Clause 421 - Disclosure of information to Director

Proceeds of Crime Bill – in a Public Bill Committee at 2:30 pm on 31 January 2002.

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Amendment proposed [this day]: No. 606, in page 245, line 1, leave out subsection (9). -- [Mr. Grieve.]

Question again proposed, That the amendment be made.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

I remind the Committee that with this we are taking the following amendments: No. 631, in page 245, line 3, leave out 'an' and insert

'a District Tax Inspector or higher grade'.

No. 627, in page 245, line 5, after 'a', insert --

'collector or higher grade'.

No. 607, in clause 422, page 245, line 17, leave out paragraph (b).

No. 608. in clause 422, page 245, line 19, leave out subsection (4).

No. 632, in clause 422, page 245, line 21, leave out 'an' and insert --

'a District Tax Inspector or higher grade'

No. 628, in clause 422, page 245, line 23, after 'a', insert --

'collector or higher grade'.

No. 619, in clause 425, page 247, line 27, leave out subsection (9).

No. 633, in clause 425, page 247, line 29, leave out 'an' and insert --

'a District Tax Inspector or higher grade'.

No. 629, in clause 425, page 247, line 31, after 'a', insert --

'collector or higher grade'.

No. 620, in clause 426, page 248, line 3, leave out subsection (4).

No. 634, in clause 426, page 248, line 5, leave out 'an' and insert --

'a District Tax Inspector or higher grade'

No. 630, in clause 426, page 248, line 7, after 'a', insert --

'collector or higher grade'.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

Before I was rudely interrupted at 11.25 this morning, I was making some relevant and informative points. [Interruption.]

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

Order. The hon. Gentleman is entitled to be heard, no matter how facetious he may be.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

I am grateful to you for that ruling, Mr. McWilliam. Some Labour Members found what I

had to say this morning not to their liking. I was referring to important matters, but they fell on ears that did not want to hear.

This morning's debate was about whether to delete the power to have other people undertake duties for the commissioners or whether it should be specified who, on behalf of the commissioners, could exercise that power. I hope that, during the lunch break, the Minister reflected on those two choices. As I suggested earlier, probably the best course of action is that the commissioners make such decisions. The powers of disclosure run counter to many of the customs of this country. We have always prided ourselves on saying that a particular investigation will be specific if it is carried out by, say, the Child Support Agency or the Inland Revenue. There will be an end to it and there will be confidentiality within the investigation.

We are now saying, however, that there will be the passing of information. I am not sure that I object to that in principle. All of us have had experiences when it would have been much more sensible if only the national insurance contributions computer had spoken to the Child Support Agency computer. I can understand that argument, but the Bill is a great departure from the way in which such matters have been handled in the past. It probably is right for the cross-fertilisation of information that such a decision should be made at the highest possible level. Amendment No. 606 would make it clear that the commissioners themselves should make such a decision.

I understand only too well that it could be argued that the commissioners have so much else to do that delegation would happen at the end of an agenda, and if there was a large number of requests, there would be neither the time nor the inclination other than to rubber-stamp them. My hon. Friend the Member for Beaconsfield (Mr. Grieve) rightly said that rubber-stamping was the last thing that we needed. If that argument does not find favour with the Minister, amendments Nos. 631 and 627 are the alternatives. I said to the Committee before lunch that I took personal responsibility for selecting the district tax inspector or a collector of taxes. Perhaps that is not the appropriate grade of officer, but it is important to explain why I chose that grade. It was born of my knowledge and experience of dealing with tax inspectors and Customs and Excise. When I ran my own business, not only was I registered for VAT, but I go back to the dim and distant past of being registered for purchase tax.

In the case of both my VAT and my purchase tax affairs, I saw how the system worked. There was always a raft of Customs officers doing all sorts of things. Sometimes I would see one, and sometimes another. My constituency work involves me closely with Heathrow and its customs operations. There is not necessarily consistency in who deals with what.

