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(Except Clauses 7, 8, 9, 11, 14, 16, 20 and 92) - Clause 91

Finance Bill – in a Public Bill Committee on 23rd June 2009.

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HMRC Charter

Photo of David Gauke David Gauke Shadow Minister (Treasury) 10:30 am, 23rd June 2009

I beg to move amendment 75, in clause 91, page 45, line 2, leave out ‘aspire’ and insert

‘use all reasonable endeavours to achieve’.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

With this it will be convenient to discuss the following: amendment 76, in clause 91, page 45, line 3, at end insert

‘and set out the rights and responsibilities of taxpayers and other persons with whom HMRC deals’.

Amendment 77, in clause 91, page 45, line 5, leave out ‘regularly’.

Amendment 78, in clause 91, page 45, line 5, after ‘review’, insert

‘at least once every year’.

Amendment 79, in clause 91, page 45, line 5, after ‘review’, insert

‘at least once every 3 years’.

Amendment 80, in clause 91, page 45, line 5, leave out ‘and’ and insert—

‘(b) consult with stakeholders in carrying out the review, and’.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

Welcome to the Chair, Mr. Atkinson. May I also welcome the Exchequer Secretary to her new position in the Treasury team and to the Finance Bill Committee? I am sure that we all applaud the fact that she is to respond to the debate on the next few clauses. She has experience of previous Finance Bills, having been a Parliamentary Private Secretary, which I am sure will stand her in good stead. She must be as delighted as she is surprised to find herself on this year’s Finance Bill Committee.

Clause 91 relates to the HMRC charter. I will make various comments about the charter’s purpose during the stand part debate, but it might be helpful to touch upon its purpose in relation to amendments 75 and 76. Is the charter’s purpose to set out HMRC’s responsibilities and its mission statement; or to set out the rights and responsibilities of taxpayers; or a bit of both?

I am grateful to the Exchequer Secretary and perhaps her ministerial colleagues for the new draft of the charter, which was published last week, before the hon. Lady  had fully settled into her new role. The draft sets out the rights and responsibilities of taxpayers or customers—I am never sure about the term “customers” in relation to HMRC, but I know what the Government are getting at. The clause inserts into the Commissioners for Revenue and Customs Act 2005 new section 16A, subsection (2) of which states:

“The Charter must include standards of behaviour and values to which Her Majesty’s Revenue and Customs will aspire when dealing with people in the exercise of their functions.”

The draft charter’s content on the rights of taxpayers may be regarded as similar to that statement, but the obligations, which the charter also outlines, are not reflected in the subsection. The subsection does not refer in any way to the obligations of taxpayers; its focus is entirely on what HMRC will do. We will have an opportunity during the clause stand part debate to argue about whether that is right or wrong, but we think it would be a better description of both the draft HMRC charter that was published last week and the February draft if the subsection provided for the charter to

“set out the rights and responsibilities of taxpayers and other persons with whom HMRC deals” as proposed in amendment 76.

Clause 91 gives the charter statutory recognition—I hope to talk at greater length about that and the reasoning behind the clause in a moment—but if the clause is to accurately reflect the charter’s nature, amendment 76 would be helpful in clarifying that purpose. New section 16A(2), as drafted, does not fully or adequately explain what the charter is about. We can debate what we think the charter should be about. There is a strong argument that what is in subsection (2) should be an accurate description of what the charter is about, or we could argue that that is deficient. I submit that subsection (2) is inadequate as a description and would be better if amendment 76 were accepted.

Amendment 75 toughens up the wording of subsection (2), which refers to

“standards of behaviour and values to which Her Majesty’s Revenue and Customs will aspire with people in the exercise of their functions.”.

We suggest that that could be improved and strengthened by removing the word “aspire” and, instead, say that HMRC will

“use all reasonable endeavours to achieve” those standards. The intention is to strengthen the requirements of HMRC to comply with the charter. If we have a charter to which people merely have to aspire, as opposed to actually and properly seen as a key objective that HMRC will go to great lengths to achieve, one may question whether the charter will have as much effect as it should have. Consequently, amendment 75 deletes the word “aspire” and inserts the words

“use all reasonable endeavours to achieve”.

Amendments 77 to 80 deal with review. New section 16A(3) states that

“The Commissioners must...regularly review the Charter, and...publish revisions, or revised versions, of it when they consider it appropriate to do so.”

