The clause allows information to be exchanged under bilateral agreement with other states to prevent tax avoidance when it is
''foreseeably relevant to the administration or enforcement of''
the relevant legislation. Concern has been expressed to us that the new test of what information is appropriate to exchange is both broader and more subjective than the necessary test that it replaces and has been extended without prior consultation by analogy to how ''necessarily'' is construed for the purposes of section 198. The change could be damaging to taxpayers.
There is also a question whether it is lawful for the UK unilaterally to make changes to existing double taxation treaties and when some degree of retrospection may be involved. Even if a case can be made for broadening the scope to provide information from tax administrators in the future, an attempt to do so for the past is a cause for concern. Not all the 106 UK treaty partners enjoy the high standards of government that we enjoy, and there are concerns that the retrospective element is contrary to the Human Rights Act 1998 and article 8 of the convention. There is a view that the clause should be withdrawn.
I do not agree with the hon. Gentleman. It is important that the UK continues to include the Organisation for Economic Co-operation and Development published model agreement on exchange of information in tax matters, and the UK prides itself on being at the forefront of the drive to promote tax information exchange on as wide a basis as possible. It is therefore only right that the UK takes the first opportunity to bring its own rules in line with the current international standards as agreed by members of the OECD and non-OECD economies.
With regard to the hon. Gentleman's point about a wider interpretation of ''necessary'', I do not think that he makes a valid comparison. The meaning of all legislation must be considered in context. The context of the existing vires, and the exchange of information, requires a broad interpretation of ''necessary''. The
commentary on the OECD model double taxation article on exchange of information states that some countries replace ''necessary'' with ''relevant'' in their bilateral conventions, regarding that as a better way to express the sense of the provision. In the view of the OECD, either word may be used in that context.
The purpose of the new wording in clause 195 clearly better reflects the reality of what we and our international partners do in practice. That is why we want to adopt it. On this occasion I cannot agree with the hon. Gentleman. The wording is not contrary to the Human Rights Act 1998. We have considered that and we are satisfied that exchange of information powers are consistent with the Act.
We shall have to agree to differ, but I do not intend to waste precious time putting the matter to a vote. I close by saying that I hope that the Government have considered whether unilateral changes to existing double taxation treaties may present a legal problem.
Question put and agreed to.
Clause 195 ordered to stand part of the Bill.