Such decisions will be delegated to an individual Customs officer if the amendment is not accepted. It is possible that on, say, Mondays, Wednesdays and Fridays, one person might apply his mind to it, and on Tuesdays, Thursdays and Saturdays, the person involved might be someone else. There will not

necessarily be consistency in decisions or depth of experience from an individual Customs officer.

In my own experience, and from my experience of speaking to people, when a serious issue arises, whether in relation to the collection of tax or, as in this case, in deciding whether to disclose information, all individual Customs officers will ultimately defer to their collector, who has a consistency of view, knows the overall workings of the system and what individual officers are doing, and can examine their work and arrive at a clear, balanced and consistent point of view. That is why I chose a collector. It is the lowest grade of which I am aware that involves consistency and personal involvement at a senior level in difficult issues.

I readily accept that the Minister may say that the collector is the wrong person. I am not aware of the grades, ranks and hierarchy of the upper echelons of Her Majesty's Customs and Excise. I am pleased to say that I have never had to tangle with that level of Customs and Excise, which is a plus, rather than a minus. It might be argued that the collector would not be the appropriate person.

The same arguments apply to the district tax inspector. My experience over the years of running my own businesses has brought me into contact with assorted tax inspectors, as is inevitable. Whether or not they run businesses, hon. Members will, because of our salaries and allowances, have come into contact with tax inspectors of one sort or another. The same principle applies. It is possible to come into contact rapidly with several inspectors in the same tax office. Sometimes they apply one way of thinking, sometimes another. My experience has taught me that, in the event of a serious issue to settle, a matter of principle, or a decision to be made on how to proceed, ultimately the district inspector in the tax office will have the file on his desk and can be asked to ensure that consistency is upheld and that the rules are applied.

If the Minister's argument is that the commissioners themselves could not cope with the work involved and that it should be delegated, and if he wants the amendments to be dropped or his colleagues to vote against them, he needs to reassure the Committee that handing the power to every Customs officer and tax official is justifiable and will not lead to inconsistency and, at worst, abuse or lack of experience leading to the wrong conclusion. He must deal with that question. There should be some consistency and control. I have no figures for the number of tax inspectors or Customs officers, but I expect that there are quite a few. I do not believe that such a power should be handed out to the many thousands of people who are bound to be involved. I imagine that the number of times that the power will be exercised will not be in the thousands, although it might well be in the hundreds in the course of time. It is not unreasonable to ask that the exercise of such a power be confined to senior officers in Customs and Excise and the Inland Revenue. I look forward to hearing the Minister's comments.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

Amendments Nos. 606 and 619 would limit disclosure to those authorised personally by the Commissioners of Inland Revenue or Customs and Excise. Amendments Nos. 608 and 620 would similarly restrict the power to consent to further disclosures. That would be impractical and bureaucratic. It would limit the numbers of disclosures that are possible, and could introduce unhelpful delays into the process.

For example, there are only five individuals who are Commissioners of Inland Revenue. It would not be a good use of their time to authorise every disclosure. The delegation of the authority to disclose will be to specialist staff who will be adequately trained and supervised, and subject to strict statutory rules of confidentiality. I think that the hon. Member for Spelthorne (Mr. Wilshire) adds another argument to that, because there would be a potential for a lack of quality if powers were delegated too far up. He knows how these things work, and he made goods points about ends of agendas.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

The Minister seeks to reassure me, but he may have a different copy of the Bill from mine. There is no provision in my copy to ensure that delegation shall be to a specialist who is properly trained. If the Bill said that, I could accept his comments. If he thinks that my argument is right, will he, after rejecting these amendments, table another that says exactly what he just offered?

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

Hold on.

Commissioners of Customs and Excise would normally delegate their authority to commissioned Customs officers. Delegation will be at the discretion of the commissioners concerned. The provision that requires special treatment for these forms of information reflects the particular sensitivity of the information to the Revenue and Customs and Excise. We are, therefore, justified in being confident about how they will use their powers of delegation.