The term “regularly review” is vague. How frequently is regularly? Perhaps the Minister can give some guidance to the Committee on that point. We suggest two alternative approaches—they obviously contradict each other. In  amendment 77 we propose the removal of the word “regularly”. In amendment 78, we suggest that the review should be annual, tying in more neatly with new subsection (4), which refers to the Commissioners making

“a report reviewing the extent to which Her Majesty’s Revenue and Customs have demonstrated the standards of behaviour and values included in the Charter.”

Given the obligation to make a report annually, we suggest that a review of the charter be performed at the same time—again, annually. I do not think that the Government intend that that be done annually and that the review of the charter itself should be tied up with the review of compliance with the charter, which is why we tabled amendment 79, which proposes that the review be undertaken every three years. That would regularise and formalise a proper review and deal with the vagueness, which has been a concern. The Minister may well provide some comfort through her comments to the Committee, but I think it is right to raise the issue of vagueness in the present wording.

The other concern relating to the review process is that there is nothing in the Bill that states that there will be consultation with stakeholders. Clearly, in producing in the draft charter, the Government have consulted stakeholders. We will turn to the charter in more detail in the stand part debate, I hope, but there has been extensive consultation and the original draft of the charter responds to the remarks made by the Chartered Institute of Taxation and the Institute of Chartered Accountants in England and Wales. If HMRC is to review the charter regularly, it would be sensible to consult stakeholders. I am sure the Exchequer Secretary will be able to reassure the Committee that any reviews will be undertaken with proper consultation, but it would be helpful if that were in the Bill and I see no reason why it should not be. We tabled amendment 80 to address that point.

Clause 91 is important, raising a range of issues which I would like to turn to in the stand part debate. We tabled amendments 75 to 80 in an attempt to be constructive, to provide greater clarity and to allow the Exchequer Secretary to expand on some of the more technical points, before we turn to a wider debate.

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury

I am pleased to serve under your chairmanship, Mr. Atkinson, and to join the Bill Committee, although it was a bit of a surprise, as the hon. Member for South-West Hertfordshire said. I thank him for his kind words.

We will come later to the stand part debate on clause 91, but I have a couple of introductory remarks. The clause introduces and maintains the charter in statute for the first time, ensuring that the charter cannot lapse. It also ensures that HMRC will be specifically accountable to both Parliament and the public for its performance against the charter. Commissioners must report annually on how well HMRC is doing in meeting the standards in the charter. That will be included in HMRC’s departmental report, opening it to scrutiny by both the Public Accounts Committee and the Treasury Committee. That imposes on the commissioners and all officers of Revenue and Customs the strongest obligation to comply with the charter’s requirements and aspirations. I assure the Committee that the charter will have a high profile at HMRC and be at the heart of everything it does.

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury

Can I just finish the point, as it leads me to amendment 75, which would change the wording of the provision to describe the standards in the charter? Instead of standards to which HMRC will “aspire”, they would become standards HMRC will

“use all reasonable endeavours to achieve”.

If there is a standard in the charter to which HMRC must aspire, it goes without saying that HMRC must use all reasonable endeavours to achieve it. In my view, the accountability mechanisms I have just described meet that obligation.

Photo of John Howell John Howell Conservative, Henley

Given the general nature of the behaviours described in the charter, will the hon. Lady say a little more about how she is going to measure them? It seems impossible to measure some of them. There are no firm numbers and no comparisons one can make. How will she approach the measurement, against which we will tell whether HMRC has met its obligations under the charter?

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury 10:45 am, 23rd June 2009

I shall speak about that later when I respond to amendment 80, because we intend to set up an advisory panel.

We do not think it necessary to change the wording as proposed in amendment 75 because we think the obligation is already there. Amendment 76 would require the charter to

“set out the rights and responsibilities of taxpayers”.

That is too sweeping. It is intended that the charter will set out those rights that do not lend themselves to being enshrined in statute, such as the rights to be treated with respect and to be presumed to be honest. However, the charter cannot be expected to set out all the rights that already exist in law, such as the right to appeal in certain circumstances. On the responsibilities of taxpayers, the charter is not the right place to say that a tax return must be completed correctly and by a given date. Although it may include, for example, a general statement that a taxpayer is expected to be honest, it is not appropriate for the clause to suggest that HMRC can dictate values to which the public must adhere.

