§ 5.25 p.m.
§ Lord HOUGHTON of SOWERBY rose to ask Her Majesty's Government what instructions have been given to officials of the Inland Revenue and other Departments engaged in investigations which may entail forcible entry into premises for search and removal of documents. The noble Lord said: My Lords, I beg leave to ask the Unstarred Question standing in my name on the Order Paper. It is very brief but it is comprehensive. My interest in this matter goes back to the Finance Bill 1976 2020 which, when it became an Act of Parliament, contained Schedule 6, which introduced widely extended powers of entry, search and seizure. I wrote letters to The Times when the Bill was going through Parliament pointing out the dangers of what was happening.
§ Noble Lords who wish to study the matter more deeply will find that during the Committee stage of the Finance Bill 1976 there were many hours of debate in another place upon the proposals which ultimately, in modified form, became law. My letters to The Times were widely quoted by the Opposition in another place, both on the Floor of the House and in Committee. During the Committee stage of the Bill, the Conservative spokesman was flatly opposed in principle to the new powers, and an attempt to amend the Bill in this respect was negatived only by the casting vote of the Chairman. Such are the Parliamentary conditions in which fundamental rights of the citizen may be taken away.
§ I shall not pursue that matter now. Nevertheless, I must remind the House that because these new powers were embodied in the Finance Bill 1976, this House was debarred from raising a finger to protect the liberties of the subject. By tacking on to a Money Bill not money but liberty matters, we were prevented from fulfilling anything but a humiliating role on a matter of constitutional importance. Noble Lords will recall that we are all obliged to the noble Lord, Lord Harmar-Nicholls, who started the ball rolling regarding this tacking procedure on 7th July, at col. 1225 of the Official Report of this House.
On 20th May 1976, again while the Bill was going through another place, I asked a Question for Written Answer in this House about the Acts of Parliament which provided for entry, by force if necessary, of civil servants into private houses or business premises for the purpose of searching for and removing documents. I received a Written Answer to my Question which related completely to Customs and Excise. In his reply my noble friend Lord Jacques stated:
Officers of the Customs and Excise have carefully delineated powers of entry, using force if necessary, for the purpose of detection and prevention of tax evasion and smuggling, under the provisions of the following Acts of Parliament …".—[Official Report; 20/5/76; col. 1569.]
The noble Lord then set out the Customs and Excise Act 1952, the Finance Act 1967, the Hydrocarbon Oil (Customs and Excise) Act 1971, the Betting and Gaming Duties Act 1972 and the Finance Act 1972, the latter relating mostly, of course, to VAT. I think my noble friend omitted from the list the Control of Exchange Act 1947 but, there again, I think it is mostly Customs and Excise officers who are concerned with the enforcement of that Act. However, my noble friend said:
Customs and Excise officers have found it necessary to use their powers of forcible entry only in isolated cases, most of which concerned the smuggling of prohibited drugs".
§ We have moved on since then, my Lords, and some of the concern that I expressed at the time has been renewed by the wide publicity given recently to particular cases of so-called "raids" and "swoops" upon household and business premises. The Question I am now asking, following upon the one I asked recently, is confined to a request for information. I shall not refer to any of the recent cases about which we have been reading, more especially as I now have an advisory role in connection with one of them. I shall not attack anybody; I shall not defend anybody. What I want is a clear statement of the instructions given to civil servants carrying out the duties of entry, by force if necessary, into premises where they have statutory power to do so. No more—and certainly no less.
§ I sent to my noble friend Lady Birk a list of the questions I proposed to ask this afternoon and I sent a copy of that list to the noble Viscount, Lord Colville of Culross, who I understood was to speak from the Front Bench opposite. I am sure that my noble friend will be fully equipped to answer those questions. if not, then I understand that my only remedy is to oppose the Motion for the adjournment of the House a little later in the day.
§ I do not refer to the police; I refer only to civil servants and I think we are entitled to have a clear set of rules of conduct for the officials involved, upon which the citizen can rely and by reference to which he can judge his own experience. I would go so far as to suggest that these rules of conduct should he clearly set out in print and handed to the occupier 2022 ofany premises concerned, to read and comprehend before any more is done.
§ What actually happens on such occasions, I do not know. What I am asking is that some formality should be observed in enabling the citizen to know where he stands when confronted with this traumatic situation. We are certainly now seeing search operations on a far bigger scale than was suggested by the reply from my noble friend Lord Jacques or contemplated at the time when these powers were granted. We now seem to have a kind of parapolice force of considerable strength, and when we read that 140 civil servants were involved in a particular operation, that is on a very considerable scale. So the vigilance we rightly use over the conduct of the police must now be cast over this development.
§ My Question is not confined to the use of powers of entry only by the Inland Revenue. They have only recently had these powers. One might almost call them novices in this particular field, whereas the Customs and Excise service have had similar powers for many years past. I am asking for rules of conduct for all occasions of this kind. I am not referring only to the Inland Revenue: they are all very similar. One procedure led to another and the form of words is much the same in each Act of Parliament. True, it varies a little. For example, the Exchange Control Act refers to "a suspected offence under the Act", whereas the Finance Act 1976 refers, among other things, to "any kind of fraud". The words differ but not, think, the substance of the matter.
§ There is of course one noticeable difference, and that is in the status of the authorising person. A justice of the peace may authorise a warrant under all Acts except the Finance Act 1976 where. on second thoughts and after Parliamentary resistance, the Government changed from a justice of the peace to a circuit judge. I think members of another place scented the danger of the extension of this form of intrusion into the premises of the citizen and wanted to get it accepted by offering the greater assurance of a circuit judge. So it is a circuit judge for the Inland Revenue and a magistrate for everybody else.
§ I now come to the questions, which all relate to procedure. There are three 2023 stages of an investigatory search of this kind! First, what happens before it is embarked upon; second, how it is actually carried out and, third, what happens subsequently. What, I ask the Minister, are the rules about asking the citizen, before any raid is made, for information on the matters under investigation? When Schedule 6 was being debated during the Committee stage in another place and the debate concentrated on the simple issue of the right of entry, by force if necessary, the Chief Secretary said: "You must look at the Schedule as a whole. You do not get to the breaking in stage until you have gone through other stages. This is the last resort and not the first". So I ask what opportunities are given to those whose premises may be broken into and searched, to provide the information without the necessity for that drastic action?
