate if that door went down or I went to the door in response to the ring of a bell and were confronted by a uniformed police officer. The eye moves faster than the mind. There is, thank heaven, still a respect for the uniformed policeman in our society.

The Chief Secretary will do his case, rotten as it is, more good by preserving something of the visual element of law and order in this grotesque power which is to be given to people who have never, in the history of this land, had such a power. He would do better to accept the amendment. Even unpleasant things, done peacefully, are better than unpleasant things done unpeacefully.

It is common sense and unanswerable to say that these powers should be used in the presence of a policeman. The Inland Revenue would surely welcome, from the bottom of its heart, the protection that a uniformed police officer would give its inspectors.

Mr. David Mitchell (Basingstoke)

The amendment should be seen in its context as part of a group, all of which have the purpose of trying to build safeguards into the discreditable powers that the Government are seeking. I join wholeheartedly with my hon. Friends in wishing to remove those powers, but as we have reached a stage where they are seen to be inevitable we should seek to impose reasonable limitations to protect people.

Amendment No. 74 starts the process by saying in effect that there should not be entry for a pettifogging amount, that £100 or more should be at issue. Amendment No. 77 calls for independent witnesses, and Amendment No. 81 calls for the provision of a list of the items taken. I am glad that the Government have partly taken that case on board. Amend- ment No. 82 provides that the items taken should be copied and returned within seven days, that the premises should be left secure, and that any loss should be made good. That amendment was discussed two nights ago, when we were told that there would be a reply later, and this appears to be the proper time. It ties up with Amendment No. 78, which deals with the police being present at the time of entry.

The Chief Secretary looks puzzled. If he turns up Hansard he will discover that I have correctly described what happened. The amendment was discussed with VAT inspectors' powers. We perhaps did not expect it to be grouped in that way, but it was, and the Financial Secretary said that there would be a reply later.

My hon. Friend the Member for Ayr (Mr. Younger) spoke about the situation when the inspector comes. Many people are at work during the day. I think of the small business man whose wife perhaps looks after the accounts. One example is a restaurant. I think of that because there was a case involving the VAT inspector in North London recently. As nobody would be at home during the day, one might expect the Inland Revenue to wait until the evening. By then the family might have gone out again, leaving a baby-sitter with their child. Imagine a teenage girl alone with the baby when there is a knock on the door by a strange man. She has been told to let nobody in. If the Chief Secretary has children, as I expect he has, he must have told baby-sitters that umpteen times. I have done so on many occasions.

I have a teenage daughter who goes baby-sitting from time of time. We invariably tell her that if a stranger comes she is not to let him in. What will the terrified girl do in the situation I have described? If there is a policeman there she will know that it is all right not to follow the instructions she has been given.

We can also imagine a householder going out and leaving his wife alone. Suddenly a man appears, producing a warrant. She will perhaps not be as terrified as the teenage girl, and will answer the door, but she will never have seen a warrant before. I have never seen one. Many people could go around with phoney warrants. However, she would recognise the local policeman and know that everything was in order. If the policeman does not have to be there, there will be impersonations.

Mr. Fairbairn

How on earth will it be possible to impersonate a Revenue official?

Mr. Mitchell

The diversity of Revenue officials revealed in some newspaper articles of recent months certainly appears to make them people whom it is not possible to identify as people of a particular style or type or in other ways recognisable.

Mr. Robert Cooke (Bristol, West)

My hon. Friend can be certain that our hon. and learned Friend could never be taken for a Revenue official of any kind, shape or form.

Mr. Fairbairn

Thank God for that!

7.45 p.m.

Mr. Mitchell

A second possible situation is that of someone in a house who does not wish to give access to a person who seeks it. There could be many reasons. A man might not wish to be found in certain embarrassing circumstances. He does not see the warrant, but he sees someone breaking in or coming up the drainpipe, and gives him a push. There will be a breach of the peace. But if a policeman is present he will say "This is the law. I had better open up."

Thirdly, we should take into account the situation where the house is empty because the householder is on holiday. The Bill gives the Inland Revenue licence to break and enter people's homes in their absence. How is it to be done? Do Revenue officials smash a window or put their shoulder to the door, or do they jemmy the door open and in doing so smash the timbering around the lock? The Chief Secretary laughs, but there is nothing funny about this.

Mr. Joel Barnett

I was not laughing at anything the hon. Gentleman said.

Mr. Mitchell

There is nothing funny about what the Bill permits officials of the Inland Revenue to do to a private person's home. If the right hon. Gentleman's colleagues are so ashamed that they are not here to support him, and if he sniggers, it is a disgrace.

Inland Revenue officials are not trained in housebreaking. They will do a bad job, unless the Minister sends them to Dartmoor for training courses with the professionals. If not, it will probably be the first time they have ever done any housebreaking, and they will do it clumsily. Having searched the house, they cannot lock it again because they have broken the lock or smashed the window. The police are used to dealing with property which is found not properly closed, but unless the Government accept the amendment there will be no police there.

The householder's insurance policy will De invalidated if the house has not been properly locked. The householder who innocently went on holiday will find his house broken into by the Inland Revenue and left open for others to enter and take his goods and chattels. Who will be responsible when there is a claim? As the Solicitor-General has been sitting here quietly throughout the debate, I hope that he will advise us whether the Inland Revenue will make good the loss in such circumstances, especially if the householder is found to be innocent, as he will in many cases.

The debate has highlighted some of the inevitable consequences which the Government perhaps did not appreciate when they started on the dangerous path of introducing the concept that, as in an Eastern European country, officials should be able to break into people's homes.

Mr. Fairbairn

The Government, and especially the Solicitor-General, should understand the full implications of the schedule, which seem to me to go much further in law than perhaps is understood. In both England and Scotland extremely limited powers of entry are granted to the police and certain statutory bodies, such as the electricity and gas authorities and the Post Office—for example, to search an employee's premises to see whether he is storing letters stolen from the mail.

There are many cases in which criticism has been made of abuse of these powers, where they have been used for purposes outside their limited extent. In fact, the powers granted to police officers are extremely limited. They may obtain a warrant to enter premises to arrest someone, or if they can establish that they have reason to believe that there are stolen goods on the premises. However, they have limited powers, which have to be exercised with extreme caution and under proper authorisation.

Let us consider the powers that are being granted under the schedule against the background of the criminal law. I believe that to be the background against which we should consider them. All that needs to be said before the sheriff in Scotland, or the circuit judge in England, is that there is reason to suppose that Mr. A. has committed an offence and that evidence of that fact will be found on the premises of Messrs. B to Z. If that is said on oath, that is all that needs to be said. The judge has no capacity to test it. There is no evidence; it is purely an affidavit.

The person who puts such a statement before the judge may be wrong. It may be that he merely has a hunch. But that will be enough. That is all he needs to do. All that any official needs to say on oath to the judicial authority is "I believe there is reasonable ground for suspecting that an offence involving a form of fraud"—it may be any form of fraud in connection with or in relation to tax—"has been committed". It may have been committed by any citizen. It may be any form of fraud by any citizen in relation to tax.

