HC Deb 23 April 2001 vol 367 cc110-20
Mr. Ottaway

I beg to move amendment No. 22, in page 33, line 33, leave out "confirmed" and insert "revoked".

The Chairman of Ways and Means (Sir Alan Haselhurst)

With this it will be convenient to discuss amendment No. 23, in clause 41, page 34, line 2, leave out from "above" to end of line 3.

Mr. Ottaway

Clause 40 applies to any decision of the Commissioners", and to powers to review any of those decisions and to appeal. Subsection (1) lists a number of matters relating to the commissioners' powers, while subsection (2) states: Any person who is or will be affected by any decision to which this section applies may by notice in writing to the Commissioners require them to review the decision. The commissioners make a decision, but, under certain circumstances, a person who feels affected or aggrieved has a right of appeal and the commissioners look at the decision again—so far, so good.

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Under subsection (3), the appeal is allowed if the notice requiring the review is given before the end of the period of 45 days—again, so far, so good. The grounds for appeal are set out in subsection (5). The facts to be considered by the commissioners have to be new facts. The ground cannot be gone over again—again, so far, so good.

At that point, having considered the new facts, the commissioners can withdraw, vary or confirm the decision that has been reviewed. This is where the clause comes unstuck. When they have reviewed their decision, they may decide to withdraw, vary or confirm it. If they do not, within the period of 45 days beginning with the day on which the review was required, give notice to the person requiring it of their determination, they shall be deemed to have confirmed the decision. Therefore, a chap appeals, he produces new facts and if, after 45 days, nothing is said, that is it. He is not informed. He is not told whether there has been an error or whether something has been missed out. If no one tells him anything, the original decision is confirmed.

It is clear what has gone on. The Minister has a busy life. He has an extensive Bill. I think that he has done pretty well tonight in dealing with all the points that have been raised, but he may have missed this point. The provision is designed to cover some official who perhaps fails to notify the person of the decision of the commissioners that the original decision stands. It does not deal with the point that there may be an error, that the commissioners may decide to vary their original decision and that, if someone forgot to tell the chap, that effect would be negatived because they would be deemed to have confirmed the original decision. The amendment changes the word "confirmed" to "revoked" to deal with that situation.

I draw the Minister's attention to the front cover of the Bill, which says, European Convention On Human Rights Mr Chancellor of the Exchequer has made the following statement under section 19(1)(a) of the Human Rights Act 1998: In my view the provisions of the Finance Bill are compatible with the Convention rights. The Chancellor is a busy chap. I suspect that he has not spotted that particular line because, if ever there was a blatant breach of the European convention on human rights, this is it.

If I, any of my colleagues or Labour Members were to raise a point of order with you, Sir Alan, they would expect you to respond. They would not expect you just to sit there, thinking that, if you said nothing, it should be assumed that your original decision stood. They would want a response. Anyone who has an appeal wants to hear what the outcome of the review is.

This is a flagrant breach of natural justice. It involves not only the European convention on human rights, but principles of natural justice going back to the origins of the British legal system. People are entitled to an explanation of the reasons given by the commissioners.

Mr. Michael Jack (Fylde)

Will my hon. Friend comment on clause 40(4), which states: it shall be the duty of the Commissioners to give written notification of any decision to which this section applies to any person"? Does my hon. Friend think that that in any way contradicts the argument that is being advanced?

Mr. Ottaway

My right hon. Friend has picked up an important point. What's good for the goose should be good for the gander; if there is written notification in subsection (4), why can we not have it in subsection (8)? That is the inconsistency, and I am pretty sure that there has been an error.

There are two strands of thinking. The first is whether this is a breach of the European convention on human rights; the second is whether it is a breach of a long line of judicial review cases that oblige authorities to give reasons. It is right that I should explore both avenues.

Article 6 of the European convention provides anybody with the right to a fair trial. The convention refers to a criminal case, whereas what we are discussing does not, although someone who does not pay the right levy will be a criminal. None the less, article 6(1), which refers to civil rights—it is not just a question of criminal cases—states: everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly". That article, which has been incorporated by the Government into English jurisdiction, sets out in some detail the circumstances in which that should happen.