The next thing I ask is, what information is given to the magistrate, or, in the case of the Inland Revenue, to the circuit judge, to satisfy him that grounds exist which justify the issue of a warrant for search? Is he given any evidence, or merely a declaration on oath at the time, that there are reasonable grounds, but without any supporting evidence as to what they are? At column 803 of the Official Report of Standing Committee E in another place on 15th June, 1976 the Chief Secretary appeared to answer this question because he said, in reply to an intervention concerning what evidence the circuit judge would need to be satisfied before giving his consent to a search warrant:
The Inspector of Taxes would have to show the circuit judge all his reasons for coming to the conclusion that there was a danger of evidence being destroyed that would lead to an assessment of tax on substantial funds that would otherwise escape tax.".
§ I repeat: all his reason for coming to the conclusion that evidence might be destroyed if it were not seized before the taxpayer had the opportunity of doing it.
§ Is this being done? What is the information laid before the magistrate or the circuit judge—what is he told? Is it, so to speak, an abbreviated indictment? If so, why should not the citizen be shown a copy of it. This is tantamount to making charges, reasonable grounds, at any rate, in support of possible charges. Why should the citizen not know what information has been laid which forms the basis 2024 of a warrant to enter his premises, to seize documents and remove them. This particular form of indictment may hang over a citizen for a very long time without any charge being made.
§ I come now to the second stage, the conduct of the entry into premises. Does a warrant authorise repeated entry, coming and going, going in, coming out, going back? It may be that many of my questions can be answered in relation to the conduct of the police, but I do not know the answers. Nor perhaps does the citizen. But this is a civil operation, not a police exercise; the relationship is between citizen and civil servant and not between citizen and police.
§ That is why I say that, when this relationship is the statutory one, the citizen is entitled to ask what is being said against him, and is also entitled to know what rights civil servants may have to enter his premises, remain there and undertake their authorised task. Does a warrant authorise civil servants to stay over-night in a private house? If so, under what conditions? Does it authorise civil servants to undertake almost continuous occupation of business premises? What is the role of the police who accompany these civil servants; what are the police there for? Can a citizen be prevented from leaving premises when a search is taking place; can he be forcibly held? What is the role of the police?
§ The third question under this heading is this: Should a list of documents or articles removed be furnished to the occupant at the time or subsequently? How is he to know what has been taken. What about the furnishing of copies? What rights has the citizen to regain some sight of papers which have been removed? Fourthly, I come to perhaps the most important aspect of the actual entry into premises. That is publicity. What disclosure is made to the Press, radio or television of a raid about to take place or actually in progress? Can the Press get information, be tipped off by the police or by the Department, so that they can be there when those who are to embark on the search have arrived. Why is it that they can get there at the same time? What are the detailed instructions about making statements to the Press and radio? Need I dwell upon all the implications of publicity in a matter like this. It can be 2025 trial by the media and sentence to prolonged anguish by civil servants.
§ I am still speaking on the process of actual entry and search. Are civil servants engaged in this exercise obliged to give their names and ranks to the occupant, as I understand a police officer must disclose his official identification? Does each officer have or need a warrant—say, 140 of them— or does one commander decide the size of his occupying force. Does his warrant authorise him to take as many as he likes or as many as he thinks he needs, or is there a number specified? What is the size of the army that can enter?
§ The third main heading is conduct after forcible entry. If statements are sought from any persons do the Judge's Rules apply. Are they being and will they he fully observed, or have civil servants rules of their own? I refer, of course, to matters of writing things down, cautions and the rest. The second point arising here is this: How long can articles or documents be retained by the authorities? I am not a lawyer, but I look at paragraph 3(i) of Schedule 5 to the Exchange Control Act 1947, which rather suggests that there is a limitation of the time documents can be retained without some charge being made. I cannot find similar limitations of time in other Acts of Parliament. Does this mean that the Departments concerned can take as long as they like? if a Department announces, as it has done after searches of this kind, "This will be a long investigation and it will be months before we are ready", who says so? What is the citizen to do while this investigation is in progress.
§ I am coming to the conclusion of my questions, but it is obvious that we have a new form of civilian police who may be authorised to do what the police may do, short of the power of arrest, though I wonder whether the police are on duty at the time to exercise their powers of arrest, and, if so, upon whose instructions and on what occasions. There are elaborate precautions about the conduct of the police and established means of complaints about wrongful conduct and behaviour. Are civil servants to be exposed to similar disciplinary procedures, and are the avenues of complaint to he similar? Are the civil servants individually accountable, as a police officer is indivi- 2026 dully accountable? Or are they a kind of demolition squad or a gang of workmen who enter the premises behind the cover of a warrant granted, it may be, to only one person? I think these questions need to be answered. What is the relationship between the citizen and the civilian policeman? Can a charge of obstruction be brought against the citizen if he reacts to the shock of the raid, or are the police on duty with the civil servants to stop anything which might be regarded as violence or obstruction?
§ I have only one word more. This day week in this House another Bill will come before us, and it is called the Child Protection Bill. This is yet another instalment of the powers of forcible entry, and I say, my Lords, 1984 is only six years away. I do not say that we shall beat that target, but we are nudging very near to it.
§ 5.50 p.m.
§ Lord HALE
My Lords, my noble friend Lord Houghton of Sowerby, with his customary courtesy, was good enough to give me a full list of the questions that he was proposing to ask of the Minister. He indicated very clearly the line that he intended to pursue in the debate. It is a search for information, but apparently with a few observations to make clear how necessary the information is.
May I say one word about annexing, because it is directly contrary to Standing Order 49 of your Lordships' House, which is made precisely upon that subject, under historic circumstances. I share in the congratulations given to Lord HarmarNicholls on his vigilance in raising this point. The matter was referred to your Lordships' Committee for Privileges and your Lordships have the report. In this case it was certified by Mr. Speaker. It is said specifically in the Act of 1911, of immortal, perhaps diminishing memory, that Mr. Speaker's certificate could not be challenged anywhere or before any tribunal. The reason why I mention it is not to argue the toss but merely to emphasise that, in the result, your Lordships' House is entirely deprived of the right to discuss an issue of vital importance.