If there is reason to believe that one's great grandmother has a dog and has not paid the dog licence, that is enough. That is because it is in relation to tax. If there is reason to believe that the dog lived two days after the licence expired, that is enough. Let us be clear about the extent of these evil powers.

Mr. A. P. Costain (Folkestone and Hythe)

Will my hon. and learned Friend clarify the position? What happens if the dog bites the inspector?

Mr. Fairbairn

Even under a Socialist Utopia dead dogs do not bite. Indeed, Socialist dogs are allowed only one bite. If that fails, the dogs can be shot. They lose their licence once they have had their bite. If it is a Left-wing dog, it is shot. However, if it is a Right-wing dog, it may have another go.

Let us be clear about the extent of these powers. The inspectors can go in if they think there is reasonable ground for suspicion. Presumably these powers could be used by the Post Office authorities if they thought that someone did not have a television licence, or if they were told that one's grandmother, uncle, mother-in-law or next-door neighbour did not have a licence. Apparently that is enough under these powers. That is enough to suggest that evidence of the commission of such an offence may be found.

Let us be clear about the effect of these powers. A Revenue official may well say "He could not live in this grand way if he were not cheating." What is the evidence? It is enough to go into the premises if it is believed that on entering them the official will find three-piece suites and grandfather clocks that the individual could not have afforded if he had been honest. Indeed, a warrant can be issued to permit entry within 14 days from the date of issue so that the premises may be searched.

We are not talking about the limited powers that are possessed by police officers; we are talking about officials who will have total powers to do anything they want. There is no restriction on their powers. On entering premises with a warrant the official may seize and remove any documents or property that he likes. He may say to himself "I rather fancy this place. We will get a furniture van and remove the whole lot." He may say to the owner "Look, old chap, I think you have been fiddling your tax," or he may suggest that the uncle, mother, partner or friend has done so. He may continue "I shall strip your house of furniture unless you tell me what I want to know, true or false. I will make you sign a statement. If not, I have authority to take every object out of your house that I can see. I have a warrant and I believe that an offence may have been committed." That is the extent of the powers.

I know that Treasury Ministers and the Solicitor-General will be anxious to say that that is not the intention, that it is not the manner in which the powers will be used. They may well say that it would not occur to anyone that such an abuse of power could result. Why not? Why do we have such extremely close scrutiny and control of the powers of the police? After all, they are the people who are entitled, in certain circumstances, to intrude into the privacy of the citizen. Why do we hedge their powers so carefully? It is because we know that the individual citizen, particularly a subsidiary individual, is not capable of exercising such general power responsibility unless he does so under total restraint.

That is why my hon. Friend the Member for Ayr (Mr. Younger) and I have suggested that there should be two policemen. We have two policemen in Scotland, to ensure that one checks the other, and not only for corroboration. One officer's account of what he did in Mrs. Smith's house when he had a warrant to search it is given in the knowledge that Constable Bloggs was with him. He has to remember that he may give a different account. That forces each officer to be truthful. But the Inland Revenue official may go along to a house alone and afterwards give an account of what he took, how he got in, what was said to him when he tried to enter, whether the door was slammed in his face, whether the dog was set upon him, and whether he broke the china on the sideboard before he snatched the letters on the mantelpiece—and his evidence will not be supported.

Let us consider the position of the Revenue official. Is he not entitled to protection? Let us consider the honest Revenue official who goes to the house of a spiv. There may be one person in the house, or there may be 10. If there are 10 the official's position will be more difficult. He may say "May I look through your papers to see whether I can find accounts of extravagance that indicate that you have an income greater than that which you have declared?" Those in the house may set about him or burn the papers in front of him. If the official gives that account, what is his protection? What is the protection given to Mrs. Snodgrass?

What happens, as my hon. Friend the Member for Basingstoke (Mr. Mitchell) said, if the baby-sitter says "Do you know, the man stole a clock, took a watch and removed some knives from the kichen cabinet?" In fact, the girl may have taken them herself. She may have thought that if some lout was entitled to break in and take what he wanted, there was no reason why she should not do the same. She may have wondered why she should not take something for herself. What protection is given to the official? The answer is that he has no protection.

If we are to give people a general power to behave as anarchists in other people's homes, if we are to give them the power to take the curtains, carpets, silver, paintings and furniture, and if we are to allow them to take fingerprints and ask questions and put them under no restraint in law, surely it is right and sensible that a uniformed police officer should be present when such invasions occur.

8.0 p.m.

I know that Treasury Ministers and the Chief Secretary are anxious to allege that these powers will be used on only select occasions, against the big fish, but I find that concept offensive. If there is a law, it must be a law for everybody. I could send the Treasury—and perhaps I shall do so—a list of 100 people who do a moonlighting job in the evenings. I should like to see the Treasury use these powers, but it would not do so because the people whom I have mentioned are not the kind of people the Treasury want to get at. If there is to be a selective law, which involves giving to Inland Revenue officials powers that no police officer in the land possesses under any circumstances, the least we can do is to bring in somebody who is impartial and who does not begin with the kind of prejudice that Inland Revenue officials may display. Such a person should be present to ensure that there is a check on the behaviour of the other.

Mr. David Mitchell

My hon. Friend said that Revenue officials would have more powers than the police. Will he say how true that is, and in what way it applies?

Mr. Fairbairn

If a policeman obtains a warrant to search my house, his search is restricted to the matters with which he is concerned. For example, the warrant will say that the police have reason to believe that on, say, 15th October 144 tins of Kit-e-Kat were taken from the Co-operative store at such-and-such an address, to whatever road it may be, and that the police have reason to believe that some of the proceeds are to be found at such-and-such premises. Therefore, all the police can take away with them are so many tins of Kit-e-Kat and nothing else. But under the provisions in this Bill they can take away with them documents, furniture or belongings. They do not even need to account for them.

Secondly, the police are not entitled to question any person under warrant in that house as to the source of any item that is or is not in that house. Again, Treasury officials are not subject to that kind of control. It is obnoxious that we are here giving wider powers to these officials than we give to trained criminal investigation officers. In other words, we are giving these powers to those who may have a hunch or a prejudice about what is taking place.

It would be extremely bad if the premises of every moonlighter were to be invaded and that person were asked to explain what he or she was doing. Many houses in the West of Scotland have traditional carpets, connected with Queen Elizabeth, or furnishings that are products of Clydeside. It is not difficult to find them. Are those houses to be invaded on the basis of fraud or the obtaining of benefit rather than that those people should be taxed upon them? The extent of the anarchy opened up by the schedule gives these powers to such people.

Let us not forget the question of balance. We have the legislature, the Executive and the judiciary. Let us also remember that the constabulary is given certain powers to protect us against the Executive and to protect the State against the wrongdoings of the citizen. This proposal will give omnipotent power to members of the Executive without any check or recourse in law.

I do not know what the law of England is in these matters, but I should have thought that there are many circumstances in which, if a Revenue official were to take other things found in a house which was not the property of the people who were suspected of any tax fraud, they would be guilty of a criminal offence.

I have been involved in many cases in which there have been allegations of how police officers have acted when searching private houses in Scotland by proceeding under a restrictive warrant. I shudder to think what would happen if powers without those restrictions were to be handed to officials who act under resentment or spite.

