I beg to move amendment No. 78, in clause 5, page 3, line 16, at end add—

'(4) Insofar as an officer of Revenue and Customs is exercising a function which relates to Value Added Tax, subsection (1) shall not apply.'.

I may, as I mentioned earlier, and with your permission, Sir John, refer in passing to one or two other clauses; of course I should not reiterate those points on stand part. The clauses in question are of course closely interlinked. They are outwardly mild-looking clauses, dealing with Customs and Revenue powers. My amendment is, as I am sure the Minister knows, a probing amendment. I shall not press it to a vote. I want to test the Minister's commitment to a thoroughgoing review of the new HMRC body's powers.

It is important to have the current position clear in one's mind. Clauses 5 and 6, taken together, limit the extent of the new HMRC officials' powers over revenue matters. The provisions are intended to prevent revenue matters from being made subject to excessive powers such as those that the Customs can at present exercise. For example, the extensive Customs powers to collect VAT, by which its officers can turn up with a warrant, raid a place and smash down the door to get a document, would not be available for a standard income tax assessment. It is important that we maintain that distinction.

That discrepancy in powers can be illustrated in many ways. It is worth comparing for a moment section 20 of the Taxes Management Act 1970—which enables the Inland Revenue to go to commissioners for a warrant to obtain a document—with what Customs does, which is to exercise a much more draconian power on the back of a police-style search-warrant. Clauses 5 and 6 reflect the concerns that have been expressed by many that the Revenue should not have those much more heavy-handed Customs powers—the Treasury Committee report and the written evidence that was given to the Committee provide elaboration on that topic.

In quite a clever way—I commend the drafting—clause 6(4) provides that former Inland Revenue matters cannot be dealt with under Customs powers; at least, that is what I take that subsection to mean. My amendment investigates what happens if things are the other way round. What about circumstances—and this is just possible—in which the Revenue may have more powers than the Customs? What restriction is there on Customs using Revenue powers? Are we sure whether we have that stable door bolted before the Bill is passed? Why is there no parallel restriction on Customs officers using Revenue powers?

The amendment that I have tabled is intended to provide assurance of that kind only with respect to VAT. I could have drafted it more widely, but I think that it serves its purpose in making the points that I want to make. I should be grateful for an explicit assurance, if this is the view being taken, that Customs already has all the powers enjoyed by the Inland   Revenue. Even with that reassurance, we should be left with a very uneven distribution of powers within the new body, HMRC. That is inevitable, stemming from the different cultures of the two bodies. We have discussed that many times: Customs has a quasi-policing inheritance—the cutlasses on the wall have been mentioned in the House—whereas the Inland Revenue has a gentler established approach to getting the money in from, as I think I put it on the Floor the House recently, reluctant but largely honest taxpayers.

My second question is: what plans do the Government have to harmonise that discrepancy? I gather that the Government are considering a consultation document that may come out in the next few weeks. I should be grateful if the Minister would say more about that. As part of that process, are the Government going to commit to a full consultation—that is, one in which ample opportunity is given to all parties to offer their views?

If the Government are committed to a full and meaningful consultation, is there not a case for a more thoroughgoing review of the whole issue? You probably remember well, Sir John, the Keith Committee review of 20 years ago—I am not alluding to your age, but to your political experience. Some 20 years ago Lord Keith looked into the issue and came up with a number of balanced and interesting recommendations. He did a good job, as everyone agreed. For example, he decriminalised many VAT offences. I believe that those who sent in late VAT returns prior to Keith thereby became criminals. That was a crazy situation and there needed to be an adjustment, so such acts were made civil offences. The world has moved on a lot in the 20 years since Keith and we could probably do with another thoroughgoing review.

Let me give four reasons for that change. The first is the electronic revolution. When tax authorities have to consult eBay to collect revenue, that reflects a new reality in the tax collection world. The second reason why we may need to consider a review is the emergence of Europe in tax matters and the intrusion of the European Court of Justice in our affairs. Whatever the Government's formal position on Europe not having any influence on tax, the truth is that it does—do not worry, Sir John; I will not elaborate on that issue, but Europe is a factor.

