Clause 26 - Penalty for contravention of relevant rule
Finance Bill
10:45 am
Mr Stephen O'Brien (Eddisbury, Conservative)
I beg to move amendment No. 125, in
clause 26, page 22, line 3, leave out subsection (3)
The amendment is linked to clause 25, which introduces civil penalties for evasion of import and export duties. Clause 26 contains a compliance rule, which carries a penalty for transgressions—subject to the concept of a reasonable excuse, which is a limited concept in VAT terms—and for the breach of certain rules and requirements in circumstances other than evasion.
My approach to clause 26 is twofold. First, I seek clarification of the part to which the amendment does not relate. I suspect that we will therefore find ourselves having a stand part debate and I hope that that is what you will rule, Sir Nicholas, for the convenience of the Committee. My point, which comes from the Institute of Chartered Accountants in England and Wales, is that although the maximum penalty for contravention is £2,500, it is not clear whether that is an absolute penalty for a given series of breaches or the maximum that could apply to each breach. If 20 invoices covered the import of a consignment of the same goods, all destined for different customers, and there was a common breach, would the fine be £2,500 or £50,000?
If the maximum fine was limited to £2,500, that would not be a criminal matter. On the other hand, if the fine was £50,000, any enforcement procedures would have to follow the Police and Criminal Evidence Act 1984. Given the answers that the Economic Secretary has already given on this part, and his reference to the position under article 6(2) of the European convention on human rights, a question arises of whether PACE would apply. The example used to express the ICAEW's concern might be debateable, but the fundamental point about the maximum fine is important and we seek clarification.
My second point relates to the amendment. The problem that I have identified and highlighted through it centres on the understanding of the phrase ''without further qualification'' in subsection (3). Does it mean that Customs and Excise does not have to give reasons for designating someone a prescribed person? If so, it might be difficult for the person concerned to argue against the designation. My recommended solution to the problem is simply to delete subsection (3). We believe that it is wrong for Customs to be able to name any person under that rule—a point that can be generally understood in terms of the fair and appropriate balance of justice. Instead, Customs should be required to show that an individual falls within a designated category.
Under the current provision, a person could have no knowledge of why they were being designated a prescribed person, and no redress. We regard that as a penalty and it is of concern to all our constituents who potentially could be in that situation. Customs and Excise is being given too wide a power. The power proposed by the Government in the clause could ultimately allow Customs to prevent someone from arguing whether they should be a prescribed person, because it could simply include them by name without giving an explanation or reason.
I hope that the Economic Secretary will consider the matter in the serious way in which it has been put, and that he will accept the amendment.