If I were to give advice to professionals in Dartmoor, it would be that they should obtain a typewriter, head the paper with the words "Inland Revenue", and set out the following message: "I hereby have a warrant to search your house because of suspected tax fraud." One could break into any house with the aid of such a warrant, and very few people would have the wisdom to question the warrant or to defend the sanctity of their property.

These provisions are a charter for the invasion of property—indeed, a charter for what otherwise would be criminal offences. They may well involve the removal of property merely on suspicion. This will put the criminal law into the hands of Revenue officials and it will also give criminals an opportunity to break into any house they desire.

Mr. Viggers

I wish to support what has been said by my Opposition colleagues on this vitally important matter. We must consider these provisions very carefully, because the Government appear to be pushing and shoving through legislation, and in this context disputes may occur, arising from the time of entry of inspectors into houses. Furthermore, disputes could arise over the circumstances of entry or as a result of the inflicting of damage at premises. There could be violence or the allegation of it—and allegation of violence is as important in these circumstances as is the violence itself.

Tax inspectors presumably are trained in tax matters. Policemen are trained in observation and in the meticulous recording of circumstances. They are also taught how to deal with violence and, indeed, how to avoid it; they are trained to de-escalate violence. They are experts in their own way. If a person locks himself out of his house or his car, he has only to call a policeman and entry into that house or car will be effected in the most efficient way. I spent five years in a solicitor's office, and I never found the police to be other than tactful and diplomatic. Police officers normally arrive in uniform, and that in itself is a protection for the individual. We deplore the invasion of privacy, but there are a few cases when it is necessary and those cases usually involve the entry of police officers.

We have heard about the excuses that may be put forward when somebody comes along to search a house for tax purposes. We must remember that there are 2 million people in this country who have difficulty in reading, to the extent that they are not capable of understanding what is set out on an official-looking document. Anybody can flourish a piece of paper and claim to be a tax inspector. Circumstances have occurred in which people have claimed to be social security inspectors and have thereby gained entry into houses for fraudulent purposes.

Disputes that may arise out of entry to houses are legion. These were pointed out very effectively by my hon. Friend the Member for Basingstoke (Mr. Mitchell). If anyone broke into my house when no one was there the burglar alarm system would automatically call the police. It would be much better, therefore, to have a policeman present at the time of entry.

If inspectors enter a house when there is no one there, they will make a search and leave. Undoubtedly, they will leave the house in circumstances that will not be the same as those which existed when they entered. The owners will come back find their house has been entered and call the police. The police will not know about the tax inspectors. But if a policeman is present the inspector's visit will be recorded in the day book at the police station and the police will have a report on the way in which the inspectors went in, and whether they took anything.

Under the Bill's provisions the inspectors have an obligation to make a list of the things that are removed from the house, but who is to say, if the house has been entered, whether the items were taken by the tax inspectors officially, by the tax inspectors unofficially, or by another burglar who broke in after the tax inspectors left? Who will know? I am not suggesting that tax inspectors will remove items illegally, but such allegation may be made.

This legislation is aimed at the big-time operators, the hard core of those who get around the law, and no doubt they will hire lawyers to make allegations that the inspectors behaved improperly. Therefore it is crucial that the tax inspectors themselves should be protected against this kind of allegation.

There is no great problem about this amendment if the Chief Secretary intends, as he says he does, to use this legislation only in rare cases of major fraud. This is a litmus test of Government intention. If they intend it to be used rarely they should not mind a policeman being present on the rare occasions when a search is made. Perhaps that situation will occur a couple of hundred times a year, and will involve about 300 or 400 police man-hours, which is no problem at all. But if it is their intention to use these powers broadly and make entering a house a matter of frequency, they will oppose this amendment. This is a clear test of Government intention.

8.15 p.m.

Mr. Hawkins

I was appalled to read of this legislation being introduced at all. I was appalled to think that inspectors of taxes should be empowered to enter people's homes. But having got beyond that point the Chief Secretary, who I believe to be a reasonable man, must see our point of view.

In the countryside and in isolated areas—and I have 120 villages in my constituency—we have had a spate of burglaries, and only last week on television and in the newspapers the police were appealing to householders not to let people into their houses. There has been an outbreak of bogus inspectors going around our district, getting into places and stealing from elderly people particularly. What is a person alone in a house to think when someone who is not in uniform arrives with a piece of paper and demands to come into his home? In the countryside it is more than likely that the householder will have a biggish dog, and it is very likely that he will feel that he might be attacked, so he will set the dog on the person concerned. The most extraordinary things could flow from this legislation. There is a real danger to the inspectors, and the posibility of many other disagreeable happenings.

It is quite wrong to introduce this law into our land, but if we are to have it, I believe that a policeman should go along with the tax inspector. There are many people in my area who are frightened to open the door to an ordinary civilian unless someone has phoned them beforehand. There are many isolated farmhouses where this sort of thing occurs.

I beg the Minister to consider this very carefully. It would be very helpful to the tax inspectors themselves if a policeman were present. My hon. Friend the Member for Basingstoke (Mr. Mitchell) raised the case of the householder who comes back from a fortnight's holiday and finds that he has had a visit from the Inland Revenue. But how does he know that the invasion came from the Inland Revenue rather than from a burglar? Is it envisaged that the tax inspectors should leave behind a visiting card saying "This house has been broken into by an Inland Revenue inspector from King's Lynn. Please ring the phone number below in the event of anything being missing."?

I believe that a policeman should be present to take a note of anything that is taken and to make sure that the Inland Revenue inspectors leave a receipt behind with the householder showing what has been taken away, otherwise there could be disputes leading to bodily harm, and that will create more and more trouble between the law and the law-abiding citizen. I say "law-abiding" because in many cases the suspect will be proved totally innocent.

I was a magistrate, and when the police came to me for a signed warrant I was always very worried about it because they could never give the particulars of what they expected to find. In this case, if all I have heard is correct, they can, in fact, take anything away and it does not have to be named in the warrant.

I urge the Government to think again about this matter, particularly in respect of people living in the country. I suspect that country dwellers will resent it greatly, and probably it will lead to many breaches of the peace, unless the police accompany the tax inspectors.

Mr. Gow

When we debated this schedule upstairs there was an air of incredulity about the Chief Secretary's attitude. He did not believe that anything could possibly go wrong with the straightforward operation of the powers given under Schedule 6. But there is a real prospect, indeed I would say a certainty, that things will not go just as the Chief Secretary envisages.

There are four specific powers in this schedule which are conferred upon inspectors of taxes—people with no training, ex- perience or guidance in the task being given to them under this schedule. These powers are the power to enter, to search, to seize and to remove. It is true that under the Bill as drafted the only one of these four powers which can be exercised specifically by force is the power to enter.

Here we come upon a defect in the Bill. If there is a power to enter premises by force it seems extraordinary that there should not also be a power to search by force, to seize by force and to remove by force. Perhaps the Chief Secretary will say whether the power extends into these areas.

