Clause 21
Finance (No. 2) Bill
4:00 pm
Brooks Newmark (Braintree, Conservative)
HMRC’s powers to direct a business to keep additional specified records are, as we have heard, extended by the clause. As my hon. Friend the Member for Rayleigh implied, the powers in the measure can be exercised only when HMRC has reasonable grounds to believe that the additional records might assist in identifying supplies on which VAT might go unpaid. The measure is intended to deter MTIC fraud.
HMRC began a wide consultation on its powers, deterrents and safeguards in March 2005 following its creation in the Commissioners for Revenue and Customs Act 2005, and the responses to the consultation were published in July 2005. A further consultation document was published on 30 March 2006, but neither document covers the specific proposals in the Bill. The Government could usefully explain why these measures have not been consulted on. A regulatory impact assessment has been published, however.
It might be useful if the Government explained why there is a need for legislation to make these changes, and why it would not be possible for HMRC to suggest that firms should keep records, as that would help them to defend themselves against accusations of MTIC fraud. They might also explain why those powers can be applied more widely than just to goods that are usually involved in MTIC fraud—primarily computers and mobile phones—and why it would not be wiser to restrict the power to those goods for the time being.