The hon. Member for South-West Hertfordshire expressed the hope that I would give some comfort and clarity in relation to amendments 77 to 79. Taken together, they propose omitting “regularly” and inserting one of two alternatives. “Regularly” clearly implies that HMRC must review the content of the charter reasonably often, which does not mean once every five years. As I have said, the charter will be at the heart of HMRC’s relationship with taxpayers and other persons it deals with. It is a pivotal document. I assure the Committee that the terms of the charter will be kept under review and the annual reporting obligation makes it inevitable that such reviews will take place at least once a year. It is not necessary to put that in the Bill.

Amendment 80 deals with consultation with stakeholders in carrying out the reviews. We agree with the sentiment behind it—of course we want HMRC to  consult with stakeholders—but the amendment is too vague and might blur responsibilities. For example, who are stakeholders? Is every member of the public a stakeholder? How many of those stakeholders should we consult? However, as I said, HMRC’s responsibility to consult is something that both we and HMRC take very seriously. Consequently, we will be setting up an advisory panel to monitor the charter. A majority of its members will be representatives of external stakeholders and it will operate in a similar way to the powers implementation forum, which is already regarded as a success. An additional reference to stakeholders is not required in the legislation.

On the point made by the hon. Member for Henley, we are already working to review what performance data should be published. That involves looking at what customers have told the Department is the information they care most about and reviewing what it would be most helpful to publish. In the light of those remarks, I invite the hon. Member for South-West Hertfordshire to withdraw the amendment.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I thank the Exchequer Secretary for her response. I shall briefly go through the various amendments and respond to her comments.

On amendment 75, I am grateful for the hon. Lady’s comment that where HMRC aspires to do something, it will also use all reasonable endeavours to achieve it. If I understand her correctly, that is helpful, and if we have her assurance that HMRC will use all reasonable endeavours to achieve the standards of behaviour and values set out in the charter, that is also helpful.

I am less persuaded by the hon. Lady’s comment that amendment 76 is too sweeping. In it, we propose that the charter should set out the rights and responsibilities of taxpayers, but we do not intend that to be exhaustive. I am sure that, in her short time in the post, the Exchequer Secretary has read through the draft charter. I think that if amendment 76 was accepted, the clause would reflect the charter much more accurately than it does now. At risk of straying into areas that will form part of the stand part debate, I believe that the charter should emphasise the rights and responsibilities of taxpayers, rather than being a mission statement for HMRC. I am not entirely persuaded by her remarks, although I am not inclined to press the amendment to a Division.

I am grateful to the hon. Lady for her remarks on amendments 77 to 79 about regular reviews. I am not sure if the definition of “regularly” as “reasonably often” provides as much clarity as it might have done, although I note her comments that it does not mean every five years. I assume by that remark that she means that it will happen more frequently than every five years. There is some clarity there.

I am particularly grateful to the hon. Lady for her remarks on amendment 80 about consulting with stakeholders. I am not sure that the wording we propose is so vague as to cause enormous difficulties to HMRC in complying with the obligation. The meaning of “consult with stakeholders” is pretty clear. However, the confirmation of the advisory panel is a helpful remark for which the Committee will be grateful.

I know that it is not necessary to withdraw any but the lead amendment, Mr. Atkinson. With a certain amount of reluctance as far as amendment 76 is concerned, I beg leave to withdraw amendment 75.

Amendment, by leave, withdrawn.

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

Photo of David Gauke David Gauke Shadow Minister (Treasury)

We have already been debating amendments to the clause, but the central question this morning is the purpose of the HMRC charter. It might be helpful to describe the context.

A fairly regular feature of recent Finance Bills has been that a substantial part of each Bill relates to HMRC powers. Those powers have been part of the programme entitled, “Powers, Deterrents and Safeguards”. I have made the point to the Minister’s predecessors, at various stages of more than one Finance Bill, that we tend to hear much more about the powers and deterrents than about the safeguards. Over the years, Treasury Ministers have answered by pointing to the existence of the HMRC charter. That charter has evolved over the past few years and we welcome the statutory recognition given in clause 91—we certainly will not oppose the clause standing part of the Bill. However, we have to consider whether the charter as it has been drafted is sufficiently focused on providing safeguards to taxpayers or customers, or whether it is lacking in that regard.