I believe that at least one police officer should be present for the protection of these unfortunate officers of the Board of Inland Revenue. I disagree with my hon. Friend the Member for Ayr (Mr. Younger) in one respect in that his amendment does not say that the police officer should be in uniform. I believe that to be necessary. I know that the Chief Secretary will dismiss my hypothesis, but there will be claims against officers of the Inland Revenue for wrongful removal of property and for damage done to property. To subject such an officer to that prospect without the presence of a police officer or someone else to corroborate his account of the proceedings is to do him a grave injustice.

Mr. Viggers

One other possible allegation could be made, which is that the evidence which is in due course produced by the inspectors may be said not to have been removed from the premises at all, and that would be the first line of defence by a less than scrupulous lawyer instructed by a less than scrupulous client.

Mr. Gow

In cases such as this it is possible that the Inland Revenue will send one of its officers to break into a house at night on his own. He may not be able to manage it on his own. He may need a chum to give him a leg up. That chum could well be a policeman. Suppose that the Inland Revenue officer was of the physical stature of the Chief Secretary. Suppose also that the occupant of the house in question was of the stature of the hon. Member for Rochdale (Mr. Smith). How would the Chief Secretary like it, at the dead of night, possibly with snow falling and icicles forming on the drainpipes, with his spectacles misting up, to have to break into a house owned by the hon. Member for Rochdale? Yet it is just precisely that duty that the Chief Secretary is laying upon these wretched Inland Revenue officers.

Does not the board have enough problems without having to climb up drainpipes at the dead of night? I wonder whether the Chief Secretary and the Treasury Bench live in the real world, because that is the real world. To impose this additional burden upon officers of the board, men who are already fearfully overburdened and who are used to going through files usually six or seven years out of date, to take them out of their grimy offices and to send them up drainpipes at the dead of night, is being unfair to them.

It does not stop there. Quite often, officers will arrive at a house with a warrant hoping to be able to seize documents, but they will find the owner away. The house will be occupied by squatters. That is almost always the case now. One can hardly go home at the weekend without finding squatters in one's house. Suppose that you arrived home, Mr. Deputy Speaker, after a long and arduous session in the Chair listening to the kind of remarks we have heard from the Government Front Bench today, and find the squatters are there. I suppose that you would go to your mother-in-law's house. But the Inland Revenue officer would ring the doorbell at your house. The squatters would probably think that it was another hippie coming to join the commune. Instead, he would say "I am from the Board of Inland Revenue". There are girls in the Gallery and therefore I will not suggest what sort of a comment the inspector might receive when he knocks on the door. It is unkind to expect inspectors to go into hippie communes in this way.

It does not stop there. The dangers to which inspectors will be exposed are limitless. The Chief Secretary has not understood that the officer of the Board of Inland Revenue—thanks to the rates of taxation imposed by the Government, he is not the most beloved citizen in the land—will be in real danger because of the squatters, and because of the three or four bandit-sized men inside the house he intends to search. For these reasons it is unfair to send the officer there on his own.

There is another temptation which we have to recognise. If an officer of the Board of Inland Revenue breaks into a house to seize documents, he might be tempted. Supposing he sees lying on the dining room table, in the drawing room or in the study some silver, he might be tempted. If he were accompanied by a policeman, he would be protected against that temptation. It may come as a surprise to the Government Front Bench to hear that officers of the Board of Inland Revenue are human beings subject to temptation. They should not go on their own, they do not want to go on their own and they should have the protection of the police.

I hope that the Chief Secretary will accept the amendment, which is designed to protect the citizen—who is entitled to be protected—and the luckless officers of the Board of Inland Revenue, who do not want these powers, do not want to be sent climbing up drainpipes and should be allowed to get on with their huge backlog of work.

8.30 p.m.

Mr. Joel Barnett

I apologise to the hon. Member for Eastbourne (Mr. Gow) if my face indicated impatience with him. It is simply that when I hear a joke of this nature for the twenty-ninth time I get the feeling that I have heard it before and I do not find it quite so funny. The exaggerated examples which have been given are a little out of keeping with the seriousness of the subject matter of the debate. What we are talking about is nothing like as amusing as hon. Gentlemen would have us believe, and the exaggerated examples they have given are unlikely to arise in practice.

We are talking about a man or woman who is suspected of evading tax—a tax fraud, a criminal offence—and an inspector of taxes who, having received the approval of two Commissioners of the Board of Inland Revenue, having gone to a circuit judge and obtained the judge's approval for the issue of a warrant, uses his powers of search and entry. A similar procedure is involved in a suspected social security fraud involving a much smaller amount of money. I should be happier about the examples which have been put before the House if hon. Gentlemen had expressed the same worry about abuses of the social security system. I know those abuses concern the hon. Gentleman, and they concern me. Equally tax abuses concern me and I hope they also concern hon. Gentlemen.

I take it that hon. Gentlemen are serious in their concern that a policeman should accompany an Inland Revenue officer—

Mr. Fairbairn


Mr. Barnett

Anyone reading the debate might wonder about that. They might not feel that this is the serious matter that I consider it to be.

Following the undertakings I gave in Committee I have had consultations about the necessity for an official of the Board of Inland Revenue to be accompanied by a policeman when calling on a person suspected of fraud after search and entry powers have been given to him by a circuit judge. The view expressed to me is that in virtually every case where force is involved, and in many cases where search and entry powers are given, there will have been previous correspondence and it will be known what situation has to be dealt with. There will be no question of force being used. The official will simply call to see the individual and obtain the documents. Where there is any thought on the part of the Inland Revenue that force might be needed there is no problem about the official being accompanied by a police officer.

The view of the police is that they believe that it would be wrong to lay down, as a matter of rule, in every case, that a policeman must accompany an official calling on a person under his powers of search and entry. That is the police view of which I am bound to take note.

Mr. Clement Freud (Isle of Ely)

Why do the police think that?

Mr. Barnett

The police do not feel that in every case as a matter of rule a policeman should accompany an official. What would happen if that principle were extended to every other part of the law?

Mr. Parkinson

This is only a handful of cases.

Mr. Barnett

There are many other precedents, in legislation enacted by the Tories, which involved greater powers. I do not recall hearing from Conservatives, on the occasions when such legislation passed through the House, the kind of speech that we have heard tonight. Here we are dealing only with people liable to income tax. Under the value added tax legislation those who are liable include all who buy an item subject to the tax. When I hear the kind of speeches that Conservative Members have made this evening I must ask where they were on those other occasions. I know that some were not in this House. I almost said that I am delighted to see them with us now. I am not so sure that I am, because I could have done without hearing some of the things that I have heard, even though hon. Members have been pleasant towards me.

There is a serious point here. I can assure the House that the Inland Revenue officer will not seek to enter any premises by force except in the presence of a policeman. I can give that assurance. Because of the police view, which I believe is reasonable, it would not be right to write into the Bill some provision which would make it a matter of rule that on every occasion a police officer must accompany an Inland Revenue official.

Mr. F. P. Crowder (Ruislip, Northwood)

Does the right hon. Gentleman not realise that no police officer has any right whatever to enter into a private house without making a personal appointment? If the right hon. Gentleman thinks that, on behalf of the Government, the police can accompany Revenue officials and demand entry, let me tell him that he is dead wrong. We on the Conservative side will not stand for it. If the police—

Mr. Barnett rose

Mr. Crowder

I have the Floor.