The Financial Secretary has to say why everybody else is entitled to have a public judgment but, under the aggregates levy, there is no right to public judgment. The learned work "Human rights Law and Practices", edited by Lord Lester and David Pannick—two distinguished authors—sets out the criteria for a reasoned judgment, stating: It is a requirement of a fair trial in both civil and criminal matters that a court should give reasons for its judgment. For recent consideration of the duty to give reasons both at common law and under the Convention see Stefan v. General Medical Council … where the Privy Council referred to 'the possible reappraisal of the whole position (in relation to the duty to give reasons) which the passing of the Human Rights Act 1988 may bring about', and commented that the provisions of article 6 'will require closer attention to be paid to the duty to give reasons, at least in relation to those cases where a person's civil rights and obligations are being determined'. I do not think that we could have a clearer exposition of what is the law and why the proposal is in breach of it.

The book states: The extent of the duty to give reasons may vary according to the nature of the decision and sets out a number of cases, such as Ruiz Torija v. Spain and Georgiadis v. Greece. This concerned a violation where court found applicant guilty of 'gross negligence' without particularising matters said to constitute such negligence. The book also refers to a series of cases that set out the need for a reasoned judgment.

That is not the only work that supports my argument. "A Practitioner's Guide to the European Convention on Human Rights" by Karen Reid states: Article 6, paragraph 1 has been interpreted as obliging courts to give reasons for their decisions though this does not require a detailed answer to every question. So the courts do not have to go into great detail, but an answer is required. The guide continues: The Convention organs' resistance to constituting a fourth instance leaves in practice little scope for attacking the adequacy of the reasons given in judgments. There has been no development under Article 6 as in the context of Article 8, 9 and 10 that decisions must necessarily be supported by relevant and sufficient reasons. No mention is made of the argument that there is no need to give reasons, although the commissioners could note that there is no requirement for the reasons given to be sufficient.

The guide continues: Lack of reasons in a decision was taken as an aspect of procedural safeguards … In that case, the Bar Council's procedure was open to criticism in two respects: lack of public hearing and the lack of precision in rules or case law as to the meaning of the 'exceptional circumstances' condition required for reinstatement to the Bar. It went on to criticise the Bar Council for not giving its reasons.

I hope that the Committee takes my point that the case law on the issue is well established. On the issue of reasoned judgment, the work "Human Rights and the Courts: Bringing Justice Home", which has a foreword by Lord Irvine of Lairg, the Lord Chancellor no less, states: Article 6(1) provides a general obligation on courts to give reasons for their judgements. This is so that, in the spirit of a fair trial, both the defendant and the public at large may know the basis of the decision. There is a clear body of case law and authorities that suggest that the commissioners are obliged to give their reasons and that their judgment should be pronounced publicly.

The reason for such requirements is to curb the power of the state. It is not acceptable for commissioners to be able to hear an appeal and say not a word. They are obliged to say something of their reasons and must not act with impunity or indiscriminately. Individuals' rights must be clear. If the Government cannot accept the amendment, I hope that they will give it serious consideration. Today, we have discussed many issues of varying importance, but this issue is important and the Minister should give it due consideration—as he usually does.

Mr. Edward Davey

I rise briefly to support the amendments. The hon. Member for Croydon, South (Mr. Ottaway) made a powerful speech, including long and detailed references to human rights legislation and commentators thereon. My point supports the substance of his argument more prosaically, because clause 40 reveals—yet again—how the Government always try to tilt the balance of tax legislation in favour of the state and against the taxpayer.

In clause 40(3), for example, the taxpayer has only 45 days to request a review. If a taxpayer misses that date, the right of appeal is gone. However, if the commissioners miss the 45-day deadline, it does not matter, and their original decision is deemed to have been upheld. The imbalance is obvious: a requirement is placed on the taxpayer, but no such requirement is placed on the commissioners. That is unjustified. It gives the commissioners an incentive for lethargy, but they ought to be required by legislation to act competently.