We must also consider the concerns expressed, in recent years in particular, about the performance of HMRC. There are two types of concern. First, there are concerns about the failure of HMRC to raise as much tax as it might have done. Those centre on underpayment of tax and HMRC’s failure to enforce measures sufficiently in the right areas, with the result that it has not got the yield that it might have done. Secondly, concerns are frequently expressed to all constituency MPs about failures in the performance of HMRC—that the customer service it provides has been unsatisfactory.

I suspect that the area that most MPs have experience of dealing with is tax credits, but I do not wish have a lengthy discussion about the tax credit system, and I am sure that you would not wish me to do so, Mr. Atkinson. However, we have all heard from constituents who are concerned about HMRC’s treatment of them, about its inability to get information across, about information going missing, and about the difficulties of getting to speak to anyone at HMRC. Lengthy delays in VAT registration and payments were also common a couple of years ago. There may be good reasons—there was concern about M-Tech fraud—but there have also been failures within HMRC, as highlighted by the National Audit Office. Experienced staff members have not been available because they have been moved around, and as a consequence the performance of HMRC has not been all that it might be. There is currently a problem, as I am sure the Minister is aware, of more general delays in tax repayments from HMRC. It would be helpful if the she said something about that.

The past few years have clearly been challenging for HMRC, with the Lyons report, the Gershon savings, the merger between the Inland Revenue and Customs and Excise and frequent changes in senior management. It is publicly acknowledged that HMRC has had a morale problem in recent years. That was highlighted at  the time of the loss of the disk containing the data of all child benefit claimants. Satisfaction with the performance of HMRC has been very low. I assume that the charter is an attempt to address these concerns, as well as the one I highlighted a moment ago: the balance between the powers of HMRC and the safeguards that taxpayers should have in this very important area. That is an issue we have discussed many times before.

I say in parenthesis that I wonder whether issues of tax administration, to do with the balance between the rights of the state and of individuals, belong in Finance Bills, which only this House has the opportunity to review, unlike a normal Bill. Those issues are different from the raising of revenue, where this House has rightly been protective of its monopoly powers. Would some of those provisions benefit from scrutiny by the other place? How we balance that is at the heart of a liberal democracy, which makes it somewhat surprising that the Liberal Democrats are not present this morning. [Interruption.] I notice that my surprise is not shared by all members of the Committee.

The charter is important as a way of trying to provide some safeguards. It has to be seen in the wider context of debates on previous Finance Bills. That leads me to some of the concerns expressed about the content of the draft charter. I thank Ministers for producing a draft charter last week, as it is helpful for the Committee to have it in front of us. Such is the timing, however, that I do not think that the professional bodies that scrutinise such documents closely and provide support for members of the Committee have had an opportunity to review the contents. I suspect that, although they welcome some aspects of it, they still have further questions. My role today is to ask those questions.

The first point that must be raised is that there is still a lack of clarity about whether the charter is intended to be a mission statement for HMRC or whether it is intended to set out the rights and responsibilities of taxpayers. The expectation, by and large, was that the charter was to be for taxpayers, to set out what rights they have and what obligations they owe. Indeed, one could question the title of clause 91, which is “HMRC Charter”. Should the title be “Taxpayers’ Charter” or “HMRC Customer Charter”? Does the existing title get to the heart of the matter?

A criticism raised by the Chartered Institute of Taxation, for example, of the February draft of the charter was that it rather confused the matter. I would like to quote the first paragraph of that draft, which was highlighted by the CIOT. It says that the purpose of the charter is:

“to make sure that the money is available to fund the UK’s public services. We also help families and individuals with targeted financial support. We aim to make the tax and benefit system feel simple to use.”

As the CIOT said:

“This belongs in a mission statement, not a charter.”

There are some amendments to the new charter. However, as far as the first paragraph is concerned, the new charter, which we have in front of us, states:

“We collect taxes and duties so that there is money to fund the UK’s public services. We help families and individuals with targeted financial support. We also help international trade run smoothly and protect the UK economy.”

Again, that is of the nature of a mission statement. The new charter goes on to make comments that are more focused on the taxpayer. However, the confusion identified by the professional bodies in response to the February consultation still remains.