Mr. Barnett

I do not want to give way.

Mr. Crowder

You will.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

The right hon. Gentleman did give way.

Mr. Barnett

But I have stopped giving way.

Mr. Crowder

I am on my feet. I am not having this. This will not do.

Mr. Barnett

The hon. and learned Member has just walked in.

Mr. Crowder

I have, and I was horrified to hear what the right hon. Gentleman was saying. This is nonsense. I want to make it clear from the Opposition side that I am not prepared for police to enter into a private house without giving notice or making a written appointment. It simply will not do. If the right hon. Gentleman thinks—

Mr. Deputy Speaker

Order. The hon. and learned Gentleman may have a point of view which he can express to the House subsequently.

Mr. Barnett

I am not too sure what that had to do with the schedule that we are discussing. If the hon. and learned Gentleman would care to read the schedule I think that on reflection he will feel that he should not have intervened as he walked into the Chamber.

Mr. Fairbairn

The Chief Secretary has given us an undertaking—what good it is I do not understand—that Revenue officials, if they are to break in and search, will always be accompanied by a police officer. Unfortunately the police officer would not be entitled to enter the premises. He would have no remit to do so. It is no good the Chief Secretary saying that this is the intention of the officials. It is beyond their powers. Let us have none of this nonsense.

Mr. Barnett

I am bound to say that the way in which this will normally work will not be as the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) envisages. Long before we reach that stage there will have been correspondence with the person concerned to try to elicit information and obtain a correct assessment. In most cases of tax fraud the matter will be settled without the sort of situation that is envisaged ever arising. In the case we are considering, where a search and entry power is given to an Inland Revenue official, he will have been in correspondence already with the person concerned, and there will be no question of any force entering into it. But where the Inland Revenue thinks there is a possibility or likelihood of force, he will, under the terms of his warrant, ask for a police officer to accompany him. I am assured by the police that they will provide such support when asked to do so.

Mr. Viggers

The Chief Secretary, with respect, has got it completely wrong, and the sooner he reconciles his view with reality the better. If there is an intention to use force the policeman will accompany the inspector, but he will have to stop at the front gate. He cannot go into the premises, because it is not written into the Bill that he has the power to do so. In order to do so the policeman would have to get his own separate warrant. As the position stands at the moment, the policeman has no power to enter the premises with the inspector.

Mr. Barnett

I am not sure that the hon. Gentleman is right [HON. MEMBERS: "He is right."] I said that I am not sure. Hon. Members opposite are so arrogant in their assumptions. I said that I am not sure. I am waiting for a message to come from someone on high who has authority. I am always ready to accept hon. Members' views when they express them as assertions, but they have not quoted me chapter and verse. They have just asserted it.

Mr. Gow

Will the Chief Secretary not take the opportunity to confer with his hon. and learned Friend the Solicitor-General, who is here for this very purpose?

Mr. Barnett

The fact is that there is some doubt about the situation. That is why I say to hon. Members opposite that I am rather surprised that they should be so certain in their assertions. Clearly, it would all depend on the circumstance in any particular case. There is nothing new in this. There are many search and entry powers given under warrant, without anything like the safeguards we have here, where an official has the power to enter a home without being accompanied by a policeman. Indeed, that power was provided in the Finance Act 1972.

I believe that the assurance I have given should be more than adequate to deal with the problem. The police have indicated that they would be willing, when asked, to accompany an Inland Revenue official in the circumstances envisaged. The police consider that it would be wrong as a matter of rule to write it into the law. I am bound to take that view into consideration, having consulted them and consulted my right hon. Friends, who are responsible for these matters and take that view into account. I hope that the House will also take it into account.

Mr. Fairbairn

The Solicitor-General apparently does not know whether the English police can enter or not in these circumstances. If the Scottish police were consulted, it would be found that the Scottish police cannot do so.

Mr. Barnett

I am delighted to hear about Scottish law. The position here, however, is that the police have indicated that, where there is a possibility of force arising, they will accompany the official. I should have thought that that was more than adequate and satisfactory to the House.

Sir G. Howe

We have spent an hour and a half in debating the amendment, which plainly raises an important point. The case has been canvassed by my hon. Friends from almost every imaginable point of view. My hon. Friend the Member for Eastbourne (Mr. Gow) has displayed a new and impressive talent for exercising massive compassion and concern for officials of the Board of Inland Revenue. I know that all my hon. Friends will be glad to see that he has an alternative bright and glowing career prospect ahead of him in the position now occupied by Mr. Cyril Plant, should he leave the House. But I hope that that necessity will never arise.

8.45 p.m.

Concern has also been expressed about the impact of these powers upon the citizen. When we come back to the realities as the Chief Secretary has approached them, there is a real issue here, and we must judge the right response by remembering that, if we take the right hon. Gentleman at his word, these will be only a handful of cases, they will be so important that they will require the personal approval of the Board of Inland Revenue and the interposition of a circuit judge, and that they will be a small number of cases where officials of the Board of Inland Revenue will be dealing with desperate men armed with the power to use force if necessary.

The more serious the case for intervention, as the right hon. Gentleman suggests, the stronger becomes the case for seeing that they are accompanied by police officers. That much has been conceded by what the Chief Secretary said. The only offset—and it is a serious one—is that we would not want to add unnecessarily, if it were felt to be unnecessary, to the burden upon the police. But I think that we can set that to one side with the knowledge—it is a guarantee of the validity of the knowledge—that it is only in a minority of cases that these powers will be exercised.

The best way to demonstrate that would be to support the powers to require the presence of a police officer. That would be a guarantee that the powers would be used only in a minority of serious cases. If we needed an additional argument, it would be that to which the Chief Secretary had no answer. It is very doubtful whether a police officer would be entitled to enter the premises unless he were covered by the words which we now propose.

The Solicitor-General (Mr. Peter Archer)

As I understood it, my right hon. Friend's undertaking was that there would be a police officer present where it was proposed to break in by force. Surely one breaks into premises from the outside. The police officer is there. There is no need for him to enter for that purpose. If it is thought that his presence is then necessary inside, if there is likely to be a breach of the peace, of course he has power to enter for that purpose.

Sir G. Howe

I have no doubt that, if a breach of the peace is expected, he can go in in that way. But what my hon. Friend seeks is an assurance that, on these few occasions when entry by force is likely to take place, a police officer should be there as a matter of course with the unquestioned right, whatever he may fear about a breach of the peace, to go into the premises.

I can see why my hon. Friends may wish to vote in support of this argument as soon as we have a chance to do so.

Question put, That the made: —

The House divided: Ayes 131, Noes 154.

