Criminal Justice and Police Bill

Part of the debate – in the House of Lords at 8:28 pm on 2 April 2001.

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Photo of Baroness Noakes Baroness Noakes Conservative 8:28, 2 April 2001

My Lords, I wish to speak to the smallest part of the Bill, Part 2. Clauses 48 to 50 deal with information disclosure for the purposes of criminal proceedings. At their heart is an entirely laudable desire to ensure that information held by the state should be available to assist in the investigation of crimes and in criminal proceedings. But, as is so often the case, the Government have drafted very wide powers, the exercise of which could easily be injurious to citizens.

I will deal in particular with Clause 49, which concerns the disclosure of information by tax authorities. Members of the Institute of Chartered Accountants, in which I declare an interest as a council member, have expressed considerable concerns about this clause, as have other representative bodies of taxpayers' agents.

Taxpayers have always believed that information given to the tax authorities is given in strictest confidence. This helps to promote a culture of tax compliance. For example, taxpayers whose affairs have got in a mess are positively encouraged to make a clean breast of outstanding issues. Under a procedure known as the "Hansard" procedure, a taxpayer can do a deal with the Inland Revenue. If the taxpayer honestly owns up to past errors and makes a financial settlement--usually a very large financial settlement--the Inland Revenue will agree not to prosecute. This is clearly advantageous to the taxpayer. But it also promotes a culture of compliance, which is one of the linchpins of our tax system, as well as improving revenue collection.

How will this procedure work in future? What a taxpayer sometimes owns up to is a source of income or capital which has its origins in an illegal act. Will the Hansard procedure protect the taxpayer in future from information disclosure as well? If that is not the case, or if the taxpayer does not believe that that is the case, we could well see a diminution in the incidence of voluntary disclosure and settlement of past tax liabilities. That would be bad for individual taxpayers, for the culture of compliance in this country and for tax collection generally.

An area of difficulty under Clause 49 is that disclosure under the clause requires the authority of the commissioners concerned; namely, the Inland Revenue or Customs and Excise. One problem with this is that in practice disclosure may well be authorised by a much more junior official to whom the commissioners have delegated their powers. I should be interested to hear whether there are any administrative processes planned to provide some protection to taxpayers against the over-enthusiastic use of these new information disclosure powers below the level of the commissioners themselves. I note in particular that, unlike Clause 47, the clause provides no penalty for wrongful disclosure. How will taxpayers be protected against the misuse of these powers?

I believe that the Government should also consider altering the authorisation procedures from within the tax authorities to an external authority. A precedent exists for occasions when the Inland Revenue wishes to obtain information about a taxpayer from external sources. It needs to obtain the permission of either a general or a special commissioner under Section 20 of the Taxes Management Act; that is to say, someone outside the Inland Revenue has to authorise the obtaining of information. It seems to me that there should be a similar requirement for the Inland Revenue to seek authority from someone outside the Inland Revenue--perhaps from a general or special commissioner--before information about a taxpayer is revealed.

I also ask the Minister to reconsider whether taxpayers should have a right to make representations before information relating to them is disclosed outside the Inland Revenue or Customs and Excise. I am well aware that there could be difficulties involved in people being "tipped off"; nevertheless, under the Bill as drafted, the taxpayer has no right of redress or right of speech.

The new information disclosure power is not confined to crimes that have definitely been committed. It does not even require criminal investigations or criminal proceedings to be under way. Clause 49(2) refers to criminal investigations which "may be carried out" and to criminal proceedings which "may be initiated". This is a very wide power. I believe that some protection for taxpayers is necessary. One way of providing protection is to ensure that disclosure cannot be made unless there is reasonable evidence that a crime has been committed.

Clause 49 is not limited to disclosure in the UK. It specifically covers criminal proceedings or investigations outside the UK. The provision is not restricted to criminal offences or suspected offences that would be treated as criminal if they were committed in the UK. For example, some acts which in this country are regarded as civil offences are regarded as criminal in other jurisdictions. Are we really creating a power to allow information to be passed outside the UK authorities for acts that we should not regard as criminal?

Penalties vary considerably around the world. We need to avoid exposing individuals in the UK to penalties that we should regard as unacceptable in this country--for example, death or a long term of imprisonment in circumstances where we should impose a fine. This is not fanciful; penalties vary considerably around the world. About a year ago, there was a report in the newspapers that the Russian tax authorities had set up a tax collection army trained in mortal combat.

I am told that a relatively common source of taxpayer disclosure under the Hansard procedures that I referred to earlier is from individuals who have brought money or other assets into this country from their former countries in breach of local laws. Many still have relatives in those countries and would fear for their own or their relatives' safety if disclosure were made. Ethnic minorities persecuted overseas may well be particularly affected by the application of these powers.

I believe that all of this increases the need for an external authority to be involved before any disclosures are made. I hope that the Government will re-examine the matter. I hope that they will examine also the specific case of disclosures outside the UK to ensure that disclosure can be made only where the offence concerned would be treated as criminal in the UK and where there is a broad equivalence of penalty provisions.

Finally, would the Minister, who has signed the usual declaration on the European Convention on Human Rights for the Bill, confirm that disclosure of information could not be made under the Bill to a foreign jurisdiction where that jurisdiction does not itself comply with an equivalent of the convention? If he is unable to confirm this, will the Government consider amending the Bill to achieve that protection?