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Let us reflect on the fact that this is a new and complicated tax. We do not yet know how complicated, because even Ministers and civil servants do not know yet exactly what the status and shape of the new regulations will be. It is asking a lot of the industry to get to grips with such complicated legislation—and ever-changing regulations, no doubt. This will be virgin territory even for tax advisers. Surely the balance should be the other way, giving the taxpayer a better chance of getting to grips with the legislation.

Mr. Bercow

We are all enthused by the hon. Gentleman's position on the subject, as well as by the juridical exegesis by my hon. Friend the Member for Croydon, South (Mr. Ottaway). I do not in any way cavil at the perfectly sound points that the hon. Gentleman has made, but what assessment has he made of the limited scope of the commissioners' discretion in modifying financial liability under subsection (9)? Is it too limited, not limited enough, or about right?

Mr. Davey

From my detailed study of the subsection, my instinctive reaction would be that it is not limited enough. That is the problem: there are not enough limits on the commissioners, who are given the benefit of the doubt, while the taxpayer is not. I would be surprised if the taxpayers charter, which is much talked about but less kept to, would allow such legislation if it were properly applied to the clause. That is why the amendments have some validity.

The Government could think of other ways of dealing with the problem. Perhaps they could decide that the 45-day period given to the taxpayer to request a review should be lengthened, allowing fuller consideration of whether such a review would be worth while. That might be a sensible compromise. I am not sure whether-Conservative Members would agree, but the Liberal Democrats would consider that a good alternative.

The Government have said in justification of the levy that it is not a revenue-raising measure. We question whether that is the case, but to stay faithful to that view, they should not put such a limitation on the taxpayer. They should say that there is no need for restrictive anti-avoidance measures and give the taxpayer the benefit of the doubt, extending the period and allowing some flexibility. I wish that the Government would both accept the amendment and extend the period for the taxpayer. That would prevent the tax from becoming even more burdensome than it will already be.

Mr. Jack

I seek clarification from the Financial Secretary. Subsection (4) says that when the commissioners first encounter an appeal, there is to be written notification of any decision that they reach—but if I have understood the matter correctly, my hon. Friend the Member for Croydon, South was right to say that if someone challenges that first set of decisions, they simply get a decision without reasons. That is an inconsistency.

This is important, as the Financial Secretary will appreciate, because decisions do not necessarily stop with the commissioners. In subsection (1) are listed the areas that can be the subject of challenge. Some of those refer to the way in which other parts of the tax will operate. The hon. Member for Kingston and Surbiton (Mr. Davey) rightly drew our attention to the fact that this is a new and untested tax. Subsequent court proceedings could follow from this secondary area of challenge, in which there is no need for a written description of a decision. Yet in the first instance there is a requirement for a written decision.

In these days of transparency and openness, I worry greatly about not having such information available for public scrutiny. For example, there is a case of a judge-made decision that affects every Member of the House, yet the reasoning behind it does not appear in the public domain. I refer to the case of Lord Levy, whose tax affairs appeared in the public prints. When that was challenged, the judge was supposed to have said that anybody in public office was fair game when it came to publishing such details. However, no reasons were given as to why that decision was reached. We have no idea, individually or collectively, how vulnerable we are to private information entering the public domain.

People may wish to challenge for a second time the various ways in which the tax operates, yet any decision that may arise concerning this novel form of taxation is without explanation. That is dangerous, particularly if someone subsequently takes the matter on through the courts, and, possibly, to the House of Lords.

Mr. Timms

I think that I can give some reassurance on these points, particularly to the hon. Member for Croydon, South (Mr. Ottaway). The provisions have been designed to meet in full the requirements of the Human Rights Act 1998. My right hon. Friend the Chancellor of the Exchequer was therefore able to sign the statement on the front of the Bill with complete confidence.

These are important provisions. We have referred to them a number of times already because they are mentioned at various points in the Bill. Under different parts of the legislation, the opportunity of review, and then appeal, is available.

