At this point, there is much flurry of paper as one ensures that one does not miss key things.
I am sure that we shall consider schedule 13 later, although it is related to clause 93. I should like to raise one or two points relating specifically to the clause, although I may make the odd reference to schedule 13.
Indeed, Mr. McWilliam.
The clause introduces schedule 13, which provides a wide range of information powers. The clause deals with information powers additional to the power to issue a notice for documents and for the purposes of an inquiry in paragraph 15 of schedule 10. As I understand it, looking back through tax law, this measure is based on sections 20 to 20D of the Taxes Management Act 1970. The powers in the Bill are more general and apply not only to persons under inquiry but to third parties. Will the Chief Secretary confirm that this schedule contains no alteration to the scope of the powers of tax officials and the board, compared with the similar powers in established legislation?
If there is an inquiry such as would require a notice under sections 20 to 20D of the Taxes Management Act 1970 for income, corporation or capital gains tax, it would be possible, by adopting these powers, also to seek information on any stamp duty land tax aspects. I understand that there is an efficiency gain if the same officers deal with important inquiries.
A number of organisations, including the Institute of Chartered Accountants in England and Wales, have suggested possible ways in which the schedule might be tightened and improved, and in particular paragraph 1(3). Although I am referring to the schedule, I shall restrict my remarks to the clause. Will the Chief Secretary confirm that the powers are established and stick to the existing law? Is he confident that taxpayers—notably small businesses that are leasing their first shop or perhaps a first-time home buyer—will understand the full scope of the Revenue's powers and their obligations?
Despite what the Chief Secretary may say, this is a significant shift from a stamp duty to a land tax. Putting aside all the names and the fun that we have had about what things should or should not be called, taxpayers face the prospect of having to operate in an entirely different regime. Will the Chief Secretary make it clear that the Government intend to ensure that those who are paying the new tax, as opposed to the old duty, will understand that? That is fairly crucial, because all the talk about information, compliance, administration and enforcement comes to nothing if the taxpayers involved do not understand the significance of the change from the duty to the new tax.
The clause and the schedule reproduce for stamp duty land tax Inland Revenue information powers contained in sections 20 to 20D of the Taxes Management Act 1970. Current stamp duty provides no similar information powers to the Inland Revenue. It can ask about documents before it stamps them and can call for evidence if a taxpayer requests an adjudication of the amount of the duty, but there is no sanction if the information is not provided, except to refuse to stamp the documents. That cannot be a satisfactory state of affairs. Should the taxpayer decide that he does not want the documents stamped after all, he can simply take them away, and the Inland Revenue is powerless.
We make no apology for the fact that stamp duty land tax, by contrast, provides modern inquiry powers based on other taxes, incorporating proper appeal rights. The schedule is part of those modern powers and does no more than apply existing legislation for other taxes to stamp duty land tax. The powers in sections 20 to 20D of the 1970 Act are aimed at serious cases of tax avoidance and evasion, and their use is strictly controlled by the Inland Revenue. The extension of the powers to stamp duty land tax will be similarly closely controlled.
The clause also provides for civil penalties if the notices issued under the schedule are not complied with. There are similar penalties in the 1970 Act, which will be familiar to many who have served on Committees considering previous Finance Bills.
In reproducing the existing powers, the schedule defines legal privilege in paragraphs 35 and 48, which reproduce existing definitions in section 20C(4)(a) and paragraph 5 of schedule 1AA to the Taxes Management Act 1970.
The schedule reproduces existing legislation and does not contain any new definition of legal
professional privilege. The Government are fully aware of the case of R v. Special Commissioner, on the application of Morgan Grenfell & Co. Ltd, which hon. Members will no doubt be aware of. That case addresses the special commissioner's powers and clarifies existing law by saying that legal professional privilege is a basic human right that can be overruled only by specific wording or necessary implication, neither of which was present in the TMA power being discussed.
Following the Morgan Grenfell case, the Inland Revenue accepted that legal professional privilege applies to all its information powers, and the judgment gives clarity. By mirroring the TMA powers in the schedule, that clarity is retained. If different words were used, the clarity that the courts have provided would be lost. That is clearly not something that any of us would wish.
As legal privilege is such a long-established, historic legal concept, surely there is no need to define it? To define it could work against the actual concept.
We are avoiding the creation of any ambiguity by reproducing the existing definition in section 20C(4A) and paragraph 5 of schedule 1AA of the Taxes Management Act 1970. Those are the definitions referred to in paragraphs 35 and 48 of schedule 13. The schedule reproduces existing legislation for stamp duty land tax and does not contain any new definitions. We should read the definitions subject to their Lordships' ruling on the meaning of those definitions in that case.
I should like to pick up on the point made by my hon. Friend the Member for Huntingdon (Mr. Djanogly). The Law Society has made representations stating that because of the Morgan Grenfell case there is no necessity to define legal privilege. It is long established in common law. The definition provided in the Bill cannot as a matter of law restrict the general meaning of privilege. The Law Society feels that what the Chief Secretary is doing is totally unnecessary, and it may be counter productive.
With respect, we take a different view. We cannot be in error if we reproduce the wording that was subject to interpretation by their Lordships in the Morgan Grenfell case. We can only be in a position in which their Lordships interpretation continues to prevail. Were we to omit any definition at all, or insert a different definition, we would expose ourselves to error and ambiguity, which is not something that we intend to do. With that explanation, I hope that the Opposition will accept that their amendments to schedule 13 would lead to an unsatisfactory situation and a divergence between the clause and the TMA. It would put taxpayers in a difficult position if these powers and those in the TMA were applied to the same documents.
Through the Lord Chancellor's Department, the Government have initiated a consultation following the Office of Fair Trading's report on competition in the professions. Legal professional privilege is one
issue in the consultation. A document was issued for consultation in July 2002, and responses were invited up to the 14 May 2003. It would be premature to make any changes to the references to LPP before the responses can be considered and decisions taken on the consultation. If the Government decide that changes in the law are needed, they will be made in the future when they can be made to the Taxes Management Act 1970 and the equivalent stamp duty land tax provision.
In response to the perfectly reasonable point made by the hon. Member for Hertford and Stortford about the importance of taxpayers understanding their obligations, we are undertaking an extensive customer education programme, aimed particularly at intermediaries, such as solicitors, conveyancers, other advisors and those active in the industry. I believe that that will go a long way towards meeting his concerns. I can confirm that there are no alterations to the scope of section 20 of the 1970 Act. With those assurances, I hope that the hon. Gentleman will withdraw the amendment.
Indeed. We now move from prescience to that sense of déjà vu in ''The Matrix'', in which I feel as though something has already happened and I am not sure why. Therefore, let me move these amendments—
Order. No, no. We are now getting ahead of ourselves. All we are dealing with now is clause 93 stand part. When we dispose of that, I will call amendments Nos. 184 and 185, but we are not there yet.
Question put and agreed to.
Clause 93 ordered to stand part of the Bill.