Amendments Nos. 627 and 634 are alternatives to those that I already mentioned, because they would not remove the power to delegate but establish that delegation must be to only a specific rank. Amendments Nos. 631 to 634 would mean that the Commissioners of Inland Revenue could delegate the power to disclose or further delegate information to a district tax inspector or higher grade only. Amendments Nos. 627 to 630 would mean that Customs delegations could be made only to a collector or higher-grade Customs officer.

The same arguments apply here as those that I made in response to the other amendments in the group. The resulting system would be bureaucratic and lead to delay. Both Revenue and Customs officers are able to take the responsibility for authorising disclosure. They do not see the need to make that a matter for a higher-grade officer.

Opposition Members mentioned our Revenue. It may be dangerous for politicians to become great fans of the Revenue, but it operates its rules and confidentiality to a high standard, and we want to hang on to that. Do we want our legislation to show

confidence in organisations' ability to deal with matters appropriately and to delegate to specialist officers with the necessary training and commitment to confidentiality? Alternatively, do we think that the organisations will delegate responsibility to people who, as the hon. Member for Spelthorne said, are not at work on Tuesdays, Wednesdays and Fridays, and who have not received any training and are not capable of the task?

Do we want to lay out a bureaucratic stricture in legislation, or are we confident that the organisations can deal with confidential information and pass it on appropriately? Everything that has been said seriously in Committee shows that we do have confidence that the organisations will deal with matters appropriately, and that the Revenue cherishes its reputation for handling confidential information appropriately. The Revenue will not put that at risk by delegating the powers inappropriately.

Amendment No. 607 would limit cases of onward disclosure of taxpayer information that is consented to by the Commissioners of Inland Revenue or Customs and Excise to a case-by-case consideration. Again, that would be impractical and unnecessarily bureaucratic. In addition to case-by-case consideration by the Revenue or Customs and Excise, there may be circumstances in which the nature of disclosure follows a similar pattern. Clause 422(3)(b) provides for the Revenue or Customs and Excise to consent to further disclosures of a kind, rather than requiring them to consent to disclosure repeatedly in very similar circumstances. The provision provides flexibility. If the Revenue or Customs and Excise consider that a case-by-case consideration is warranted, they can, and will, adopt that approach. We will not tell them that they cannot.

Photo of Boris Johnson Boris Johnson Conservative, Henley 2:46, 31 January 2002

How often does the Minister suppose that the Revenue would disclose details of people's tax affairs to the director? If that would be very rare, and there would be only half a dozen such instances a year, why should the function not be exercised by the commissioners?

Sitting suspended for a Division in the House.

On resuming--

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department 12:00, 31 January 2002

The hon. Member for Henley (Mr. Johnson) was asking a question that has already been raised: how often would the powers be used? That is obviously of interest to the Committee, and it would be nice to be able to pin down how many times they would be used. We said earlier that we envisaged civil recovery being used about 20 times a year, and we do not envisage the taxation powers in clause 311 being used much more often than thatperhaps 30 times a year.

It is not possible to say how many times it might be appropriate for the director to approach the Revenue for tax information when dealing with confiscation or civil recovery cases. He will be able to do so only when appropriate. The commissioners will consider the information that he asks for and check whether it is

appropriate, and they will not disclose it if it is not. It would not be possible to give the hon. Member for Henley--had he been here--or anyone else a detailed analysis of how many times disclosure of information from the Revenue will be required.

We must get the director in place, establish the Assets Recovery Agency, set up the memorandum of understanding, and develop a method of working together. That is why I put such emphasis on the need within the agency for a culture that maintains the credibility of both the agency and the system, and has the high degree of credibility that those with which the agency will deal already have.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

I am a little concerned that the Minister says that he has no idea how often the power will be used. I suspect that that is correct, because I have learned that the Government sometimes do not do their homework. There was a money resolution for the Bill, so calculations must have been made. Perhaps he could confirm that. If the power will be used thousands of times a year, we would need more officers to do the work, and that would cost money. The money resolution must have made some assumptions about the work involved.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

The hon. Gentleman is right to say that there was a money resolution, and that in order to justify it, a broad assessment was made of the volume of work that the agency would do.