I shall also be grateful if the Minister can explain one of the changes to the wording in that first paragraph of the new draft. It says:

“We also help international trade run smoothly and protect the UK economy.”

There is no one more committed than I am to the cause of international trade running “smoothly”; I am a free trader, without any equivocation. However, I was somewhat surprised that that objective was seen as a particular focus of HMRC. If HMRC can do what it can to help international trade, I have no objection to that. Nevertheless, I was somewhat surprised to see those words in the first paragraph.

I was also curious about the wording:

“and protect the UK economy.”

I would be grateful for the Minister’s view, but my personal theory is that there was a first draft that stated, “We must protect the UK economy”, which I suspect was about protecting UK tax revenues. Then, someone looked at that draft and said, “That looks somewhat protectionist”, and therefore some wording about helping “international trade” was inserted, to prevent there being any protectionist element. I am not quite sure how we got to this particular wording, but it sits rather uneasily in the first paragraph about the purpose of HMRC.

We then have a summary of the rights section and there has also been a change there from the February draft. The February draft contained the wording:

“Pursue relentlessly those that break or bend the rules.”

The professional bodies made two points about that wording. First, they said that it did not sit comfortably in a list of the rights of taxpayers. Secondly, it did not fit comfortably with the intention of the new penalties regime to work constructively with taxpayers to ensure that they would comply with the rules, and it did not make a distinction between those who made innocent mistakes and those who were cheating the Revenue. In that sense, it would be inappropriate to pursue relentlessly those who break or bend the rules.

The new draft addresses a concern raised by the Low Incomes Tax Reform Group that people on low income, who are unable to receive professional advice and who may make an inadvertent mistake, would be affected. The February draft appeared to state that such people would be pursued relentlessly, which was perhaps not the tone that HMRC wanted to strike. We welcome the new draft’s wording:

“Tackle people who try to cheat the system”.

I reiterate that a key obligation and responsibility of HMRC is to tackle people who try to cheat the system, so we have no query about point 8 of the charter as an HMRC obligation. However, whether that fits easily into a list of “Your Rights”, is another matter.

I suspect that the Minister will argue that those who pay their taxes in accordance with the rules and do not cheat the system will not want other people to be able to  cheat the system. However, the document does not read easily on that point, so I would be grateful for her remarks on it.

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness 11:00 am, 23rd June 2009

Does my hon. Friend agree that it would be better to have three sections entitled, “Your Rights”, “Your Obligations” and “HMRC Commitment”? That would be a better and more logical way of explaining whether HMRC would get the money by pursuing relentlessly or by tackling wrongdoing.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

My hon. Friend makes a good point. It might be better to structure the document so that one section focuses on rights, another on obligations and another on HMRC’s wider commitment. The counter-argument is that that takes us back to the confusion between the mission statement and the rights and responsibilities of taxpayers. I understand that the charter seeks to address both, but that would be done more cleanly if the Government and HMRC followed my hon. Friend’s suggestion.

Let me say something about the document’s structure. The February document essentially contained a summary, and that was it; it basically listed rights and obligations, and did not particularly expand on them. The structure adopted by other charters, such as those of the OECD and Australia, provided greater detail in addition to a summary of rights, which is the route that HMRC has now taken. It is a good structure, and it is helpful for taxpayers that there are greater explanations on headline matters. For example, under Your rights, the charter says:

“You can expect us to:

1. Respect you.”

Then, within the body of the charter, there are helpful details on what respecting the taxpayer or customer means, such as treating the customer with courtesy and consideration, listening to concerns, and so on. However, I wish to highlight some of the suggestions made in response to the February document that are not covered by the new draft charter, and I would like the Minister to respond to them.

First, there is nothing in the charter about taxpayers’ freedom of information rights. Those rights exist—the Freedom of Information Act 2000 exists, as all Members of the House are well aware—and should be in the charter. There is nothing specific here about rights of appeal. It is not appropriate to put detailed rights of appeal in the charter. They are complicated matters that vary in each circumstance, but some indication on rights of appeal would be helpful. There is nothing specific in the charter about remedies or compensation available to a taxpayer, or anyone, in the event of failures on the part of HMRC. Should there be anything in the charter on that point?