The key point, which the hon. Member for Croydon, South missed—or at least, did not refer to—is that there are two stages to the process. The right hon. Member for Fylde (Mr. Jack) picked that up. There is the review, dealt with in clause 40, and there are the appeals against reviewed decisions, dealt with in clause 41, to which amendment No. 23 refers. I do not think that that amendment has been mentioned in the debate, but it is grouped with amendment No. 22. There may have been a misunderstanding about how those two elements relate to each other.

I make the point again, as I have done frequently throughout the debate, that these provisions are in keeping with those relating to other taxes such as the landfill tax, introduced by the previous Government. In practice, Customs and Excise will respond to all requests for review. However, the provision that failure to reply will be taken as confirmation of the original decision is, in reality, a safeguard. If that provision were not in place, it would be possible for Customs and Excise to delay giving an answer to a review—although I am sure that it would not do so—thereby delaying the appeal, which is the next stage in the process to which taxpayers have access.

Under the Bill, if Customs and Excise did not respond within the 45-day period, there would be a full appeal to a tribunal, as set out in clause 41(1)(a), which is in the interests of the taxpayer.

Mr. Letwin

I am grateful to the Financial Secretary. Perhaps he was merely being witty, but surely he recognises that our amendment would provide a safeguard, and that, unlike his safeguard, ours would be a real one. It would ensure that the commissioners had to produce an answer or end up revoking their original decision. There would then be no need for a tribunal, with all the expense to which that would put the taxpayer.

Mr. Timms

The amendment is pretty meaningless. An assessment will be made and a review requested, normally on the grounds that the amount of money required should be reduced. The hon. Gentleman suggested that the decision would then be revoked, but what does that mean? Would the taxpayer have no liability? "Revoked" is not an appropriate word in this context, as it does not give a satisfactory outcome to the process. I do not agree that the amendment is helpful or in the interests of the taxpayer.

Mr. Davey

In the process described by the Minister, the tribunal could go ahead with no indication from the commissioners as to why they took their original decision. The process is therefore flawed, because we need a cut-off point by which the commissioners should give their justification so that the tribunal can go ahead on the basis of that reasoning.

Mr. Timms

It will be in the interests of Customs and Excise to give its reasons so that the tribunal can consider them. That is why Customs and Excise will, in practice, respond within 45 days. The measure as drafted clearly protects the interests of the taxpayer by ensuring that there is no delay in proceeding to the appeal, at which the tribunal can consider the matter. That is completely consistent with the Human Rights Act.

The hon. Member for Kingston and Surbiton (Mr. Davey) queried the appropriateness of the 45-day period within which a request for a review must be made. A balance must be struck, but the Bill gets it about right, and reflects arrangements elsewhere in the tax system. The period of 45 days—a bit more than six weeks—is enough to enable research to be undertaken, but not long enough for people to become complacent or dilatory. A person need not necessarily deposit all the grounds for review within the 45 days in every case. If a case were complex, Customs could take a sympathetic view, while still guarding against the frivolous attempts to delay proper administration of the tax that occur from time to time.

Mr. Jack

Will the Minister address my point? Subsection (4) deems it necessary for it a written decision to be given in the first instance. Subsection (5) reminds us that new information may be considered in a second or subsequent challenge to the first decision. In spite of that, however, when a decision is reached at the later stage, nothing is required in writing. Why is there that difference?

Mr. Timms

In practice, there would be written notification of the decision. My reading is that written notification would, in fact, be required. I shall reflect on the point, and if I am mistaken, I shall come back to it—but I think that written notification would be given in practice, as it should be.

I hope that I have persuaded the Committee that this measure is in the interests of taxpayers and protects their position. It is wholly consistent with the Human Rights Act, and I hope that the Opposition will not press it to a vote.

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Mr. Letwin

I do not know whether my hon. Friends were persuaded by the Financial Secretary—[HON. MEMBERS: "No."] He certainly did not persuade me. In response to my intervention a few moments ago, he said that the whole idea of maintaining the principle that if the commissioners delay, their decision is revoked, was "meaningless", because one would not know what to do with a provision that forced one to revoke a decision.

