Clause 77

Serious Crime Bill – in a Public Bill Committee at 10:30 am on 10 July 2007.

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Extension of powers of Revenue and Customs

Question proposed, That the clause stand part of the Bill.

Photo of James Brokenshire James Brokenshire Shadow Minister (Home Affairs)

The clause will give effect to schedule 12, which will extend the powers in the Regulation of Investigatory Powers Act 2000 to all criminal investigations undertaken by  Her Majesty’s Revenue and Customs. The clause has been raised in the context of the ongoing review of HMRC’s powers. The Law Society has raised a number of concerns in relation to the provisions, stating:

“In our responses to the ongoing consultation we have made clear our view that HMRC should not have wider powers than those available to the police.

It is equally vital to ensure that the use of any new powers is authorised at an appropriately senior level within HMRC. At present, the senior authorising officers for the police are Chief Constables (Commissioners for the Metropolitan and City police forces), whereas for HMRC those authorised will be officers of HMRC. We believe the act must make clear the level of seniority required to authorise such intrusive powers and should identify an equivalent level of seniority to that of Chief Constable. In addition, the officers in question should be limited to those in HMRC’s new Criminal Investigations Directorate—as is the case with the proposed powers of arrest—who have received thorough training in the exercise of these powers.”

Those seem sensible and reasonable points. What assurance can the Minister give that they have been or will be addressed?

Photo of Vernon Coaker Vernon Coaker Parliamentary Under-Secretary (Home Office) (Crime Reduction)

It may help the Committee if I say a few words about the clause. In answer to the hon. Gentleman, my understanding is that those authorised will be senior officers. At present, only five officers within HMRC are authorised to act in that sphere of work, so it is not a widespread responsibility—only a small number of specially trained officers have it.

Another point worth making to the hon. Gentleman is that work in that area is divided into criminal and civil cases. One aspect of the arrangements that concerned people was that the two parts of HMRC’s operations should not be merged, as they are very distinctive and it is a small, specialised body.

Clause 77 and schedule 12 extend the surveillance powers available to HMRC to tackle serious crime. At the moment, they are available only when the crime relates to an ex-Customs and Excise matter. The clause would make them available also for serious crimes that relate to ex-Inland Revenue matters. The change is necessary to address the emerging patterns of criminality targeting ex-Inland Revenue tax systems, such as self-assessment, tax credits and gift aid. That criminality involves not only the evasion of tax on income or commercial profits, but organised attempts fraudulently to extract money from the Exchequer. For example, in June four people were jailed for a total of 19 years for committing a £1 million fraud involving the gift aid scheme. The extension of the powers would allow HMRC more effectively to investigate and bring to justice criminals engaged in serious attacks on ex-Inland Revenue systems. The powers would help to establish the links between those involved in the criminal activity, the financial structure of the activity, and where the proceeds of the crime are located. For example, the serious criminals behind organised tax credit fraud involving identity theft may engage foot soldiers to operate bank accounts for them. The extended powers would make it easier to establish the links between the foot soldiers and the major players, allowing the full extent of the crime to be uncovered.

HMRC consulted on the change from March 2006 to January 2007. The majority of those who responded were in favour of what is proposed, provided that the powers could be used only in criminal investigations  into serious tax crime, and that they continued to be subject to the same safeguards and controls that apply to HMRC criminal investigations into ex-Customs and Excise matters. The same concerns were voiced when the clause was considered in another place. I am pleased to assure the Committee on all those matters. The powers can and will be used only by trained specialist officers who work only on criminal investigations. They cannot be used by other HMRC staff engaged in civil compliance work, such as checking the accuracy of tax returns. The powers cannot be used to inquire into major tax avoidance, on the ground of safeguarding the economic well-being of the UK. They can be used only when necessary, and they must be proportionate to the circumstances.

The interception of communication requires a warrant from the Secretary of State. Intrusive surveillance must be approved by a surveillance commissioner, and the most intrusive property interference also requires the approval of a commissioner. All property interference must be reported to the commissioners, who can quash any authorisation. As the hon. Gentleman will know, use of the powers will be overseen by the independent Interception of Communications Commissioner and the Office of Surveillance Commissioners. Complaints can be made to the investigatory powers tribunal, and HMRC is subject to inspection by HM inspectorate of constabulary. None of that will change.

I assure the hon. Gentleman that only senior officers will be able to apply for warrants, and there will be rigorous internal controls on applications. I think that that is the reassurance that the hon. Gentleman sought. It will involve only a small number of people in HMRC, and only senior directors will be able to apply for warrants.

Photo of James Brokenshire James Brokenshire Shadow Minister (Home Affairs) 10:45, 10 July 2007

I am grateful to the Minister for his assurance that only a small number of people will be involved. I ask him to reflect on the provisions of schedule 12, particularly whether it could make it clearer precisely who is mandated by the provisions. Will he give an assurance in response to the points raised by the Law Society? If he is able to identify and deal with those points, will he bring forward appropriate amendments on Report?

Photo of Vernon Coaker Vernon Coaker Parliamentary Under-Secretary (Home Office) (Crime Reduction)

I think that there are appropriate safeguards, but given the spirit in which the Committee has conducted its business, and without saying that I will bring forward an amendment—I am not making that commitment—I will consider the matter and point out the specific safeguards that we believe are already in place. That, I hope, will answer the points made by the hon. Gentleman and the Law Society. I will consider the matter, but I will not give a commitment to bring forward amendments on Report. Rather, I shall simply consider whether the schedule gives us all the safeguards that we want.

Question put and agreed to.

Clause 77 ordered to stand part of the Bill.

Schedule 12 agreed to.