I return to the issue, which we debated last week, of retrospective taxation. Last week, I raised the issue in the context of clause 67 in the hope of obtaining from the Financial Secretary some indications of the Government’s general approach to retrospective taxation. I do not think that I was entirely successful. However, some indication of what a taxpayer can expect from the Government on retrospective legislation—something perhaps setting out the general principle that HMRC will not act retrospectively, other than in some fairly clearly defined circumstances—would be helpful.

The Chartered Institute of Taxation raised one point that is partially addressed. That is, if the charter states that it is right for a taxpayer to pay only the tax that is due, which seems perfectly reasonable as nobody should be expected to pay more than they are lawfully due, then there is wording in the charter that distinguishes between those legitimately trying to pay the lowest amount of tax and those evading tax. I do not think that anyone would necessarily disagree with an explicit acknowledgement that people should not be required to pay more than they are due. Indeed, I think that the Chancellor has commented that people are entitled to minimise their tax liability, if they do so in a lawful way.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Has it not always been a duty of HMRC to help taxpayers pay the minimum amount of tax that they are due? I am surprised that this is something new, because I understood that it was almost a duty of HMRC.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

My hon. Friend is correct: this is not new. What we have is a charter that is new. The charter should set out what the taxpayer can expect. In our earlier debate, the Exchequer Secretary raised the point that it might be difficult to be comprehensive and create an exhaustive document setting out every right and remedy available to a taxpayer. However, there is an opportunity to assert what is, as my hon. Friend says, a fundamental aspect of our taxation system.

What is not included in the new charter is a blunt statement that taxpayers can expect to receive a professional service from HMRC. That is not at any point explicitly stated. The charter refers to various commitments—we will do what we can to keep the costs down, we will help to support you to get the payments and claims right—which partly addresses the point made by my hon. Friend the Member for Wellingborough, but there is nothing particularly explicit.

I have, of course, picked out various points that could have been addressed but have not been. I do not want to obscure the fact that we believe that an HMRC charter setting out the rights and responsibilities of taxpayers is right. It is an important safeguard, as Ministers have said, but we still have one or two concerns about the drafting, about whether the document lacks focus on what the taxpayer can expect and on their rights and about the danger that this is a missed opportunity. It needs to be looked at in the context of a period that has seen HMRC accrue significant new powers. The safeguards are right, so we raise those concerns, but welcome clause 91 none the less. It is an important aspect of the Bill.

Photo of John Howell John Howell Conservative, Henley 11:15 am, 23rd June 2009

When I first looked at the draft charter that goes with the clause, I had a sense of dĂ(c)jĂ vu; it struck me as very retro. It took me back to the 1980s and 1990s and those companies that had mission statements emblazoned across their doors. It was axiomatic that the only companies that needed mission statements emblazoned in such a way were those that had difficulty believing in them and translating the words into change in the first place. It is a shame that this charter has that feel because I agree with the comments made by the Chartered Institute of Taxation—there is real value in  having a simple, accessible statement of basic rights, particularly as the relationship between HMRC and the taxpayer is becoming ever more complex each year. We have also commented on that.

The charter does the minimum. It is not easy to hold HMRC to account and the charter is subjective in what it currently sets out. It will not, for example, be difficult to sue against the charter if you wish. It ought to have been backed up with hard targets. My hon. Friend the Member for South-West Hertfordshire commented on professional service. Part of that professional service is about having targets that can be seen, measured and used to hold the organisation to account. The charter comes over as neither one thing nor another: part mission statement, as has been said, and part an attempt to get some substance into the relationship between the taxpayer and HMRC.

There is confusion in the charter over who the audience is. Without wishing to make the document significantly longer, there is logic in specifying some of the differences between the different sorts of customers or clients—however you wish to describe them—that HMRC deals with. It would be useful in the charter.

Reading and comparing the proposed draft charter with the OECD model charter, which, from the structure and the wording, HMRC must have based it on, I was struck that paying tax that is legally due is firmly in the OECD charter. So, too, are some very specific recommendations, such as, “We will finalise assessments in X days, we will deliver refunds in X days, we will reply to queries in X days, and, even, we will send the minutes of investigations in X days to those who have been investigated.” The OECD charter also deals with the right of appeal in a more robust way than the one-line reference in section 1 of the draft, which just mentions the awareness of rights, including the right to appeal.