I speak frankly as one who came to another place, 30 years ago, passionate about these matters, passionate for the 2027 liberty of the subject, and calling myself, in my early years, a Liberal and going on calling myself a Liberal with Socialist economics all my Parliamentary life. I am prepared to say in full debate that maybe the situation has come in which we must make some concessions to a situation of increasing crime, increasing violence and indeed of widespread tax evasion, which, I if were speaking on another subject, I might say that the Government do rather too little to stop. But this House is entitled to know—and my noble friend Lord Houghton has made it abundantly clear—that it does seem impossible to know.
As my noble friend detailed in his speech, I realise that for the past 24 hours he and I, in our separate ways, have been engaged in almost precisely the same forms of research—in, I might say, not a tandem but a tram. He listed the Acts under which it might appear that a progressive abrogation of liberties has taken place. I venture to say that the Act of 1947 dealt with the sterling area and its problems. However, that was a wholly unprecedented and, it was hoped, a reasonably temporary, or reasonably not-too-longlived situation, following the blockage of sterling and the steps that we had to take, quite frankly, to avoid the immediate payment of our national debts abroad. It was a long and complicated measure.
The Act of 1952 was said to be a consolidation measure, setting out what appeared to be then all the provisions for the enforcement of the collection of duty and the establishment of customs and excise. Some of the others that I have studied contain odd sections about the right to arrest people, communicating with smugglers, taking them before the magistrates, and so on. It is not until the Tax Management Act 1970 that some abrogations were made. It was in the precise Schedule 6 of the 1976 Act that there came these four successive sections in that Schedule, replacing some in the Tax Management Act 1970 and introducing new measures. My noble friend said that there was considerable discussion and protest in the other place. f think that discussion lasted for two Sessions in Committee, in the main. I am sure that there would have been a great deal of protest in this House.
2028 I have read through the invaluable Simond's notes on tax. Naturally we can hardly hope to come any further up to date at the moment than the conclusion of the year 1976. This measure represents a considerable change. Thanks to the Library, I have in my hands the annotated copy of the Finance Act by the Institute of Taxation. I do not think that 1 can do better than quote brief extracts to the House from the general notes on the section:The powers of the Revenue to obtain information regarding a person's tax affairs, other than by way of statutory returns, were formerly very limited in scope. This schedule gives the inspector or the Board broader powers to call upon the taxpayer and others to produce documents relevant to the taxpayer's liabilities. In addition, provision is made for entry onto, and search of, premises in cases where there is reasonable ground for suspecting the existence of a tax fraud. These new powers are nevertheless strictly circum? scribed, and their exercise must generally be authorised in each case by the Board …".The next general note reads:Formerly TMA 1970, Section 20, gave the Board power to call for books, accounts or other documents in cases where an individual company has failed to make a return of profits from a trade when required to do so. In practice the power was rarely used, the Revenue relying in the main on the appellant commissioners' powers under TMA 1970, Section 51. The new provisions are much wider in scope. They are not limited to the obtaining of information for the purpose of assessment. Under Schedule D, cases 1 and 2 arc more far-reaching in that they enable the Revenue to call upon the taxpayer's family, and present or former business associates, for documents or information. They cannot, however, be used to obtain information in appeal proceedings… The inspector may require the taxpayer to deliver the documents …".Next, we come to the section which says that a warrant may be obtained to search any premises of the taxpayer if,… the appropriate judicial authority is satisfied on information on oath given by an officer of the Board that there is reasonable ground for suspecting an offence ".I repeat, "reasonable ground for suspecting an offence". That information, of course, is given in private to the circuit judge by an officer employed by the Board of Inland Revenue, who says, "I have reasonable ground" and who can give some information to show that he has reason to suspect.
These investigations and searches can apparently take place at any hour of the day or night on any premises of the taxpayer by simultaneous arrangement where he operates in several districts, 2029 and not only can a search be made but books and records can be taken away. If what one is told is true—I have no special knowledge and I do not claim to have any special information on this matter at all, but I have heard this suggested—there is no receipt given for the books, which may be books of accounting relating perhaps to the operation of a company. There is no immediate bringing to trial except at the wish of the Inland Revenue. There is none of the steps which used to be regarded as the great basis of protection of the individual before the British courts.
I have read the answer which the noble Baroness, Lady Birk, gave to my noble friend Lord Houghton as regards a previous question in which he raised some issues in detail. However discreetly the officers act there are circumstances in which it becomes apparent that an investigation is taking place which must inevitably involve grave suggestions against the honour of the person whose name becomes known. Those things happen and they are not unprecedented. They happen during searches for drugs under warrant. However, in cases where it is suggested that operations are so considerable that a large number of officers, accompaned by police, may be called upon to make these observations, I think that we are entitled to ask the noble Baroness to give us the fullest possible information as to how the operation is managed.
I am told that one recent observation involved what is called "the lump" —a matter I hardly understand at all. Where are the special powers? The powers extend; but how widely do they extend and to how many different forms of alleged tax defalcation or tax avoidance? Do they extend to matters not in themselves criminal, such as mere non-payment? Who decides when a case requires a warrant? Is it sometimes done without any request for the information to be furnished by the taxpayer? I venture to press the noble Baroness to give us as much information as possible. I appreciate that this matter is highly complex and that perhaps some of the information will have to be supplied later in more detail, but at least I hope that she will give us some this evening.
§ 6.6 p.
My Lords, I am most grateful to the noble Lord, Lord Houghton 2030 of Sowerby, for asking this Question. Like him, I am an adviser and I have, therefore, to declare a personal interest. I must pick my words carefully so that I do not prejudice the result of an investigation which is taking place at present. However, this is an opportunity which is not likely to occur again in this House for a very long time and the public interest is paramount in this Question.
I am disturbed at the way the officers of Her Majesty's Customs and Excise are exercising their powers with regard to investigations relating to value added tax. As the noble Lord, Lord Houghton, has suggested, they certainly do not seem to be subject to anything like the Judges' Rules. Recently, officers of Her Majesty's Customs and Excise descended upon a considerable number of individuals most, if not all, of whom have become only quite recently British citizens and are still very fearful of' authority. I believe that they produced warrants, hut they did not accord the individuals concerned the right to communicate with their legal advisers. When it was suggc:;ted by the individuals that they should call their legal advisers, they were told that it was not necessary.
The officers seized not only documents, but considerable sums of money, for which no receipts were given for at least eight weeks. They questioned those individuals throughout the day for a period of 12 hours, without any respite and without any break for refreshment, coming in relays to ask questions. That may sound not too unreasonable until it is realised that the individuals concerned run restaurants and night clubs and had only retired to bed at about 6.30 in the morning. They were pulled out of their beds at 9 o'clock to be hustled away for questioning.
