Clause 20
Finance (No. 2) Bill
3:30 pm
Mark Francois (Shadow Minister, Treasury; Rayleigh, Conservative)
We considered MTIC fraud in some detail under clause 19—and, in passing, I commend the Paymaster General for the detail that she gave in her reply. She did her best to respond to the points raised by my hon. Friends and me, within the confines that she faces, and I am grateful for that. I should like to press the Minister on some specific questions on the proposed powers to inspect goods before we allow clause 20 to stand part of the Bill.
We have received representations from a number of bodies about the measures in this brief but nevertheless important clause. For instance, the Institute of Indirect Taxation reacted to clause 20 as follows:
“We are concerned about the breadth of the new para 10 (2A). Our understanding is that HMRC only want to stamp the container or outside packaging and to scan any bar codes printed on the packaging. We fully appreciate the need for such powers”.
Nevertheless, the IIT goes on to say,
“However, the new sub-paragraph goes far wider than that. It will give customs powers to insist on goods being unpacked completely and then repackaged, at the taxpayers expense and to physically stamp the mobile telephone itself.”
Similarly, the Institute of Chartered Accountants in England and Wales, in its briefing note under the heading “The breadth of powers” states:
“The institute appreciates the value of this clause, as it will deter the multiple use of the same goods in MTIC frauds. Nevertheless, we are concerned that this clause goes far further than necessary, and contains insufficient safeguards. The clause effectively gives HMRC the power to have any goods (whether linked to MTIC fraud or not) completely unpacked and then marked.”
That is the institute’s view. I hear the Paymaster General dissenting, so I hope that she will clarify the situation. I was going to ask whether she could reassure us that the powers would be used selectively and only in appropriate circumstances, and whether she could provide that reassurance beyond doubt.
As well as the specific issue of MTIC fraud, there is the wider question of the deliberate smuggling of goods in order to evade payment of VAT and duties such as tobacco duty. My hon. Friend the Member for Wycombe (Mr. Goodman) dealt with tobacco duty in part 1 of the Bill, and I do not propose to cover that again now. However, this clause deals with powers to inspect goods.
On that point, Ministers might be aware that suggestions are circulating in some quarters to the effect that the Government are considering some kind of scheme for the marking of cigarette packets against counterfeiting and smuggling—perhaps something similar to the strip stamps on Scotch whisky. I see the ears of my friend from north of the border, the hon. Member for Dundee, East, pricking up.
That might range from simple marks that consumers can inspect to see that goods are genuine—but which risk being easy to counterfeit—to more complicated technologies for marking packets of cigarettes, which might be available to those with scanning equipment that can determine whether a packet of cigarettes is genuine and which could, theoretically, be used by HMRC inspectors in order to combat fraud.
I understand that discussions on the issue recently took place between the tobacco industry and HMRC. Bearing in mind that there was considerable discussion and consultation before strip stamps came in, can the Paymaster General say whether those discussions have progressed any further, whether there is any depth to them and whether the Government have any plans—even at an early stage—to mark cigarette packets in some way as an anti-fraud measure? Not least because of all the other changes that have taken place in relation to smoking in the past year or so, it is important to know what the Government have in mind.