Let us consider the decisions in question—those specified under subsection (1), paragraphs (a) to (1). It is clear what is going on. In paragraph (a), we are told that the decision might concern whether or not a person is charged in any case with an amount of aggregates levy". That means that the commissioners would have decided that a person is to be charged with a certain amount of aggregates levy.

A provision specifying that if after a certain number of days the commissioners had said nothing, that would effectively confirm their decision, would mean that the person would be charged with the amount. He would then have to hire some lawyers to go to a tribunal and engage in great expense to take on the august machinery of government. However, if the amendment were accepted—so that if the commissioners said nothing, they would implicitly have revoked their decision—the meaning is equally clear: the person would not be charged with an amount of aggregates levy in that case. That is perfectly clear.

Subsection (1)(b) relates to a decision on the amount of aggregates levy charged in any case and the time when the charge is to be taken as having arisen". If the commissioners had made a decision about the amount of aggregates levy charged in any case, and that decision was revoked, the person would obviously have no liability. That is a strong incentive for the commissioners not to allow the matter to lie fallow for 45 days—otherwise they would effectively quash the decision to raise a certain tax.

The effect of the amendment is clear, as is the effect of the drafting of the current provision: again, the commissioners could say nothing and rely on the fact that the poor old company or individual would have to hire lawyers and go to a tribunal. It would be tedious to go through paragraphs (c), (d), (e), (f), (g), (h), (i), (j), (k) and (l), but if the Minister wants me to do so, I am prepared to continue.

Mr. Timms

I am not surprised that the hon. Gentleman does not want to go beyond paragraph (b), because at that point his argument collapses. It would be wholly inappropriate for a notice along the lines of that paragraph—the amount of aggregates levy to be charged in a particular case—to be revoked. Where would that leave everybody? How much money would be outstanding? Nobody knows. Under the clauses that we have dealt with already, the liability to the levy stands; only the decision would be revoked. The meaning of that would be unclear. The amendment would give rise to a wholly unsatisfactory situation that is without precedent in the tax system; it makes no sense at all.

Mr. Letwin

I shall go on past paragraph (b), if only to disprove what the Financial Secretary says—but as he referred to paragraph (b), I shall return to that first. What he says is clearly wrong. It is clear what would happen if the decision were revoked. Customs and Excise would be precisely nowhere; there would be no levy. The commissioners would have to start all over again. It is perfectly possible for them to do that. The Financial Secretary is right when he says that the law would still apply, so any liability duly arising would still duly arise; it would be for Customs and Excise to start again and recalculate it. That is an incentive for the commissioners not to sit on their hands and wait for the 45 days to pass. That is perfectly reasonable.

The Financial Secretary thinks that problems will arise for me beyond paragraph (b), so let us consider paragraph (c), which deals with decisions on registration. We had an extremely long discussion about registration a few hours ago. It is clear that the commissioners have to make certain decisions—for example, whether it appears to them that an individual has an intention to produce something that qualifies as an aggregate for the purposes of the levy. Under amendment No. 22, if such a decision had been made, someone had sought a review, and the commissioners had not made a decision in 45 days, the decision to force a registration would be null and void and the commissioners would have to tell Customs and Excise to start all over again, or else desist.

Again, that would be a perfectly workable arrangement under amendment No. 22. Under the Bill, the difference is that the luckless individual would have to take his case to a tribunal, which would involve him in costs. There is no need to go through paragraphs (d), (e), (f), (g), (h), (i), (j), (k) and (l), but I say again that I am more than willing to do so if necessary. It is perfectly clear that there is a difference.

The Financial Secretary has said one thing that is absolutely true: unfortunately, similar provisions have repeatedly appeared in legislation. However, I am astonished that a person of his integrity and intelligence rests behind the cloak of that dreadful argument. The fact that we have got something wrong for many years does not mean that we are justified in getting it wrong again.

Mr. Bercow

Does my hon. Friend agree that the Financial Secretary's reply to my right hon. Friend the Member for Fylde (Mr. Jack) seemed positively Wodehousian? Was he not implying that in practice, notification would be given, and that it was very important that it should be given? Indeed, so important was it that notification should be given, that apparently the clause should not require it to be given.