Thirdly, there is increasing oversight of customs practices by the European Court of Human Rights. The Court has recently reviewed the Hansard procedure, whereby those who own up will be all right. However, some people have found themselves being Hansarded several times over, which is what happened to Lester Piggott and Ken Dodd. I think that Piggott was Hansarded three times, after which the decision to prosecute was taken. The Hansard procedure has been given a brush-up in the light of the ECHR review, but that brush-up was an ad hoc, piecemeal improvement. I suggest that a more thoroughgoing review might be necessary. The fourth reason is that recent massive Finance Acts have moved us into another physical dimension, owing to the sheer volume of legislation.   The size of those Acts probably justifies looking at the extent to which, bit by bit, they may have altered the relevant powers.

My final question is: will the Minister agree to a full, Keith-style review? Will she set out the principles that would lie behind any change in, or harmonisation of the powers that she might consider? I could do that for her now—clearly, one would allow a department to take a power only if it was deemed necessary, if its application was not onerous for taxpayers and if it was subject to appropriate checks and balances. I would be interested to hear the Minister's view on that.

I have a fifth question: what is the Minister's time scale for harmonisation, bearing in mind that any changes will be in primary legislation and there will be quite a lot of that to amend? The existing powers are, I believe, in the Taxes Management Act 1970, the Customs and Excise Management Act 1979, and the Value Added Tax Act 1983. There is of course also some landfill tax and environmental legislation.

In looking at this area, we are dealing with something that is of great concern to the outside community. I have some advice here from the Institute of Chartered Accountants of Scotland, which has picked up on a point in a draft Government document on the review of powers. The Government statement said that

''any officer of HMRC, whether formerly an officer of Customs and Excise or of the Revenue, can use those powers that exist in relation to the specific tax they are looking into. If an officer of HMRC obtains information that is also relevant to other areas of HMRC they may pass on that information for immediate and future follow-up action.''

The great concern of ICAS is that this statement may lead to the transfer of powers resulting in an extension by stealth to the powers that each department currently possesses. In other words, an officer could say, ''While you are in there, would you take a look to see if you can find X or Y?'' We would then find that these powers are being used in much more extensive ways than were ever initially intended. We do need reassurance on that issue. A thoroughgoing review, such as I am calling for, is probably the best way to provide that reassurance and I hope the Minister can help on that point.

Briefly, I want to agree with many of the general points about powers that the hon. Member for Chichester has raised under amendment No. 78 to clause 5. I really have only two brief points to add. The first concerns the serious point about the consultation document which came up as a reference on Second Reading. We need to have as much information as possible about when that will emerge, and whether it will be before the end of Committee hearings. Secondly, on a more detailed point, I want to ask the Paymaster General for clarification on clause 5(2) and the definitions under paragraphs (d), (e), (f) and (g). May we have clarification of the precise distinction between paragraphs (d) and (e), and (f) and (g) in subsection (2), and whether it would be possible to consolidate these definitions in some way, so as to reduce the burden of things? Surely it is not necessary to list all of these particular roles in this way?  

I assumed on seeing amendment No. 78 that the hon. Member for Chichester was tabling a probing amendment. I could not believe that he would actually remove powers that would enable the effective and efficient collection of VAT. So I am going to respond to the points he was making with regard to powers, rather than the substance of the amendment, unless he particularly presses me. The substance of the amendment basically removes the ability to enforce and collect VAT. He referred to those very few taxpayers who, none the less, require consistent encouragement and persistence from Customs in order to pay the VAT that is due to the Revenue departments. So I shall concentrate on the points made by both hon. Gentlemen about the principle of powers stretching across the clauses. The hon. Member for Chichester identified why we need to read clauses 5 and 6 together. I start with the first position.

Hundreds of different powers apply across the many regimes currently administered by the Inland Revenue and Her Majesty's Customs and Excise. I take the word power to mean the right of the department concerned to take discretionary action in respect of an individual taxpayer in order to monitor and assist and, when necessary, to enforce compliance with the law. It is almost always capable of being backed by sanctions.