I hesitate to use the word "extort", but the officers obtained statements made without the benefit of legal advice and, as I understand it, made in desperation to get away from the questions. These were statements made by individuals who were completely unaware that they had committed any offence. The officers retained the documents, which included future lists of table reservations for establishments which would expect to be working to capacity over Christmas and the New Year, with the result that there 2031 Was a very serious Strain on the reputations of those establishments because of the muddled bookings that ensued. There was no indication that those documents could be looked at, and it was not until February that they were told that they might look at them. Those concerned are now in possession of so-called evidence, much of which would be unlikely to be admitted as evidence in a court of law. But, of course, they do not have to submit this evidence to a court of law.
That incident—applied to people whom I would loosely describe as "foreigners", although they are British citizens in this country—is to my mind a horrible example of the kind of police State that we have apparently reached through allowing almost uncontrolled powers of entry and seizure to be exercised by persons other than the police. Can anyone justify the seizure of money in quantity—at least a four-figure sum is involved in these seizures—without any sign of a receipt being given for more than eight weeks?
I am an accountant and my mind boggles at the thought of how the books were kept in this case. Were these sums put immediately into some fund for confiscation, or what? Can we really justify this descent in force on individuals —especially w hen they are virtually foreigners although they have British citizenship—simply in order to sort out a value added tax claim?
I understand that Her Majesty's Customs and Excise had to take on a large number of additional staff to deal with value added tax. Can we be assured that these staff have been given adequate training to deal with situations of this kind? If it is necessary for such action to be taken, surely it should be carried out by the police and in accordance with the Judges' Rules, which they must observe. I absolutely support the noble Lord, Lord Houghton of Sowerby, in his Question, and I hope that the Minister will be able to give us some replies to the questions we have asked.
§ 6.13 p.m.
§ Viscount HANWORTH
My Lords, I would ask your indulgence on at least two counts. First, I was not present at the beginning of this debate and, secondly, it is my wedding anniversary so 2032 I have to leave shortly. I should like to make two observations. First, I believe that today there must be greater powers to ensure that the law is not being sidestepped—as is very often the case, particularly in revenue matters. Therefore, on that count we must have tougher measures, which might even extend to looking at people's bank accounts. However, it is quite clear that one simply cannot leave this to the small man on the lower rung of the Civil Service ladder who then abuses the powers.
So I sit down or stand up on both counts: that we must have this, but that we must also get it right. The remarks just made by the noble Lord, Lord Spens, absolutely appal me. It is fairly easy for your Lordships when someone comes along and tries to put this over on us—it may be the police or others—because we know what to do; but the vast majority of people do not know how to respond. When this is done it means that we are living in what is almost a police State.
§ 6.15 p.m.
Viscount COLVILLE of CULROSS
My Lords, it is indeed fortunate that the opportunity has been given to us by the noble Lord, Lord Houghton of Sowerby, to discuss at last a matter on which we were frustrated some two years ago—a matter which, in fact, I think Members of another place had rather anticipated that, on that occasion, we would have been able to deal with or discuss. Certainly it was something that aroused very strong feelings indeed in another place and, it would appear, also here.
It would not be my purpose this evening to say in any definitive way at all what my Party would do about it, particularly as, although we have been strongly defended by the noble Lord, Lord Houghton of Sowerby—who said that there was a difference between the context of the powers of search and entry, which the noble Lord, Lord Spens, has referred to in connection with VAT, and the powers that were taken by this Government in 1976 —so far as principle is concerned there are some common matters which one has to bear in mind. Such common matters, indeed, that the noble Lord, Lord Spens, has thought fit to talk about the VAT searches on a Question which is down simply on the Inland Revenue powers. I do not complain in any way about that.
2033 Therefore, If I do not say anything definitive, it does not mean to say that I am not extremely interested in the opportunity to take, as it were, inventory of the way in which these powers have, in fact, been used and whether the predicted safeguards have turned out to be safeguards at all. Of course, the first thing to notice is that there are substantial differences in the kinds of protection that have been given. One of the questions which the noble Lord, Lord Houghton of Sowerby, asked was: Can one get a list of documents that have been taken?
Under the VAT legislation there is no statutory provision for that, but under the Finance Act 1976 the occupier of the premises or the person who had possession of the documents can, as a matter of law, require a list. That must be an improvement. So evidently we have learned that safeguards were not there before and are needed. By the same token, although the clients, or friends, of the noble Lord, Lord Spens, who are in the restaurant business, could not require the inspection of their restaurant books under the VAT legislation, they could have done so if the documents had been seized under the Finance Act 1976 because they would have been required in the course of the business. Therefore, it is quite evident that safeguards which were not originally written in, have, as a matter of practice, been found to be necessary and to have been incorporated in new legislation. That is an advantage, but it means to say that we have room to learn, to experiment and to improve all the time.
I confess to a fairly grave underlying anxiety about this. I do not like the idea of people in civilian clothes—however worthy, zealous, honest and upright they may be—being allowed to come to a citizen's front door and, not being police, to force their way in on a warrant. If it can be avoided, it should be avoided. There are two other difficulties about this. First, there is no way of identifying such people. I suppose that they could show a warrant, but what citizen in those circumstances is sharp-eyed enough to take down the name and the initials of the official from the warrant when it is shown rapidly to him? Such officials have no numbers on their shoulders as policemen do, so if in the course of the investigation something occurs about which the citizen 2034 wishes to complain, how is he to identify the person against whom he wishes to level the complaint? There are all sorts of things of that nature which are inherently unsatisfactory unless we are absolutely forced to have them.
My approach would be this. I do not suppose anybody would ask me, but if I were to be asked whether this system should continue and whether I would give my views upon it, not only would I wish to know how they had actually been operating—and I would expect that that would be the approach of the Government as well because that must be the conscientious approach—but I would also wish to look again at the justification for having these powers in the hands of the Civil Service at all. It is a matter of straight record that the two recent Acts which bring these powers into existence are the Finance Act 1972 and the Finance Act 1976. In the case of the first, the VAT legislation, the only occasion when entry by force can be employed as a weapon of investigation is if a justice of the peace is satisfied that there is reasonable ground for suspecting that an offence in connection with tax is being, has been or is about to be committed on the premises. That therefore presupposes a situation which is not uncommon in the case of police getting warrants of entry. This is tied specifically to a suspected offence, not a matter of avoidance, not a matter of routine investigation, not a matter of mere suspicion of some sort or another; there has to be something which points to an offence.