We said that we envisaged that there would be about 250 cases a year in which confiscation would be handed on from the prosecuting authorities to the agency because they thought it necessary to use the agency's specialist skills. I think that that included about 20 to 25 civil recovery cases and a few more--perhaps 20 to 30--tax cases. It was not possible or necessary, when creating a regulatory impact study and a money resolution, to try to guess how many times those cases would involve requests to the Revenue for information.

It would be extremely difficult to be accurate about the number. If I were to try to give the hon. Gentleman an indication about that--based on how many confiscation cases were being heard, and whether repeat requests might arise as they progressed--it would be little more than a work of fiction, and that would be pointless.

I ask the Committee to accept that some common sense exists within the Revenue. The system will be set up under a memorandum of understanding. It would not be in the interests of the agency, the Revenue or Customs and Excise to delegate those powers to people who are not proficient or properly trained, and they certainly would not delegate them to people who were not committed to rules of confidentiality.

The key issue is whether we want to tie the organisations' hands, by telling them how they should delegate the powers. Do we wish to limit by statute how the Revenue organises its affairs, with regard to its dealings with the agency? That is the question that we should answer, because it addresses the substantive point.

The amendments would remove or restrict the powers to delegate the responsibility for authorising and consenting to disclose. That could cause delay and lead to the disclosure of the director operating less than effectively. We believe that it is justified to have confidence that the organisations concerned will use the powers appropriately.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

The Minister has responded carefully to questions about several issuesand especially powers of delegation.

Amendment No. 607 concerns a slightly different matter. It deals with whether the Inland Revenue or Customs and Excise should be able to give a blanket right of further disclosure to the director, instead of each case being dealt with on its individual merits. As the debate has progressed, that has become the provision that troubles me most. I have not been convinced that it is necessary, particularly in the light of the number of cases that are likely to arise. One must bear it in mind that disclosure onward from the director can extend beyond the Government service, and out to a foreign country. That is why I am particularly concerned. Will the Minister comment on that?

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

My response to that is broadly the same as to the previous matter. The Commissioners of the Revenue are not required to give a blanket right of further disclosure. They would consider giving that right only if the business that they were conducting with the director indicated that it would make a lot of sense to do that. If they were receiving repetitive requests that fell into exactly the same area, it might appear to be common sensefrom the points of view of themselves and the directorto grant coverage of a class of requests, rather than to continue to address cases on an individual basis.

The key issue is the same as it was with regard to the previous matter. I believe that we should be confident that the relevant organisations can exercise that power in a correct and appropriate manner. The hon. Gentleman believes that we should pin them down by insisting that cases are addressed on an individual basis. If we did that, we would, in effect, be saying to the Commissioners of the Inland Revenue that we do not care if, under certain circumstances, it becomes apparent to them that it would be common sense to grant class coverage.

I might be able to give the hon. Gentleman an example of specified circumstances. It could be said that that would be best for details about location--latest home address, latest employer's address, place of work--when assisting a criminal confiscation investigation. When there are criminal confiscation proceedings, do we want to prevent the commissioners from releasing details--with appropriate safeguards--of a person's last known place of employment? Do we want to insist that they look at every single case, and under no circumstances release those details, even if, after working with the agency for some time, it would clearly be sensible to do so? I am not sure that that is what Opposition members really want to do, and I ask

them to think seriously about the amendments that they have tabled.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

I am grateful to the Minister for treating the amendments seriously, because certain issues needed to be addressed. He has persuaded me that it would be wrong to press to a Division an amendment that fetters the ability of the board to delegate. If the intention is for delegated officers with expertise within the Inland Revenue and Customs and Excise to deal with such applications, I am confident that they will be able to do so.