Division No. 253.] AYES [8.50 p.m.
Atkins, Rt Hon H. (Spelthorne) Holland, Philip Price, David (Eastleigh)
Beith, A. J. Hooson, Emlyn Pym, Rt Hon Francis
Bell, Ronald Howe, Rt Hon Sir Geoffrey Raison, Timothy
Biggs-Davison, John Howell, David (Guildford) Rees, Peter (Dover & Deal)
Blaker, Peter Hurd, Douglas Ronton, Rt. Hon Sir D. (Hunts)
Boscawen, Hon Robert James, David Rhys Williams, Sir Brandon
Bowden, A. (Brighton, Kemptown) Johnson Smith, G. (E Grinstead) Ridsdale, Julian
Boyson, Dr Rhodes (Brent) Johnston Russell (Inverness) Rifkind, Malcolm
Bryan, Sir Paul Kellett-Bowman, Mrs Elaine Roberts, Wyn (Conway)
Buck, Antony Kimball, Marcus Ross, Stephen (Isle of Wight)
Butler, Adam (Bosworth) King, Tom (Bridgwater) Rossl, Hugh (Hornsey)
Carlisle, Mark Kirk, Sir Peter St. John-Stevas, Norman
Clark, William (Croydon S) Lamont, Norman Scott, Nicholas
Clegg, Walter Lane, David Shersby, Michael
Cockcroft, John Langford-Holt, Sir John Sims, Roger
Cooke, Robert (Bristol W) Lawrence, Ivan Smith, Dudley (Warwick)
Cope, John Lawson, Nigel Spicer, Jim (W. Dorset)
Costain, A. P. Le Marchant, Spencer Spicer, Michael (S Worcester)
Crowder, F. P. Lewis, Kenneth (Rutland) Stanbrook, Ivor
Davies, Rt Hon J. (Knutsford) Macfarlane, Neil Stanley, John
Dodsworth, Geoffrey MacGregor, John Steel, David (Roxburgh)
Douglas-Hamilton, Lord James Marten, Neil Stewart, Ian (Hitchin)
Drayson, Burnaby Mates, Michael Tebbit, Norman
Emery, Peter Mather, Carol Thompson, George
Evans, Gwynfor (Carmarthen) Maudling, Rt Hon Reginald Townsend, Cyril D.
Fairbairn, Nicholas Meyer, Sir Anthony Trotter, Neville
Farr, John Miller, Hal (Bromsgrove) Vaughan, Dr Gerard
Finsberg, Geoffrey Mitchell, David (Basingstoke) Viggers, Peter
Fletcher-Cooke, Charles Moate, Roger Wainwright, Richard (Colne V)
Forman, Nigel Montgomery, Fergus Wakeham, John
Freud, Clement Morgan, Geraint Walker-Smith, Rt Hon Sir Derek
Fry, Peter Morgan-Giles, Rear-Admiral Warren, Kenneth
Galbraith, Hon T. G. D. Morrison, Charles (Devizes) Weatherill, Bernard
Gardiner, George (Reigate) Morrison, Hon Peter (Chester) Wells, John
Glyn, Dr Alan Neave, Airey Welsh, Andrew
Godber, Rt Hon Joseph Nelson, Anthony Whitelaw, Rt Hon William
Goodhew, Victor Neubert, Michael Wiggin, Jerry
Goodlad, Alastair Newton, Tony Wigley, Dafydd
Gow, Ian (Eastbourne) Nott, John Wilson, Gordon (Dundee E)
Grant, Anthony (Harrow C) Onslow, Cranley Winterton, Nicholas
Grieve, Percy Page, Rt Hon R. Graham (Crosby) Younger, Hon George
Grimond, Rt Hon J. Paisley, Rev Ian
Hawkins, Paul Parkinson, Cecil TELLERS FOR THE AYES:
Hayhoe, Barney Penhaligon, David Mr. Fred Silvester and
Higgins, Terence L. Percival, Ian Mr. Anthony Berry.
Abse, Leo Davidson, Arthur Irvine, Rt Hon Sir A. (Edge Hill)
Archer, Peter Davies, Bryan (Enfield N) Irving, Rt Hon S. (Dartford)
Barnett, Guy (Greenwich) Davies, Denzil (Llanelli) Jackson, Colin (Brighouse)
Barnett, Rt Hon Joel (Heywood) Davies, Ifor (Gower) Janner, Greville
Bates, Alf Davis, Clinton (Hackney C) Jay, Rt Hon Douglas
Benn, Rt Hon Anthony Wedgwood Deakins, Eric Jeger, Mrs Lena
Bennett, Andrew (Stockport N) de Freitas, Rt Hon Sir Geoffrey Johnson, Walter (Derby S)
Bidwell, Sydney Dell, Rt Hon Edmund Kelley, Richard
Booth, Rt Hon Albert Dormand, J. D. Kerr, Russell
Boothroyd, Miss Betty Douglas-Mann, Bruce Kilroy-Silk, Robert
Bottomley, Rt Hon Arthur Ellis, John (Brigg & Scun) Kinnock Neil
Bradley, Tom Evans, Fred (Caerphilly) Lamborn, Harry
Brown, Robert C. (Newcastle W) Evans, Ioan (Aberdare) Lamond, James
Brown, Ronald (Hackney S) Ewing, Harry (Stirling) Latham, Arthur (Paddington)
Butler, Mrs Joyce (Wood Green) Foot, Rt Hon Michael Lestor, Miss Joan (Eton Slough)
Callaghan, Rt Hon J. (Cardiff SE) Ford, Ben Lipton, Marcus
Callaghan, Jim (Middleton & P) Forrester, John Loyden, Eddie
Carter, Ray Fowler, Gerald (The Wrekin) Luard, Evan
Carter-Jones, Lewis Fraser, John (Lambeth, N'w'd) Lyons, Edward (Bradford W)
Cartwright, John Garrett, John (Norwich S) Mabon, Dr J. Dickson
Castle, Rt Hon Barbara Garrett, W. E. (Wallsend) MacFarquhar, Roderick
Cocks, Michael (Bristol S) George, Bruce MacKenzie, Gregor
Coleman, Donald Golding, John Madden, Max
Colquhoun, Ms Maureen Grant, George (Morpeth) Mallalleu, J. P. W.
Conlan, Bernard Grant, John (Islington C) Marks, Kenneth
Cook, Robin F. (Edin C) Hamilton, James (Bothwell) Marquand, David
Corbett, Robin Hamilton, W. W. (Central Fife) Marshall, Jim (Leicester S)
Cox, Thomas (Tooting) Hardy, Peter Maynard, Miss Joan
Crawshaw, Richard Harrison, Walter (Wakefield) Meacher, Michael
Crosland, Rt Hon Anthony Hayman, Mrs Helena Mendelson, John
Crowther, Stan (Rotherham) Hooley, Frank Mikardo, Ian
Cryer, Bob Huckfield, Les Miller, Dr M. S. (E Kilbride)
Cunningham, G. (Islington S) Hughes, Robert (Aberdeen N) Morris, Rt Hon J. (Aberavon)
Moyle, Roland Sedgemore, Brian Tomlinson, John
Murray, Rt Hon Ronald King Selby, Harry Torney, Tom
Newens, Stanley Shaw, Arnold (Ilford South) Walker, Harold (Doncaster)
Ogden, Eric Sheldon, Robert (Ashton-u-Lyne) Ward, Michael
Orbach, Maurice Shore, Rt Hon Peter Watkins, David
Ovenden, John Silkin, Rt Hon John (Deptford) Weetch, Ken
Owen, Dr David Silkin, Rt Hon S. C. (Dulwich) Weitzman, David
Palmer, Arthur Sillars, James White, Frank R. (Bury)
Park, George Silverman, Julius Whitlock, William
Pavitt, Laurie Skinner Dennis Willey, Rt Hon Frederick
Peart, Rt Hon Fred Small, William Williams, Alan (Swansea W)
Pendry, Tom Smith, John (N Lanarkshire) Williams, Alan Lee (Hornch'ch)
Perry, Ernest Snape, Peter Williams, Rt Hon Shirley (Hertford)
Richardson, Miss Jo Spearing, Nigel Wise, Mrs Audrey
Roberts, Gwilym (Cannock) Stewart, Rt Hon M. (Fulham) Woodall, Alec
Robinson, Geoffrey Stoddart, David
Rodgers, George (Chorley) Strauss, Rt Hon G. R. TELLERS FOR THE NOES:
Rooker, J. W. Thomas, Mike (Newcastle E) Mr. Joseph Harper and
Roper, John Tierney, Sydney Mr. Ted Graham.
Sandelson, Neville Tinn, James