Mr. Letwin

My hon. Friend is entirely right, as he so often is. The Financial Secretary offered a case of what one can only call PG Tips, and he has been doing so consistently this evening. The general structure of his argument has repeatedly been that he is trying to create a perfectly sensible outcome; he thinks that he is dealing with a tax that will be levied when the stuff is sold—but actually, he is not. That is not what the Bill states, but that does not worry him, because he is sure that sooner or later, someone will do something reasonable. He used that argument again in response to my right hon. Friend the Member for Fylde (Mr. Jack), saying that the fact that the tax would be reasonably administered was a good reason why we did not need to worry about whether the Bill ensured that it would be reasonably administered.

It is clear that with subsections (7) and (8)—which, in essence, represent the provisions that amendment No. 22 would change—we are dealing with a problem that has persisted in our legislation, and the time has come to put a stop to it. There is no basis at all for commissioners to be able to decide not to bother to produce a review, in the certain knowledge that only those who are very rich and powerful will be able to challenge that decision at a tribunal. That is the wrong way to structure our tax law, and now we have a good opportunity to change it, especially with a tax that is likely to be subject to greater review than almost any other, because it is so complex, so arbitrary and so difficult to enforce.

Mr. Tyrie

I can only reinforce what has just been said by asking the Financial Secretary a couple of questions. First, if a decision is deemed to have been confirmed under subsection (7), but it is appealable under clause 41(1), as he said in his defence, why are not the commissioners at least required to explain that decision? Why should they simply be able to go ahead when the decision has been deemed to be confirmed without having to give any reason at all? I can find no justification for that, and the Financial Secretary certainly has not given any this evening.

The second question is pertinent to what my hon. Friend the Member for West Dorset (Mr. Letwin) has just said. Does not the Financial Secretary realise that the current proposals leave the man who has the liability with a huge hill to climb if he wants to challenge the assessment? Either he accepts the decision, or he has to pay all the expense of fighting the case at the tribunal, and he must do so without knowing what those on the other side feel is their case. He has no idea whether, unbeknown to him, the commissioners have a good point. They may be right but will not have bothered to explain their case, so perhaps that man should not go to appeal and waste all that money in a tribunal. However, he will have no way of knowing whether his judgment is correct because the commissioners will not supply him with the necessary information.

It is eminently sensible that explanations should be provided. They will not be provided under the Bill as it stands but I hope that, after a moment's reflection, the Financial Secretary might say that it is possible that he has not got the clause absolutely right and that he will return with a minor amendment to improve it.

The Financial Secretary may be right to say that amendment No. 22, which would replace the word "confirmed" with "revoked" in subsection (8), is not perfect. However, surely it is not beyond the wit of man to include a sentence that would force the commissioners to supply an explanation for their decision within a given time.

Mr. Timms

I certainly did not intend to sound Wodehousian in my remarks: I think that I have made the case very fully. If the concept of revocation were to be adopted, as the hon. Member for West Dorset (Mr. Letwin) said, things would return to square one. Another assessment would be raised and the process would start all over again and that would cause further delay and uncertainty for taxpayers. That is certainly not in their interest.

The hon. Member for Chichester (Mr. Tyrie) rightly said that the word "revoked" is not perfect. Although I would go further than that, I can agree with him on that point. The current wording is certainly preferable.

In response to the hon. Gentleman's question, it is clearly in the commissioners' interests that the decision should be made and communicated, and that is what will happen in practice. It is in the interests of taxpayers that there should not be any unnecessary delay before matters move to appeal. That should take place expeditiously, and arrangements in the Bill will allow that to happen.

Mr. Ottaway

My hon. Friends have made a perfectly genuine and feasible case, but the Financial Secretary has failed to address their good arguments. However, we have only an hour and a quarter of the debate left and many clauses and amendments remain to be considered. We feel strongly about this issue and we hope that the Financial Secretary will reconsider our arguments. However, under the circumstances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 40 ordered to stand part of the Bill.

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