That puts me on guard to wonder why the matter cannot be dealt with by the police, because they too, no doubt, can investigate offences. If you look at the equivalent provisions which are put in by the Finance Act 1976, the only circumstances in which entry with warrant to obtain documents can be justified is 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. There is the same point again. It was indeed used at the time of the passing of the Act. The chairman of the Board of Inland Revenue, writing in The Accountant, justified the proposed powers by saying that we are thus talking only about fraud which is a criminal offence.
2035 For myself, I should like to investigate, if I had the opportunity with the full resources of Government, whether it would not be possible that these investigations could be carried out by the police. It may be that they cannot be. I am not asking the noble Baroness this evening to say whether or not this is so, but I should have thought that if in practice these matters were giving rise to complaint—there have been complaints before and the noble Lord, Lord Spens, produced another today—those concerned might carefully like to think afresh whether these powers should not, after all, be given back to the police for them to exercise in a way in which they must exercise their powers of investigation of many other offences all over the country every day.
Having said that, I really want to ask the noble Baroness only two questions about the safeguards. As I said, these are being improved all the time. In the 1976 Act one new safeguard was introduced. Instead of the warrants being issued by a justice of the peace—because there have been some suggestions in another place of criticism of justices of the peace, although I do not think it was intended in any way to be general or derogatory of justices of the peace, notwithstanding the suggestion that they might not be a sufficient filter, as it were, through which to pass these matters—the power to issue the warrants was given to the circuit judge, as the noble Lords, Lord Houghton and Lord Hale, said. I wonder whether the noble Baroness can tell us whether in practice this has made any difference. If I were a circuit judge and had been told that 1 was being brought in as a safeguard instead of the justices, I think I should be inclined to ask for a good deal of information before I was prepared to sanction the warrant. I have no doubt that there have been occasions since the coming into force of the Finance Act when circuit judges have had to be asked to endorse these warrants. I would think that the Government have got information, and I should be grateful to know if they have and whether this has meant that in practice more detail has to be provided before a warrant can be obtained.
I can well understand the possible basis of the criticism of the justices that may have occurred in another place. Some of these matters will be highly 2036 technical and no doubt consist of a good deal of paper which can be looked at before any further documents are obtained. It may well be that certain justices might take into account the fact that the information is given on oath, together with the source from which it comes, as being sufficient in itself to allow a warrant to be issued. I would not have expected with the introduction of circuit judges as a safeguard, that they would be prepared to take things with anything like the same degree of trust, if indeed it has been taken on trust before.
Can the noble Baroness tell us whether this has proved to be an effective safeguard and that, in order to be sure to be able to answer all the questions that a circuit judge might wish to put, those who have gone to see him to seek a warrant have prepared their cases more fully and carefully than used to be the case when they went to the justices? Of course, they would not have been the same people —it would probably be the Customs and Excise people who went to the justices—but has it worked as a safeguard?
The second thing is the question of investigating complaints, which again the noble Lord, Lord Houghton, touched upon. I have already pointed out that those who do these searches are probably not the police, although the police may stand by on occasions. In the same year as the present Government passed the Finance Act which we are talking about they also passed the Act that set up the Police Complaints Board. The Police Complaints Board, controversial though it may have been, provided for disciplinary complaints to be investigated by a new tribunal containing a lay element; and your Lordships may remember it being discussed. Supposing in the course of one of these searches and entries and documents being taken the citizen has cause to complain about the way in which officers from the Inland Revenue have treated him, or indeed treated members of his family because they are involved as well; what in fact happens? How does the citizen set about complaining?
I have no doubt that he can write to his Member of Parliament and the matter will then be dealt with. What usually happens in those circumstances is that the Member of Parliament would pass 2037 on the complaint to the Treasury Minister who would investigate it and send an answer back to the Member of Parliament with a copy for him to send to his constituent, and that may or may not be satisfactory. The thing can, of course, be proceeded with by way of Question and Answer, but it is a somewhat indirect method of getting at it, and certainly no lay element is involved at all.
I imagine that if one were to write direct to the Inland Revenue an internal investigation would be carried out and at the end of it some form of answer would be obtained. Again, one is not dealing with any sort of tribunal. I may be wrong, but so far as I know there are no outwardly known rules whereby an investigation of this kind is carried out so that the citizen can be satisfied that certain formal stages have been gone through. Certainly there is no lay element. There is also another difficulty and another reason why, if I had the choice, I would not leave it in the hands of civil servants. However marvellous they may be in every other respect, they are not members of a disciplined force in the same way as are the police.
There may be disciplinary procedures. You may not get your promotion, or you may get transferred to another department, or you may not be allowed to do this sort of thing again. These may be very severe and great punishments, but it is not the same as when you are dealing with a disciplined force. These men and women, admirable though they may be, are not members of a disciplined force. Therefore, any disciplinary tribunal does not bite on them in quite the same way as it would if they were members of the police.
I suppose you can go to the Ombudsman, the Parliamentary Commissioner. Again, that is a fairly new remedy. I have seen the results of some of the Parliamentary Commissioner's activities, and they are wholly admirable. There may, on occasion, be criticism that he has missed some of the finer nuances, and this is always liable to happen with any investigation; but he produces a full report of the whole of an impartial, and this time a lay, outside investigation. The only trouble is that nobody can make anybody do anything about it. He may produce criticisms of the most violent nature 2038 against what has happened, but he is totally toothless. It is only the Committee of another place that can do anything about it, and so it is all still somewhat indirect.
If the noble Baroness could explain whether that is the whole range of remedies—I expect it is not—I should be grateful. I should like her to make a point of telling people how the ordinary citizen is supposed to go about a complaint, in the unfortunate event that he or she should have one to make, and whether in her opinion the procedures are satisfactory and are as good as the ones that we have set up under the Police Complaints Board.
If we are giving members of the Revenue and members of the Customs and Excise staff, however senior and good in every other respect, the same powers to interfere with the liberty of the citizen as the police of course must have, then I believe that we should also make sure that the check and the balance is equally effective upon them. I add only those questions to a full list that the noble Lord has already asked, and I hope that we may be enlightened. If we are not, of course we can return to the matter on another occasion.