Question accordingly negatived.

Amendments made: No. 79, in page 127, line 4, at end insert— '(1A) Section 4A of the Inland Revenue Regulation Act 1890 (Board's functions to be exercisable by an officer acting under their authority) does not apply to the giving of Board approval under this section.'.

No. 80, in page 127, line 6, leave out 'documents or other'.—[Mr. Joel Barnett.]

9.0 p.m.

Mr. Younger

I beg to move Amendment No. 81, in page 127, line 10, at end insert 'provided that the occupier shall be furnished with a list of all items taken by the officer of the Board'.

Mr. Deputy Speaker

With this we shall take Government Amendment No. 83, in page 127, leave out lines 11 to 19 and insert but this does not authorise the seizure and removal of documents in the possession of a barrister, advocate or solicitor with respect to which a claim to professional privilege could be maintained. '(4) Where entry to premises has been made with a warrant under this section, and the officer making the entry has seized any things under the authority of the warrant, he shall, if so requested by a person showing himself either—

  1. (a) to be the occupier of the premises; or
  2. (b) to have had the possession or custody of those things immediately before the seizure,
provide that person with a list of them.

(5) Where documents are seized which relate to any business, and it is shown that access to them is required for the continued conduct of the business, the officer who has seized them shall afford reasonable access to the documents to the person carrying on the business.

20D.—(1) For the purposes of section 20A and 20C above, "the appropriate judicial authority" is—

  1. (a) in England and Wales, a Circuit judge;
  2. (b) in Scotland, a sheriff; and
  3. (c) in Northern Ireland, a county court judge.

(2) For the purposes of sections 20 and 20A, a person stands in relation to another as tax accountant at any time when he assists the other in the preparation of returns or accounts to be made or delivered by the other for any purpose of tax; and his clients are all those to whom he stands or has stood in that relationship.

(3) In sections 20 and 20C above "business" includes trade, profession and vocation; and in those sections and in section 20B "documents" include books, accounts and other documents or records whatsoever.'.

We shall also take the following amendments to Amendment No. 83:

Amendment (a), leave out 'in the possession of a barrister, advocate or solicitor'.

Amendment (d), in subsection (4) leave out from 'shall' to first 'the' in paragraph (a) and insert 'furnish a list of them to'.

Amendment (e), in subsection (4) leave out 'or (b) to have' and insert: 'and to the person who'.

Amendment (f), in paragraph (b) leave out: provide that person with a list of them".

Amendment (b), in Section 20D(2) after assists', insert 'directly'.

Amendment (c), in Section 20D(2) leave out 'or has stood'.

Mr. Younger

It appears that Government Amendment No. 83 meets the substance of what I was proposing in Amendment No. 81. Therefore, I have moved it formally in the hope that the Chief Secretary will be able to confirm that this is yet another concession to the valid arguments that have been put forward by the Opposition in Committee.

Mr. Joel Barnett

I am always happy to allow the hon. Member for Ayr (Mr. Younger) a little credit for having convinced the Government that he had a sensible argument. As I pointed out in Committee upstairs and on the Floor of the House, when we have a serious debate and a serious point is made, we like to consider it seriously.

Amendment No. 83 makes three substantive changes. First, the amendment prevents the seizure or removal of documents in the possession of a lawyer with respect to which a claim to professional privilege could be maintained. Secondly, the amendment provides that, where documents are seized in the execution of a search warrant, a list should be provided on request. I think that meets the hon. Gentleman's point. Thirdly, the amendment provides that, where documents are seized which relate to a business and it is shown that reasonable access to them is required for the continued conduct of the business, reasonable access shall be provided to the person carrying on the business.

Those points were made to me in Committee upstairs. I am glad to recommend the amendment to the House.

Mr. Peter Rees

I rise to speak to Amendments (a), (b) and (c).

I recognise the distance that the Chief Secretary has moved under delicate pressure from the Opposition in Committee. I am delighted that he has recognised the many respects in which Schedule 6 has proved, in the short time that it has been before the House, to be defective. However, there are one or two matters that still need to be cleared up.

Amendment (a) relates to professional privilege. I think that you, Mr. Deputy Speaker, will recall that in the early hours of this morning we had a long and relatively constructive debate on the question of professional privilege. The Chief Secretary, guided no doubt in these matters by the Solicitor-General, recognised that professional privilege was not just a matter of protecting professional people. That will come as a matter of reassurance to the hon. Member for Luton, West (Mr. Sedgemore) who I am delighted to see joining in our debates again. I did not realise, from his earlier interventions, that he recognised any professional standards or constraints. We shall look for a quite different measure of interventions from him. [Hon. Members: "Withdraw."] No, I shall not.

Mr. Brian Sedgemore (Luton, West)

I belong to the same stinking, rotten profession as the hon. and learned Gentleman.

Mr. Deputy Speaker

Order. The House does itself no credit with sedentary observations.

Mr. Rees

Such disloyalty to his own profession comes curiously from the hon. Gentleman. But, as we know, he is more concerned with his journalistic experience with Private Eye. I have no doubt that we shall hear a massive intervention by the hon. Gentleman on matters such as the inspector's report on Lonrho. No doubt in his intervention the hon. Gentleman will not draw on any professional experience.

I should like to resume the main theme of my intervention, which was on the question of professional privilege. Privilege, as my right hon. Friend the Member for Crosby (Mr. Page) and I had occasion to remark at about 2 o'clock this morning, is not designed to protect a barrister, advocate, solicitor or even an accountant. I do not say "even" in any pejorative sense. The purpose of privilege is to protect a person who seeks professional advice, so that the advice he receives is not open to the intrusive eyes of the Inland Revenue or, dare one say it, the police. I believe the Chief Secretary has taken that point on board, with the assistance of the Solicitor-General, in view of the undertaking he has given even at this late stage. It is a matter of curiosity that after 84 hours of debate in Committee and three days of debate in this House, it is still necessary for him to expose himself to further representations from professional bodies. One would have thought a more appropriate time would be in March or April before the Bill was published. It is not for me to make comments about this. We shall be able to deal with the whole method of transacting Government business when we debate the Third Reading.