I want to deal with all the questions on consultation and its scope in one go. First, I shall deal with the specific questions about the restrictions on Revenue and Customs powers as they are transferred to the new department. The hon. Gentleman asked about a point that he said had been raised in their submission by the Scottish accountants, which was on information sharing between departments. That already goes on. I understand that such information has been collected at information gateways for some time. That adds to the complexity of trying to approach a difficult series of questions.

The hon. Gentleman said that Customs uses its more extensive powers to enforce Customs and Excise-based tax, but that sharing the information could result in what might be called information creep. However, that already happens; and in order to ensure that the departments fulfil the objective of protecting the Revenue base through the merger, which I know is of concern to the hon. Gentleman, that has to remain the case.

There is a huge difference between the staff of two independent and separately run departments deciding to exchange a piece of information—having thought about it carefully and perhaps having consulted a superior—and two people sitting side by side, cheek by jowl or on opposite sides of the corridor having a chat each afternoon about a particular client.

I do not know whether the hon. Gentleman has noticed, but those teams have been working side by side for a considerable time, both under the previous Government and under the closer working strategy. It is not new.

The hon. Gentleman asked whether there was a parallel provision—he said that the Bill appeared to restrict Customs powers only to Customs taxes, but that it seemed to work differently for the Inland Revenue. [Interruption.]

Order. I remind hon. Members that long and extensive conversations in Committee are not permitted. Brief conversations on matters before the Committee are permitted. I should be grateful if right hon. and hon. Members recognised that.

Thank you, Sir John.

As the hon. Member for Chichester said, clauses 5 and 6 are closely related. A parallel arrangement for the Inland Revenue can be found in clause 6(2), which states that the Revenue has a new transfer ability insofar as it is exercised in relation to Revenue functions. That brings me directly to the question of consultation.

I agree entirely with the hon. Gentleman that it is about checks and balances. The consultation will be a large exercise, given the overriding requirement of the new department to protect the Revenue base. It will cover the appropriateness of existing powers regimes, including the option of the abolition of the risk assistance, the name for the Customs powers that the hon. Gentleman was referring to. It will look at the benefits of greater consistency of approach across taxes and duties in respect of requirements to provide information, interest, surcharge regimes for late payment, penalties for non-compliance and rights of appeal. The hon. Gentleman alluded to that when he was comparing the level of authority required in some of the Customs legislation for use of some of the powers with that required in the Inland Revenue. It works in the other direction as well—there are some Revenue powers where Customs powers require a higher authority. It will go to the heart of the question that the hon. Gentleman is also raising: what are the modern powers and practices that the new department—I think the hon. Gentleman said ''in this changed world''—might need to allow it to build on the considerable success to date and deliver its public service agreement targets? What might it need to ensure the taxpayers'—on Second Reading I said ''experience'', which caused some hilarity in the Chamber, so let me rephrase it—contact with the department is efficient for the taxpayer as well? Rather than having to go to lots of different places, if the taxpayer is dealing with one department, the taxpayer   should be able to tell it certain types of information once, to ensure that we have efficient services with improved compliance.

In addition, the hon. Gentleman raised a question, as an example of the Hansard approach, about serious fraud. The revenue departments are currently reviewing their civil procedures and working practices in cases of suspected serious evasion. This may involve—I will have to wait and see what the review says—changes and new procedure under Her Majesty's Revenue and Customs. It is important to say clearly that the department will be seeking the views of all those that the department regularly consults with, and who will have views on these matters.

I am sure that the hon. Gentleman and Members of this Committee can see that that is a vast task. The process is that a consultation document will hopefully be issued by the end of the month—that is my intention and what we are working towards.

As the Minister, I am hoping to start the legislative process for the required changes in the Finance Bill 2006. It is difficult to say whether it will all be dealt with in that Bill, whether that is the appropriate vehicle, or how large the exercise is. That may need to be revisited. I am trying to emphasise that we are going to try to be clear, that there will be proper consultation and that this matter should not drift for a considerable time. However, we need to have some causal principles and everybody—Members of this House, Ministers and the bodies that we shall be consulting—needs to understand the direction that we intend to take. We shall use as a model—this is a compliment to the previous Government—the very successful model that they used for consultation when introducing self-assessment. It works extremely well, is focused and moves us forward.