§ 6.33 p.m.
§ The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk)
My Lords, underlying my noble friend's Question this afternoon, as with his earlier Question on this subject, is a general concern—and I think it is not unshared right across the House—that civil servants may have been given unnecessarily wide powers to search individual citizen's homes and places of work. My noble friend was good enough, as he pointed out, to send me a list of the questions that he was raising.
I think that I must start by saying that I share, as he does, with my noble friend Lord Hale, a passion for liberty, and a grave suspicion and doubt about any invasion or intrusion into the liberties and privacy of the subject. I also applaud and agree with any form of pinpointing of anything that may be wrong, and also making it quite clear that when powers of this sort have to be taken—and my noble 2039 friend Lord Hale in fact mentioned in the first words of his speech that nowadays, and in certain fields, it is unfortunately necessary for these powers to be taken—they should be carefully watched, they should be monitored, and that in both Houses of this Parliament and in our democracy we should keep a close and eagle eye on them.
From his questions today and the earlier Question, my noble friend also believes that in some cases these powers may have been abused. I would not for one moment pretend to be able to say here, or on oath, or in any way, that there may not have been in the past, and there may not be in the future, occasions when powers (as all powers are) are abused by certain individuals. This is part of the human pattern of any society. One cannot lay down anything rigid to cope with that situation.
The noble Viscount, Lord Colville, said that there is always room for learning and for improvement. I would certainly go along with him on that, and it may be helpful if I first explain in general terms why successive Governments, of both Parties, have felt it necessary to give officials power to search premises in this way. The noble Viscount is of course well aware that the 1972 Finance Act, which he mentioned and which covered the queries he raised on the question of VAT, was passed by a Conservative Government. The Finance Act 1976, which was mainly the subject of my noble friend's questions, was passed by a Labour Government. I think that this shows the reluctant necessity on the part of both Governments to have to employ what, in certain cases (and I hope fairly rare cases) are these draconian measures.
A central point here is that we are dealing with complex cases which may involve very serious offences. We are not here talking about minor offences, or about scattered, petty offences; we are talking about major offences. Among these cases there are bound to be some in which it is simply not possible to obtain sufficient evidence without obtaining documents and books.
While on this matter I think I should point out that I am given to understand that in tax lost, evasion costs the country 2040 some hundreds of millions of pounds through certain people practising in this completely calculated way. This is not a question of somebody making a mistake in their income tax return. It means that the rest of the community, the rest of us who are paying our taxes, are in a way, having to make good the loss to the State of the revenue that is just not being paid.
In the cases we are talking about I think we must distinguish cases which are of such gravity from the rest, and we have to be realistic. I think my noble friend Lord Hale put his finger on this point, and the noble Viscount, Lord Hanworth, also mentioned it. It is very unlikely that, in the absence of powers to enter and search premises, documents and books which would incriminate individuals and companies would be volunteered. If in fact a warning was given leaving enough time for the destruction of the records which would be absolutely essential and invaluable in delving into this question, then there does not seem to me to be any alternative.
I will take a hypothetical case. A company, let us say, is engaged in a tax fraud involving millions of pounds. The Inland Revenue, from sources outside the company itself, gets wind of this fraud; but if it is to get sufficient evidence to prosecute it needs to get all the company's records. Is it not possible that if they simply telephone to ask for them, the company will destroy or tamper with the evidence? A great deal has been said, particularly by the noble Viscount, about giving these powers to the police rather than to civil service officials working with the police. It is not very likely that, if the police telephone somebody and ask, "May we come and search your room because we are looking for some stolen goods?", the reply will be, "Certainly, come and search my room "without anything further happening. By the time the police arrive the room will probably have been swept clear—the place will have been "laundered", which is, I think, the phrase to use.
To be able effectively to check frauds of this nature the Inland Revenue need to enter premises without prior notice, so that they can obtain the required evidence before the company has had a chance to tamper with it, and in the case of individuals the same applies. The same 2041 is true of other areas where officials have these powers, for example in relation to exchange control and the collection of value added tax. As my noble friend pointed out, much of this ground as it concerns the Revenue was gone over during the passage of the Finance Act 1976.
Bearing in mind that the Revenue have used their powers in this regard on only seven occasions since that Act became law, we see that it is not being used in an extravagant or rash manner. In any event, it is rather early days—I am not criticising or querying the fact that one should now be drawing attention to the possible problems that might arise—and it is rather premature to try to give in any great detail the answers to a number of the crucial questions that arise until we have seen how this has worked out in practice.
Even some of those cases where entry has been made are still underway and have not been completed. The nature of some of the cases is illustrated by the fact that in the first two cases which have been completed—this illustrates the severity of the cases which come into this rather limited group—nine people have been charged and found guilty and prison sentences totalling more than 21 years have been imposed. That does not imply anything about the other cases where the Revenue have used these powers, cases where they have not yet been able to proceed.
We are very much aware—I assure noble Lords that I am personally aware—of the dangers which may arise when powers of this kind are conferred on anybody. I would class the police here with civil servants; the idea that a uniform makes all the difference, I do not think is entirely relevant. In any case, a number of policemen involved in cases—not these cases but cases generally—are in plain clothes. I am rather puzzled to know why so much confidence is placed in the police vis-d-vis civil servants in cases like this. The point to remember about a civil servant going along is that he is an expert in the particular thing they are looking for. After all, it is difficult, with the best will and rectitude, to expect a policeman to be able to make a proper search for documents and books in a highly complicated tax case when really he would not know what he is looking for.
Viscount COLVILLE of CULROSS
My Lords, I do not think the noble Baroness can get away with that. How does she suppose the Fraud Squad recognise the documents when they go to investigate fraud cases which may take months to try because of the complication of the documents? The police are perfectly capable of doing this and they have specialists who can do it.
§ Baroness BIRK
My Lords, while I am not an expert in this matter, so far as I know, in a case of fraud, a lot of evidence has already been built up and they then have a chance, once they go in, to get further advice on the subject. We arc talking of cases where knowledge is given by some means to the Inland Revenue and, that information having been given, the Revenue must act quickly and obtain highly complicated documents. I accept that the noble Viscount is more expert than I am on questions of tax and the laws of finance, but the tax cases with which we are concerned are of a highly complicated and complex nature and they cannot be coupled with all types of fraud cases. Some cases of fraud I can understand perfectly well, though thinking of some of the places which the tax officials have had to visit I believe it would be extremely difficult for anybody except experts to do that job.