On the basis of the right hon. Gentleman's undertaking I do not propose to take up the time of the House on Amendment (a). I shall deal with Amendments (b) and (c). Amendment (b) is designed to limit the definition of tax accountant. At the moment the definition of tax accountant is, in effect, "anyone who assists a person in the preparation of his returns for tax purposes." The amendment seeks to insert the word "directly".

The Chief Secretary, being, at any rate spasmodically, a fair-minded person—

Mr. Sedgemore

Go back to your ice-cream town.

Mr. Rees

—spasmodically, I repeat. I gather than the hon. Member for Luton, West is rather envious of the town that I represent. I am totally ignorant of the charms of Luton, and perhaps not by his intervention and not with his instruction—because I know that his tenure of the distinguished position as hon. Member for Luton, West is likely to be a rather short one—I certainly look forward to comparing the charms of Luton with those of Dover. At the moment I merely say to the hon. Gentleman that his was a rather ill-judged intervention from a sitting position—but recalling the level of his contributions to Private Eye it is all that we can expect from him. If I may be permitted, with the permission of the Chair and of the hon. Member for Luton, West, to resume my discourse, I point out that the purpose of Amendment (b) is to clarify a rather difficult point.

How far must a person be involved in assistance to a taxpayer, in respect of the preparation of his return for taxation purposes, to be regarded as a tax accountant? I think that the Chief Secretary will recognise that this is a modest and rather practical amendment, and I hope he will see his way to accepting it. If not, perhaps he will give his own definition, so that persons can see in what peril they may place themselves and their clients if they offer assistance, and can realise whether they will become tax accountants or not?

Amendment (c) seeks to insert the words "or has stood". At present, it appears that a person can be a tax accountant to someone even though he may long have given up any kind of professional connection with that person. Therefore, if the tax accountant, so-called, is guilty of any kind of fault in the fiscal sense he may put all his clients, past or present, at risk.

I know that upstairs in Committee the Chief Secretary was disposed to put a certain weight on subsection (5) of the proposed new Section 20A, which, I agree, limits the right of the Revenue to give notice to a time within 12 months from the date of the conviction of the tax accountant, but that will be small consolation to those who, perhaps 15 or 20 years before, had stood in some kind of professional relationship to that person. I suggest to the House and to the Chief Secretary that it would be wise to limit the ambit of this provision to those who are currently the clients of the tax accountant who has defaulted in this way.

These are modest practical amendments. I hope that the Chief Secretary will take on board the arguments that I have adduced and accept them as making a practical contribution to the cause that he and I have in mind.

Mr. John Farr (Harborough)

Schedule 6 is a thoroughly unpleasant schedule. At this stage I have just one question to put. Why does the Minister, by his Amendment No. 83, accord a privileged position to barristers, advocates or solicitors—as a layman, I accept that they are privy to the secrets of others—and not confer the same privilege or exemption on people who may equally be privy to secrets although not necessarily secrets of a legal nature?

I regard the wording of the Government amendment as faulty in this respect. I think it wrong to make an exemption for members of the legal profession who are privy to secrets and not make the same exemption for other professional men, such as doctors, dentists or specialists. Doctors especially are privy to secrets every bit as confidential between their client or patient and themselves as are the secrets between client and member of the legal profession, whom the Government seek to exempt.

Will the Chief Secretary give an assurance that there will not be power to remove documents that could divulge confidential matters which should be privy only between a specialist or medical man and his patient?

Mr. Joel Barnett

The hon. Member for Harborough (Mr. Farr) asks why we do not extend the privilege to other professional men. That is rather different from the point constantly pressed upon me by his hon. and learned Friend the Member for Dover and Deal (Mr. Rees). We are talking here about professional privilege—I am not a professional man in that sense of the term—and I promised the hon. and learned Gentleman in Committee that I would look into the matter with a view to seeing whether, if the schedule was not altogether satisfactory, something more should be done.

The hon. Member for Harborough seeks to extend the exemption further. I think that he has not fully appreciated that in most of Schedule 6—certainly in the part to which he is now referring—we are dealing with the definition of what is called a tax accountant, who could be a lawyer who had given not only advice but more than advice.

That brings me at once to Amendment (b) to the Government amendment, in which the hon. and learned Member for Dover and Deal questions our definition of a tax accountant for this purpose. The Government amendment provides that a person stands in relation to another as tax accountant at any time when he assists the other in the preparation of returns or accounts to be made or delivered by the other for any purpose of tax". I shall come in a moment to the further definition in response to the hon. and learned Gentleman.

The hon. Member for Harborough will appreciate that in the normal way of things that would not apply in the circumstances that concern him, and he has no cause for worry.

I gather that the Inland Revenue has had discussions with the Law Society and has informed it that a legal adviser would not be regarded as a tax accountant unless he had been directly concerned in drawing up returns or accounts, or in preparing material for inclusion in returns or accounts. In these circumstances, it follows that the hon. and learned Gentleman's amendment would be unnecessary.

That is the main reason why I do not recommend the House to accept the amendment. I shall reconsider the definition, but I understand and am advised that it is unnecessary because no problem will arise in the circumstances that I have explained.

9.15 p.m.

The effect of Amendment (c) would be to remove from the definition of "client" those clients for whom the accountant had acted in the past. That would go much too far, because we are dealing with a tax accountant who has been convicted of a tax offence and has therefore committed a criminal offence. One has to draw a line, and one should not be able to see a document when the person involved is someone who has been a client a day or a week before. In most cases of that kind it is fair and reasonable to leave it to a circuit judge to decide whether a document should be made available. I hope it will be seen that there is no need to press the amendment.

Amendment negatived.

Amendment made:

No. 83. in page 127, leave out lines 11 to 19 and insert 'but this does not authorise the seizure and removal of documents in the possession of a barrister, advocate or solicitor with respect to which a claim to professional privilege could be maintained.'

(4) Where entry to premises has been made with a warrant under this section, and the officer making the entry has seized any things under the authority of the warrant, he shall, if so requested by a person showing himself either—

  1. (a) to be the occupier of the premises; or
  2. (b) to have had the possession or custody of those things immediately before the seizure,
provide that person with a list of them.

(5) Where documents are seized which relate to any business, and it is shown that access to them is required for the continued conduct of the business, the officer who has seized them shall afford reasonable access to the documents to the person carrying on the business.

20D.—(1) For the purposes of section 20A and 20C above, "the appropriate judicial authority" is—

  1. (a) in England and Wales, a Circuit judge:
  2. (b) in Scotland, a sherrif; and
  3. (c) in Northern Ireland, a county court judge

(2) For the purposes of sections 20 and 20A, a person stands in relation to another as tax accountant at any time when he assists the other in the preparation of returns or accounts to be made or delivered by the other for any purpose of tax; and his clients are all those to whom he stands or has stood in that relationship.

(3) In sections 20 and 20C above "business" includes trade, profession and vocation; and in those sections and in section 20B "documents" includes books, accounts and other documents or records whatsoever.'.—[Mr. Joel Barnett]

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