Clause 25 - Penalty for evasion
Finance Bill
10:30 am

Question proposed, That the clause stand part of the Bill.

Photo of Mr Nicholas Winterton

Mr Nicholas Winterton (Macclesfield, Conservative)

Before we begin the debate and further to the point of order raised by the hon. Member for Eddisbury on clauses 34 and 35 and the amendments to them, the Chair is happy for amendments Nos. 123 and 124 to be discussed with clause 34 and amendments Nos. 131, 132 and 120 to be discussed with clause 35. I hope that that meets the wishes of the Committee.

I understand through the usual channels that the Committee is likely to sit until around 7.30 pm today. If yesterday's happenings in the House are a guide, we shall probably have several Divisions on the Floor of the House on the third day of the Criminal Justice Bill. I suggest to the Committee that it might be sensible to try to combine a tea break for Committee members—and particularly for Ministers, Opposition spokesmen and the Chair, a comfort break—with a Division if one occurs around 5 o'clock and that we have a short break of, perhaps, half an hour then. I shall make an announcement at the time, but thought it might be helpful for the Committee to have some indication of that now.

Photo of Mr Stephen O'Brien

Mr Stephen O'Brien (Eddisbury, Conservative)

I acknowledge with gratitude the approach that has been taken on clauses 34 and 35 with their attendant amendments. I dare say that I speak on behalf of all Committee members in thanking you, Sir Nicholas, for giving us guidance on the rest of today's business and particularly the timing of both tea and comfort. I am grateful to you for helping the Committee.

Turning to clause 25, the concept of dishonesty in evasion is retained, although there may be a question about the burden of proof because there is no need for the conduct in question to give rise to any criminal liability. The Minister's response on clause 24, and particularly his response to the hon. Member for North Norfolk, was helpful. The argument strayed into clause 25 and the hon. Gentleman has obviously received representations, as I have, about its application in relation to human rights and, therefore, the Police and Criminal Evidence Act 1984.

The Minister set out clearly the reasons for the possibility that the 1984 Act does not automatically apply in such cases. That went some way to alleviate some of the issues that have been raised in representations to us about clause 25. As a result of this short debate, the Minister will be able to add to that. The concern was that there might be an absence of due process. We were not minded to table amendments to the clause, but I await the Minister's response, although his response to clause 24 went a long way to assist me.

Photo of Mr Michael Jack

Mr Michael Jack (Fylde, Conservative)

Could the Minister put my mind at rest about the way in which clause 25 will operate for someone who unwittingly evades a requirement to pay tax when that is subsequently discovered following inspection and discussion with a representative of Customs and Excise and when they had not knowingly

set out to be dishonest? For those of us who have to deal with constituency cases in which constituents with small businesses run into problems over VAT, some words of reassurance would be helpful. Perhaps that is dealt with through the type of procedure that he described in clause 24, where letters of notice and warning are issued, but I should be grateful for some clarification.

10:45 am
Photo of Mr Stephen O'Brien

Mr Stephen O'Brien (Eddisbury, Conservative)

My right hon. Friend raises an interesting point. I hope that the Economic Secretary will confirm that the concept of dishonesty is retained in the clause. There should have to be an element of intent combined with some knowledge.

Photo of Mr Michael Jack

Mr Michael Jack (Fylde, Conservative)

I entirely agree with my hon. Friend's line of inquiry. We look forward to hearing what the Economic Secretary has to say.

Photo of Mr John Healey

Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)

The hon. Member for Eddisbury probed the burden of proof, which is an appropriate and important line of questioning because we are looking to introduce a civil rather than a criminal regime. As he knows, comparing the two regimes, criminal cases must always be proved beyond all reasonable doubt whereas civil cases require proof to a lower level, known as the balance of probabilities. Although that is a lower level than proof beyond reasonable doubt, the more serious the allegation, the higher the level of proof must be. Thus, for civil evasion cases the level of proof required by the courts and VAT tribunals begins to approach the criminal standard, although it is still below it, whereas the level of proof required to demonstrate liability for default surcharge, for example, is lower.

The right hon. Member for Fylde is rightly concerned about the position of businesses that trade honestly and make unwitting errors, as he described them. The Government recognise that even the best-run businesses make occasional mistakes, and penalties will not automatically be issued in such cases. In addition, the new penalties are part of a much wider programme that Customs is putting in place to ensure that the changes are implemented smoothly and to improve compliance across the board. Those include a visiting programme to provide advice and support for new traders who wish to improve their general compliance; improvements in the way in which existing guidance is updated and made available; and the publication of compliance standards. Those standards will be published through the joint consultative committee, a body made up of a wide range of trade and other interests with a direct concern in this field, as I explained earlier.

On that basis, I hope that all Committee members will accept the clause.

Question put and agreed to.

Clause 25 ordered to stand part of the Bill.