In order that we take every safeguard, the necessary warrant can be obtained only when the Department concerned has satisfied a magistrate, or, in the case of Revenue, a circuit judge. I would also add that it is not the case that some minor official can go either to a magistrate or to a circuit judge; the Commissioners of the Board of Revenue themselves must agree that action should be taken on each such case before anybody can go before a circuit judge.
The noble Viscount asked whether I thought a circuit judge would take more care than a JP in deciding that there were reasonable grounds to suspect that an offence had been committed. Speaking as a JP who is at the moment resting, I hope the noble Viscount will not knock JPs too hard. My answer is that it probably depends on the case. From my experience, many JPs question such matters very hard indeed. Certainly I have always done so in the past when I have been asked to issue a search warrant. 2043 And more and more today, because of the whole structure, training and method of selection, JPs are very much more versed in the way of dealing with these matters when such requests come before them. Where a circuit judge is charged with this responsibility, he would certainly take great care to see that the information supplied to him was adequate to justify the issue of a warrant.
In these particularly complicated cases —I think we are here dealing with even more complicated ones than those mentioned in my noble friend's rather more general questions—we have judges who are experienced lawyers and who are exercising very important judicial powers. It was because of this that they were introduced into this scheme. As to the future, the matter is open; whether it may in the future be considered necessary, in the other areas, that warrants should be issued by a circuit judge, I do not know. Certainly the Government would be open to consider the matter, in the same way as we are open to look into the way in which these things are developing, to make sure that every possible precaution is taken, with supervision, in order to catch any difficulty and ensure that these matters are dealt with completely properly.
I stress the word, "satisfied", in relation to an offence being or having been committed, because it is not enough for a civil servant simply to affirm on oath that reasonable grounds exist; the magistrate or circuit judge must he convinced of it. It is pertinent to point out that no warrant has so far been refused by a circuit judge, and I understand that in relation to exchange control the same has applied in the last 15 years, though there the matter goes before a justice of the peace. Here, as elsewhere, the public relies in the last analysis on the Judiciary to protect it, again ensuring that warrants are granted only in the right circumstances. To take the matter a stage further, if a case was brought and then thrown out, the effect of that would itself be very strong. The civil servants, who are involved in exchange control, income tax, value added tax, or any of the other areas where powers to search premises can be obtained, are well aware of this need to satisfy the judicial authority. 2044 As I have pointed out, in no case in which a warrant has been applied for has it been refused.
My noble friend Lord Houghton of Sowerby asked several questions about the procedure involved in these cases. He is concerned particularly with what happens before a search, how the search is conducted, and what happens afterwards. Some of his questions I have already answered during my general remarks; or I have tried to answer them in the light of the amount of experience we have of the recent Inland Revenue change. I am sure that, with his knowledge of the whole subject, he will appreciate that some of the other points are detailed matters. These concern the police as much as anybody else, and I may not be able to answer them fully. He pointed out that he was not going to comment on specific cases; neither, of course, can 1
My noble friend asked what rules there are about asking individuals or companies for information before taking out a search warrant. As I have already said, warrants are sought only in exceptionally serious cases, and generally a warrant is resorted to only where other attempts to obtain information have failed. There are masses of cases where the people involved and the Inland Revenue get together, arrangements are made, and the whole matter is solved without having to resort to warrants. But there are cases where there is a great danger of the evidence being destroyed, and it is here that it is quite impossible to give prior warning to a company or an individual that he or they are being investigated.
My noble friend also asked about the need to satisfy the appropriate judicial authority before a warrant is granted. I believe that I have already covered that point. But, by way of example, I should like to add that I understand that one recent Inland Revenue application for a warrant had attached to it a summary of the evidence running to 15 pages of typescript. My noble friend asked what it contained, but I am afraid that the matter then becomes a vicious circle, because this is confidential information. Again, he must rely on what I said earlier about the qualities and qualification of the circuit judge.
2045 Before I attempt to answer my noble friend's queries on the conduct of the searches, there are two general points I should make. First, the details of the conduct of the searches concerned the police as much as the civil servants involved. Indeed, for the Inland Revenue and exchange control, one:or more policemen are always present during searches. So there is no question of civil servants going along alone, although the Customs and Excise officers do not always take policemen with them, since they have a special law enforcement status of their own. The second point is that the details of what is, and what is not allowed, will depend on the particular case and the particular warrant.
I shall now try to cover my noble friend's specific questions briefly. He asked whether a warrant authorises repeated entry. I have been into this as thoroughly as I can, and it is very difficult to imagine any circumstances in which a renewed search would be useful, and I can find no evidence of that so far happening in practice. We have found no decided case. Although it is thought that in theory, reading the terms of the warrant, a second search might be legally possible if it were carried out within the requisite 14 days, I will personally stick my neck out and say I think it is very doubtful that there would be a second search without going back for another warrant.
My noble friend also asked whether a warrant authorised prolonged occupation of the premises. The answer is that it entitles the searchers to remain on the premises as long as is necessary to complete their search. This is a question of how much material they are looking for, and how many people they have with them. The warrant will generally entitle those executing it to search individuals for documents; but there is no power to stop people leaving the premises, and the officers will not search people unless there is a very strong suspicion that, for instance, someone has put a document in his pocket or tried to conceal it in some other way. All warrants, with the exception of those under Section 20C of the Taxes Management Act 1970 (in regard to the Inland Revenue) allow those executing them to search the individual for documents, although this is very seldom used.
2046 My noble friend also asked whether a list of articles or documents received should be furnished to the occupant at the time or subsequently. Before I leave this question of the time, I should say that the object of the exercise, for both the officers and the police, is to get what they can as quickly as possible, and then get out. They do not want to linger. They want to get the information they seek, and get out as quickly as they can. Whether lists of documents should be furnished at the time or subsequently varies from case to case. Lists will be provided in cases involving the Inland Revenue and Customs, but they may not be in some other cases.
§ Baroness BIRK
No, my Lords, I am not saying that at all. I am saying that, in cases involving the Inland Revenue and Customs and Excise, lists are provided. Sometimes they are provided on the spot. It depends on the amount of material that has to be taken away. In other cases they are provided later. Here I must apologise to my noble friend, and say that I will write to him concerning "some other cases" because, quite frankly, I am not sure to what they refer; but they do not refer to Inland Revenue and Customs, which are the main matters with which we are concerned at present.
