Clause 34 - Powers in relation to documents
Tax Credits Bill
3:30 pm
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
The clause applies to tax credit fraud and two sets of powers that apply in relation to serious tax fraud. The first set of powers involves the production of documents, and is applied to all tax credit fraud. The second set of powers involves the entry of premises with a warrant to search for documents and applies only in respect of serious tax fraud. The amendment seeks to apply the second set of powers in all cases of tax fraud. I want to explain to members of the Committee why the amendment should be rejected.
The powers in the clause to enter with warrants are new powers that do not currently exist in relation to working families tax credit. However, when considering the totality of the compliance regime, we felt that they should be added for the most serious cases, such as where organised criminal gangs were engaged in systematic fraud.
I do not need to remind the Committee that these are significant powers. I thought carefully before agreeing to give them to the Inland Revenue, because the tax authorities should be given the power to enter premises with a warrant only in extreme cases. The powers will be used only by specially trained officers from the Inland Revenue's special compliance office and never in normal tax credit inquiries. I do not agree with the hon. Member for Hertsmere that they should be.
As with any extension of power, there must be a strong justification for the extension that is sought and for Parliament to agree them. All fraud is serious, whether it is tax fraud or tax credit fraud. I wanted to make it clear that a poor tax credit claimant does not have to fear that, if they make a genuine error, there will be a sudden knock at the door and the Revenue special compliance unit will be there. To addition of the word ''serious'' limits the powers to cases involving
large amounts of money. Because there are natural limits to an individual's tax credits entitlement, we do not think it right that the power should depend on the seriousness of the fraud against the public purse.
However, we need the powers to require the production of documents in such cases, and I have left those in place. That is because there may be factors in an individual claim that are indicative of organised fraud, but the sums of money known to be in question at the time that the documents are required to be produced may not warrant the tag ''serious''. That is the point about prosecuting somebody for a crime that has not yet been committed. Not unreasonably, the courts take a strong line on the matter, and claimants must be in receipt of tax credits, as the hon. Gentleman, who is a barrister, may know.
The position is different for search powers, and I make no apology to Parliament for that. It is my job as Paymaster General to ensure that where there are extensions to powers of this type they are fully justified, and they are not justified in respect of tax credits.
It is clearly more intrusive to enter someone's premises and search for documents, than it is simply to require them to produce documents. We have been cautious about extending these powers, and I make no apologies for that proportionate approach. The powers allowing entry to premises should apply only if the sums of money involved are such that the Inland Revenue is in a position to demonstrate to a judge that there are reasonable grounds for believing that there is serious tax fraud. It is right that the Inland Revenue should be subject to checks and balances, which it rightly sought.
These are not clear-cut decisions, and this is an area in which we should move with caution. We have to balance the reasonable rights of the citizen against the need to tackle those who deliberately set out to cheat the tax credit system in an organised way. We feel that the provisions in clause 34 strike the right balance, and I therefore hope that the hon. Member for Hertsmere will be reassured about the way in which the Bill is framed. If, however, he feels unable to withdraw the amendment, I shall have no hesitation in asking my hon. Friends to oppose it.