The issue raised by amendment No. 607 is slightly different. I regret that I did not table a similar amendment to the Scottish provision, so we have only the England and Wales and Northern Ireland provision to go by. I fully understand the Minister's point. The scope for a generic right to make an onward disclosure could be confined to particular types of information, such as a name and address. We are dealing not with disclosure to the director but with the director's right to make use of that information subsequently, without going back to the Revenue for authorisation. There are some important provisions under clause 423. It is clear that the director may want to use the information in various ways, including those that will enable him to carry out his functions. I have no difficulty with that, because it is axiomatic that the director will obtain the necessary information to perform those functions.

In addition, the provision extends to criminal proceedings in the United Kingdom, a subject that we will later discuss in principle. It places the director in a potentially advantageous position over other law enforcement authorities, in terms of obtaining evidence from the Inland Revenue for subsequent use. I am well aware that there are circumstances in which the Inland Revenue could be requested to provide information to law enforcement authorities that--under the current provisions--they might not otherwise have been able to obtain. That troubles me, especially if that information can be transmitted without its being looked at again and approved by the Inland Revenue or Customs and Excise, even if it is innocuous and generic, such as a name and address.

Even more pertinent are potential proceedings outside the United Kingdom, which would effectively be the transmission of that information to a foreign Government or law enforcement agency. The Minister will remember that, in a previous debate, I expressed my worry that human rights could be infringed if the foreign Government to whom disclosure was made were less scrupulous or less respectful than we are of those rights. That is a subject for concern, particularly with information on taxation.

I can think of instances in which a person might have ''trouble'' with foreign tax enforcement authorities. The oppressive nature of the regime with which they were dealing would then give rise to serious hesitation about whether one should supply information to that country for the sake of obtaining that person's assets, which may be abroad. That information may relate to the commission of offences,

but sometimes the two might be difficult to disentangle. I can easily imagine an unscrupulous Government masquerading a request for information on an alleged serious offence such as drug trafficking as a request for information for other purposes. Their allegations may not be justified.

I do not say that we should not give that information, but I should be unhappy if information relating to the confidential relationship between a citizen and the Inland Revenue were passed abroad under a generic heading without the Inland Revenue necessarily having the chance to reconsider that decision.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department 3:15, 31 January 2002

I am following the hon. Gentleman's point, and he has raised genuine issues for concern. I wonder if he could focus his argument. Why does he think that there is a particular problem in relation to tax? I foresee that the same issues could arise under foreign jurisdictions with almost any information that we were to pass to them. I am struggling to understand why tax is separate or different.

To what degree would individual approval by the Revenue give additional protection in the circumstances that he, quite rightly, worries about? To what extent should we trust the director and to what extent should we worry about human rights, rights in relation to self-incrimination and the comeback on those issues? To what extent do we think that referral back to the commissioner will add something?

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

I do not want to get dragged into a general discussion of the powers under clause 423(1)(h) if I can avoid it. We shall come to that subject shortly.

The Minister is right that there are issues about disclosing any information that the director may have to hand to a foreign Government, because the director then ceases to have control of it. It could be used against the person concerned or others in a way that infringes, for example, human rights legislation in this country. Clearly, with some foreign countries, that risk is considered minimal, but even some of our European neighbours' track records in criminal investigation are, I regret to say, not very good. It is often a subject for discussion in their newspapers that the activities of their investigating magistrates, for example, turn out to be oppressive. We have criticisms of our system, too, but one has only to consider the nature and quality of some of the criticisms made in Europe to feel anxiety about the way in which some foreign countries, including some quite close to us that are regarded as democracies, enforce criminal law.