A question was raised as to whether people who were carrying on business would have access to documents and other materials which were taken. The answer is, Yes, they will. They can have access to any books or accounts they want to see, but they cannot take them away with them.
Viscount COLVILLE of CULROSS
My Lords, will the noble Baroness clarify that? It is a very important point. I think that, in the case of Customs and Excise, it would have to be a matter of practice rather than a matter of any statutory right, because I do not believe that it is written into Section 37 of the Finance Act 1972 the way it is written into 2047 the 1976 Act. Is she saying that, as from today, or some date in the past, people who have documents taken for VAT inquiries may have access to them for purposes of their business?
§ Baroness BIRK
With regard to VAT, I think I am right in what I say, but I wonder whether the noble Viscount will allow me to check this and write to him on the point.
§ Baroness BIRK
I will write to everybody who has taken part in the debate on that point, as I do not seem to know the answer at the moment. My noble friend's final question about warrants was whether civil servants are obliged to give their names and ranks to the occupants of premises, and whether each officer had a warrant. The noble Viscount, Lord Colville of Culross, also raised that point, though in a rather different way. The answer is that, generally, there is one warrant; but I have seen a copy of this type of warrant, and on the back it lists the names of all the officers. So, although, as my noble friend pointed out, a person may not carry out a check list as to who is Jones and to who is Smith, that person will know immediately how many officials there should be who are covered by the warrant. If there are more officials present than the number on the list, a person would be absolutely right to query this, and naturally would do so.
My noble friend and some other noble Lords are also very concerned about publicity and relations with the Press—I have had a message by pigeon post. It says that Customs and Excise always make a practice of giving access to documents. Perhaps that will save me writing a lot of letters. As I was saying, I recognise that publicity and relations with the Press is a very difficult one. So far as is possible—and, again, I have been into this as thoroughly as I can—I should 2048 like to assure noble Lords, as I did on an earlier occasion, that no information is given to the Press before a search warrant is executed, either by the Inland Revenue or by the Customs and Exercise, or by the police themselves.
But we must remember that the exercise of a search warrant is a public act, and, quite frankly, the Press could be "tipped off" by an employee arriving and seeing the place swarming with people. Then, if the Press arrive and see a lot of movement going on, with vans outside and people milling around, they are going to inquire very quickly what is happening. But it is a public act, and the relevant Department, if asked, cannot deny they are conducting it and cannot do other than quote the authority under which they are doing it. All they are instructed to say is from which Department they come and the authority under which they are there. But information is not given about the nature of the suspected offences, and information is given only about the premises being searched, which is already clearly public knowledge.
Odd things happen. In fact, somebody mentioned to me the other day having seen something reported in the paper about a company in relation to which it appeared that action might be taken. This turned out to be a statement given out by the company itself. It evidently thought that this was the better part of its own valour. So this is one way in which it can happen. It can happen through employees, or it can happen, as I say, because people are around there. There may be—I do not deny it—the odd case where there may be a very unfortunate leak, but so far as is humanly possible this is guarded against. In a recent case, the case which my noble friend raised in his Starred Parliamentary Question, inquiries were carried out both by the Inland Revenue and by the police, who conducted their own inquiries to try to establish whether there had been any leak; and they found that, to the best of their knowledge and belief, there had not been.
A point raised by the noble Lord, Lord Spens, dealt with a specific case. If he would like to write to me and give me the details, I will look into it. I really cannot accept what the noble Lord, Lord Spens, and I think the noble Viscount, 2049 Lord Hanworth, said about this being a horrible police State, with almost uncontrollable powers of entry. I really think that is a horrible statement to make about this country. I think that the people who feel like that ought to see what happens in a real police State before saying such things. They would not be able to get up and say that this is a horrible police State, to start with. So, while we have got to keep, as I say once more, the strongest and wariest eye on this situation, we must keep a sense of proportion and regret very much, as I do, with my noble friend Lord Hale, that there are situations where it is impossible to deal with this sort of crime—and we are talking about crime—in any other way.
Finally, the noble Viscount, Lord Colville, asked me about the system of complaints and accountability. In the first place, civil servants are accountable to Ministers, and I would think that when cases like this occur the relevant Minister would want to be assured, certainly, that the action taken was justified and carried out properly. Complainants can, as the noble Viscount pointed out, and should, write to their Members of Parliament. As to the Ombudsman, recognise the limitations but, on the whole question of the powers of the Ombudsman, they are not rigid for the future; it is possible to extend those powers. The noble Viscount raised the question of something equivalent to the Police Complaints Board, which, let us face it, also took a long time coming. I would not say that any of these are closed options at all. I think that all of us would want to feel that any safeguards that we could build in, where we have to take action of this sort, we would build in; and any suggestions that are put forward I shall certainly gladly pass on to my right honourable colleagues in another place.
One of the points which I think are important as matters of fact is that no complaints have been tabled since the 1976 Act. Since only seven cases have arisen from it, since there have been no complaints, and since warrants have been issued by circuit judges in each case, I think one can safely say that up to now this procedure has been exercised with as much caution, as much propriety and as much discretion as is possible. This does not mean that we should not, as I 2050 have continuously said and believe, keep this subject always under very close supervision and control. My Lords, although I have had a very uncomfortable few days dealing with all this, I think that an Unstarred Question and a debate of the sort which we have had, initiated by my noble friend, is very advantageous and very nourishing to our democracy!
My Lords, before the noble Baroness sits down, may I say that she has invited me to write to her about a particular case, but she has not answered what I thought was a general question about the taking of money and the giving of receipts. How long a period is considered reasonable before Her Majesty's Customs and Excise give a receipt for the taking of money?
§ Baroness BIRK
My Lords, again I will write to the noble Lord about this. This applies also to the listing of other information. It often takes quite a considerable time to do. The money is accompanied by a great many documents and other things as well, but if I can give the noble Viscount any more precise information, I will. I do not think anybody is borrowing this money and using it meanwhile; it is just a case of the time taken to accumulate the evidence before dealing with everything altogether. As I understand it--and if I am wrong I shall certainly correct it and write to the noble Lord—it is simply a case of time and the amount of work that is involved in these cases.