I hope that that supplies the information that the hon. Gentleman was seeking with regard to the intentions. I have clarified the check in relation to the Inland Revenue and I have made it clear that there is already information sharing between the two departments, and has been for some time. He referred to the harmonisation of powers. I call them the appropriate powers. I think that we are basically talking about the same thing. However, that will be underpinned by the fact that in some respects we have quite different taxes operating. VAT is very different from corporation tax or national insurance. None the less, there needs to be some understanding so that people are clear on the current process.

The last point was that raised by the hon. Member for Yeovil in connection with the drafting. The Bill converts all of the terms used in current legislation to ''officer of Revenue and Customs'', as I said earlier. We are attempting to simplify things. All the terms are listed to ensure that all references from different legislation over many years are picked up. That returns to the point that I made on the programme motion: it is complex ensuring that all the legislation dovetails in. That is the answer to the hon. Gentleman's question.

I hope that the hon. Member for Chichester will not press his amendment to the vote. It would be a very expensive commitment by the Opposition. I am not   going to be mischievous, because I know that it was only a probing amendment. I hope that I have dealt with all the issues. He made a point about having a Keith-type commission. I hope that he can see that the process is to deal with all the issues, but in a certain time frame and with openness. That is a good way to proceed, as he said, in a modern world—rather than using a process that worked 20 years ago.

We have travelled some distance. The Minister has managed to be mischievous and reasonable at the same time on one or two occasions. She has taken us some distance, but she has fallen short of explaining what—to use her phrase—''proper consultation'' is. It would be helpful to know. She says that we will use the precedent of self-assessment. Although self-assessment was a big process, it was far less fundamental and far less sensitive—although it is sensitive in itself—than the issues that would be raised by a fundamental change in the powers of the institutions. There is nothing that upsets our constituents and businesses more than the heavy-handed use of those powers, or worse, their occasional abuse or the act of apparently overstepping them. On the Revenue side, the commissioners spend quite a deal of time policing that and, as we know, there is a tribunal system on the Customs side. Again, those are different approaches to bringing the checks and balances to the whole system.

I am a little perturbed. The Minister says that she will do this in the Finance Bill 2006. That is a relatively short time frame and, who knows, perhaps I will be presenting the Finance Bill 2006 and she can stand here and have a go at what I propose, which would be putting somebody in charge of a thoroughgoing review who is demonstrably independent and who commands widespread respect in the business community and among those who are affected by the exercise of those powers.

I do not expect the Minister to make a decision on the spot because I have not discussed the matter with her beforehand, but I ask her to give me some reassurance that she will go away and think about whether it might be worth while finding somebody of that type to put together a small committee with a relatively tight time frame to do exactly what I am describing: to go through the issues that we have both agreed we need to examine, to report back, probably to go through some quick scrutiny by the Treasury committee and then to bring the matter before us as legislation that amends the four or five major Acts to which I have referred.

The self-assessment process saw a consultation document, a response to it, a committee drawn from the representative bodies set up to consider the proposals for the new department, draft legislation produced, its consideration by that committee and its presentation to Parliament. It was a pre-pre-legislative process. There are smaller examples of that: the review of intellectual property rights and the consideration of the large tax changes we made, for example. The only point missing is that which the hon. Gentleman made, when he asked whether we should   appoint someone specifically. I have not got so far as to determine who would be responsible. I will consider it, but I envisaged the process as this Committee expressing its view and, if the Government did not quite agree, the Government being accountable. When the legislation came before Parliament it would be up to us to explain why we had chosen the drafting that we had. This is not a particularly huge issue. I will consider it and write to the hon. Gentleman when I have taken a view. It is not that interesting. I can say, however, that the appointee will not be a Member of the House.

I am very grateful for that answer, and it sounds to me as though I have got somewhere between half and a whole loaf. In this game, you quit while you're ahead. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 ordered to stand part of the Bill.

Clause 6 ordered to stand part of the Bill.

Schedule 1 agreed to.