§ Mr. Forman
asked the Chancellor of the Exchequer what is the policy of Her Majesty's Customs and Excise towards costs of unsuccessful appeals by taxpayers to the independent value added tax tribunals against penalties imposed under the provisions of the Finance Act 1985; and if he will make a statement.462W
§ Mr. Brooke
The practice of Customs and Excise in seeking costs in unsuccessful appeals heard by the VAT Tribunals was set out by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), when he was Financial Secretary to the Treasury, on 13 November 1978. There has been no change in policy since then, but with the new enforcement powers and rights of appeal, particularly on the grounds of reasonable excuse, enacted in the Finance Act 1985, it may be helpful to restate it. As a general rule, Customs and Excise do not seek costs against unsuccessful appellants. They do, however, ask for costs in certain narrowly defined cases so as to provide protection for public funds and the general body of taxpayers. They will therefore seek to continue to ask for costs at those exceptional tribunal hearings of substantial and complex cases where large sums are involved and which are comparable with High Court cases, unless the appeal involves an important general point of law, requiring clarification. They will also continue to consider seeking costs where the appellant has misused the tribunal procedure—for example in frivolous or vexatious cases, or where the appellant has failed to appear or to be represented at a mutually arranged hearing without sufficient explanation, or where the appellant has first produced at a hearing relevant evidence which ought properly to have been disclosed at an earlier stage and which could have saved public funds had it been produced timeously.
The new penalty provisions and right of appeal to the value added tax tribunals have made no change to this policy. Customs and Excise, with the agreement of the Council on Tribunals, consider that appeals against penalties imposed under section 13 of the Finance Act 1985 on the grounds that a person has evaded VAT and his conduct has involved dishonesty fall to be considered as being comparable with High Court cases. Where such appeals are unsuccessful, Customs and Excise will normally seek an award of costs.
In all cases the question whether or not costs should be awarded will, of course, remain entirely within the discretion of the tribunal concerned and the amount of any such award will be fixed either by that tribunal, or by the High Court, as provided by tribunal procedure rules.
Customs and Excise, in consultation with the Council on Tribunals, will continue to keep their policy under carefull scrutiny.
§ Mr. Michael Forsyth
asked the Chancellor of the Exchequer whether he has considered the fifth report of the Select Committee on Statutory Instruments in regard to the Value Added Tax (Repayment Supplement) Regulations; and if he will make a statement.
§ Mr. Brooke
Yes. I recognise the concern expressed by the Committee and by my hon. Friends the Members for Stafford (Mr. Cash), for Newark (Mr. Alexander) and for Surrey, North-West (Mr. Grylls) who entered a prayer against the regulations, that the position of the taxpayer should he fully protected by law, and that there may be room for doubt whether in their present form the regulations achieve this objective. I have therefore authorised Her Majesty's Customs and Excise to revoke Statutory Instrument 1986 No. 909 and to lay before the House today new regulations which are based on objective criteria to establish the dates of the relevant events.