Linking to other legislation is important. My hon. Friend the Member for South-West Hertfordshire mentioned that in connection with the Freedom of Information Act 2000, but it also applies to the Equality Bill—the Committee on which is going on in another room down the corridor. I am sure that there are elements of the Equality Bill that will need to be taken into account.

What will the board report against? We come back to the question about needing specific details. Even with the information that is there, it is very difficult to see what the HMRC board will say about how the sorts of objective in the charter will be achieved and measured. That is because the charter is far too wishy-washy. It could have set out standards and played an important role in providing safeguards for the taxpayer. Of course, the weakness in the charter compares very unfavourably to the enormously greater powers that HMRC is seeking in subsequent clauses.

My final point is one of great surprise, Mr. Atkinson. I notice that the letter to you and Mr. Hood from the Treasury team regarding this clause, states that the redraft is a better version than there original. If that is the case, I would hate to have seen the original.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

I rise to speak very briefly, following the contributions of my hon. Friends the Members for South-West Hertfordshire and for Henley. As the latter rightly said  toward the end of his comments, there is a stark contrast between the mushy generalisations of the charter and some of the very specific, quite draconian and unique new powers in the next few clauses. There is a fundamental risk that such a document written in such general terms will look like a very mushy mission statement. It needs specifics. As my hon. Friend rightly said, the OECD’s proposals talk about commitments that can be expected by the customers, as it were, of the HMRC in relation to time deadlines.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

My hon. Friend goes to the nub of the issue. When I was in practice, one of the problems was that one would get a demand from the Revenue to reply within two weeks, or else, but the Revenue’s reply would then take up to six months to arrive, which left the taxpayer in limbo. It all seems to be one way, and I do not see the charter addressing that problem at all.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

Similar problems may be found in a range of central Government Departments, but my hon. Friend is absolutely right. There is a sense of imbalance in the relationship, which is not terribly helpful.

The charter is written in such general terms that it justifies HMRC’s existence in areas where many would doubt its competencies. As my hon. Friend the Member for South-West Hertfordshire rightly pointed out, the very notion that HMRC exists to look at international trade and to protect the economy is utter nonsense, and if that provision gives the various bodies who should have those responsibilities an alibi, it makes it all the worse.

I was a business man before I entered Parliament and have had dealings for many years with HMRC and the two predecessor bodies. I had perfectly good relations with the VAT-related bodies and Customs and Excise. There was a very strict rule that, if one was running one’s own business, in no circumstances should one mess with Customs and Excise. In almost 20 years as a business man, I ensured that I kept to the letter of that rule. Fundamentally, my concern with any sort of charter, and certainly a charter couched in such terms, is that it undermines what I consider to be a very important principle, which is that businesses and individuals should be able to get on with their lives without undue hindrance from the state. We do not want businesses or individuals to neglect to pay their taxes, and they have certain obligations in that regard. However, setting those out in a strict rule of a charter must be the wrong approach. Let businesses and individuals have as much freedom as possible. I fear that the charter is a step in the wrong direction.

Photo of Brian Jenkins Brian Jenkins Labour, Tamworth

As usual, it is a pleasure to serve under your chairmanship and to be guided by your wisdom, Mr. Atkinson.

I welcome the charter. It is a good move. One of the difficulties that we have always had—I think that we have now cracked it—relates to the rights and responsibilities of taxpayers. Once the charter is passed, I will await the day when taxpayers line up to give an assurance that they will always speak the truth, never lie, never take cash and never join dodgy tax avoidance schemes, but I will not hold my breath while waiting. I am more concerned about the mechanics of how the provision will be implemented.

The commissioners must report at least once a year, but to whom? The Chamber of the House of Commons? Do not expect me to go through their report line by line and hold them to account; I have neither the time nor the resources to do so, and neither do most of our Committees. The only Committee with such resources is the Public Accounts Committee, which can call upon the National Audit Office’s 800 members of staff, who have the time and resources to go through such a report.

The commissioners’ report is not the only one in which I am interested. I am most interested in the Public Accounts Committee’s report, to which the Government have to reply. I am also interested in what follows that. When the commissioners return within the next year, as well as having an undertaking to utter, yet again, the warm words, “We accept that our behaviour was not up to standard”—I am more interested in behaviour than values, because behaviour will lead to the targets that the commissioners aspire to achieve—will they also have a duty to report to the Public Accounts Committee the percentage of their promises that have actually been achieved?.