I shall focus on the specific question of why the Inland Revenue, or Customs and Excise for VAT, should be different. The Minister has acknowledged the difference by requiring that certain bodies give authorisation for disclosure under the clause; subsection (8) specifies the commissioners. For some reason, the Minister and the draftsman have considered that there should be special safeguards for tax material. I always understood that that is because of the special nature of the relationship of

confidentiality between individuals and the bodies to which they pay their tax. That is well established in this country.

The Minister has acknowledged, owing to the way in which the clause is drafted, that the tax information that is likely to come to the Commissioners of Inland Revenue or Customs and Excise is treated as a special category. If I identify that that is a special category for onward transmission from the director, the Minister, in logic, must agree with me. If information was a special category when it was given to the director, surely it should remain a special category when it is in the director's hands.

That is acknowledged by the way in which clause 422 is drafted. That clause relates to further disclosure if information comes from the Inland Revenue or Customs and Excise. The Minister offered an attractive argument that we are discussing generic matters such as names and addresses, which may sound relatively innocuous and straightforward. However, that does not detract from the fact that the information originated in the confidential relationship between the individual and the Revenue or Customs and Excise. In such circumstances, there should not be a generic disclosure clause.

In the case of onward transmission from the director, he should return to the two bodies and say, ''You supplied me with information about Mr. Bloggs's tax affairs. I think that this would be very useful to the German authorities in the money laundering proceedings that they are to bring against him. Do you agree that it should be disclosed?'' The Revenue, with its Revenue hat on, would have a further opportunity to refuse that, if it had good reasons to do so, rather than giving a blanket permission, which could lead to difficulties.

If the number of cases will be as small as the Minister suggested, that would not cause a serious problem. It would mean only that after the Revenue gave information and generic guidelines to the director, it would not lose control of the information in a manner that could be held against it. I am worried about its reputation.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

And so should we be, but the hon. Gentleman tries to use the Bill's structure against my argument. The worries of the Revenue and Customs about ensuring their reputation for confidentiality and control of information has affected the way in which information is protected by the Bill. The same commissioners who have those worries are those who will agree any methodology that allows the generic transmission of onward information.

If we try to extend the culture of confidentiality beyond the director, I do not know what we would add to the Bill by providing that even if the commissioners are comfortable, in given circumstances, to give generic permission for onward transmission, we should say, ''No. Even if you feel that you are comfortable, we can't allow you to enter into such an arrangement.'' I understand that the hon. Gentleman is making a serious point, but I struggle to understand why he thinks that the very people who insist on confidentiality and who were involved in

drafting the Bill would enter into such generic arrangements that would damage their reputation.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

I very much hope that they would not. I have paid compliments to the Inland Revenue and its attitude, born of my experience of prosecuting on its behalf. Perhaps the Minister will say that the Revenue asked for clause 422(3)(b), but I cannot help thinking that it is not necessary at present. If the director wishes to make use of such information, it is said that he must first gain permission to do so, but given the volume of disclosure that is likely to take place, the Committee may be more comfortable if such matters are dealt with case by case, for no other reason than that an individual taxpayer's affairs are ultimately thatindividual.

The trouble with generic disclosures is that, when someone has tried to identify a category and says that, in the case of names and addresses, for example, the person need not bother to come back, the issue tends to be forgotten about until something goes wrong. Someone will say, ''I think I made a mistake, so we should change the category.'' That mistake might not have happened if there had been a process by which it can be said, ''In the case of Mr. Bloggs, can we do this?''

The matter cuts both ways. It is difficult to see that a greater burden will be placed on either the director or the Revenue if clause 422(3)(b) is deleted. In the absence of a cogent argument against that, I am minded to press amendment No. 607 to a Division to register our concern. The Opposition are unlikely to win the vote, but will the Committee consider whether it is appropriate, in the case of tax affairs, which we have decided to treat particularly carefully, that there should be a right of onward information provision by the director, without the Inland Revenue being asked about it? I shall withdraw amendment No. 606 and press amendment No. 607 to a Division. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 421 ordered to stand part of the Bill.