The Chamber debates Public Accounts Committee reports at least once a year. Will that Committee have a duty every year to ensure that it reports not only on the commissioners’ report, but on the commissioners’ assessment of how many standards of behaviour they have achieved or failed to achieve, as well as why they failed to achieve them? Putting the simple mechanics in place is as much as a Government can do; we cannot change individuals’ behaviour and we should not legislate to try to do so. I would therefore like an assurance from the Minister that the mechanics are right for the situation, and that we have got a firm grip on the matter.

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury

We have had an interesting debate with contributions from several hon. Members. On the last point made, the commissioners must report annually on how well HMRC is doing in meeting the charter’s standards and, as I have said, that report will be included in HMRC’s departmental report, which opens the matter up to scrutiny by both the Public Accounts Committee and the Treasury Committee. That gives a degree of comfort that the commissioners’ report will not only be a piece if paper, but will also be scrutinised.

On formal service standards, since April 2008, HMRC has been reflected in the three departmental strategic objectives, all of which are supported by high-level targets, and HMRC success against those targets is included in the departmental report. HMRC plans to start publishing information on its performance against those objectives in the autumn. The information will focus on what customers tell us is most important to them, how easy it is for them to access the services support that they need and the quality of that support, including whether they were handled courteously, whether information was treated confidentially and whether they were given the right answer.

I will not relate the history of the charter, because members of the Committee probably already know it, but the first consultation document was warmly welcomed as making a positive contribution to the relationship  between HMRC and those with whom it deals. The hon. Member for South-West Hertfordshire has said that he does not agree with the concept of the charter.

Mr. Gaukeindicated dissent.

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury

No? I am sorry: he agrees with the concept of the charter, but his hon. Friend the Member for Cities of London and Westminster disagrees with it, which is a shame, because I think that most people agree with the concept. Most respondents argued that a legal foundation would be the best way to ensure that the charter would be an effective and enduring document. That is why the clause giving the charter explicit legislative backing is included in the Bill.

Photo of David Gauke David Gauke Shadow Minister (Treasury) 11:30 am, 23rd June 2009

For the charter to be effective it needs to impose or encourage a culture within HMRC to comply with it. Will the Minister—either immediately or subsequently in her remarks—outline to the Committee what steps will be taken to disseminate the contents of the finalised charter among HMRC staff? I appreciate that we do not have the final version here, although we anticipate that what we have is very close to it.

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury

I may come back in detail on that. It is important that the charter does not just sit here because we have agreed to it, but that it goes to HMRC staff not just in Whitehall but across the country, because those are the people with whom the majority of taxpayers interact. Most people interact with HMRC not in Whitehall, but in its local branches. The hon. Gentleman said the draft is not set in stone, and I will come back to that point.

The hon. Gentleman and the hon. Member for Cities of London and Westminster asked why the overarching statement at the beginning of the charter mentions international trade. HMRC has responsibility for European Union obligations on international trade duties. The charter addresses all of HMRC’s stakeholders, so the overarching statement has been written to reflect the customs policy as well as the tax-collecting duties of the Department’s role. The Committee has seen a draft of the charter and I want to assure Members that work continues on the final version and the remarks we have heard today will feed into it.

The point was raised that there was nothing in the charter about being professional, but point 4 says,

“Whenever you deal with us we will take responsibility for our actions and behave in a professional way. We will: act with integrity”.

We will continue to work with stakeholders on the specific text of the charter and to take comments on board, as we have done so far. We aim to have a complete charter published in the autumn. The second consultation, which closed in May and led to the revised draft, took a wide range of views on board. The CIOT congratulated us on listening to its suggestions and taking them into account.

On the point made by the hon. Member for South-West Hertfordshire about accounting bodies, we shared information on a confidential basis with the ICAEW. In its briefing last week it said:

“We support the current version of the charter which we believe is a well balanced document which sets out the rights and obligations of the taxpayer.”

The clause is straightforward and self-explanatory. The detail is in the charter, which is still being refined and revised.

Question put and agreed to.

Clause 91 accordingly ordered to stand part of the Bill.