Schedule 48

Finance Bill – in a Public Bill Committee at 5:45 pm on 23rd June 2009.

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Extension of information and inspection powers

Question proposed, That the schedule be the Forty-eighth schedule to the Bill.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

The schedule deals with the extension of information and inspection powers to further taxes. My question relates to paragraph 5, which deals with the powers to inspect property for valuation. That is clearly a sensitive area, in that under those powers HMRC officers may enter private premises, accompanied by

“any person needed to assist with the valuation”.

The safeguards are that an inspection can only be carried out with the agreement of the occupier, who has been given notice of the inspection in writing; or with the consent of the tax tribunal, when the occupier must still be given seven days’ notice in writing. I ask the Minister whether those safeguards are sufficiently robust, given that the power enables HMRC to enter a person’s private residence.

In particular, I put to the Minister concerns raised with us that there should be a specific right for the recipient of the notice to be heard by a tribunal, if he or she wishes to object to access to the private premises. I also ask whether there should be a specific right of appeal in this area. It is a sensitive matter, as is always the case when the authorities are allowed access to private premises. I would be grateful if the Minister let the Committee know what representations he has received and whether any consideration has been given to additional safeguards.

Photo of Ian Pearson Ian Pearson Economic Secretary, HM Treasury

The hon. Gentleman is right to say that the schedule contains a power to enter property for valuation purposes, which rationalises and aligns several existing powers. Schedule 36 of the Finance Act 2008 gives a power to enter and inspect business premises. However, it can be necessary in specific circumstances to value private premises or the assets on those premises. For example, the valuation of all types of property is an essential form of check for inheritance tax. The aligned valuation power contains significant extra safeguards that go beyond the current legislation. The legislation will now specify that valuation inspections can be carried out only with the agreement of the relevant person or the tribunal. The ability to visit unannounced has been removed. I am happy to clarify that.

During the consultation, the majority of proposals in the schedule were welcomed. Some respondents were concerned, however, that the involved third party power could be applied more widely; for example, to the beneficiaries of someone who had died. I can give  reassurance that that is not the case. Specifying in primary legislation precisely where the power can be used means that if HMRC did wish to extend its scope, proposals would need to come before Parliament. I am happy to respond on that point.

Many respondents to the consultation noted the difference between inheritance tax and mainstream taxes. We accepted that and have removed the proposal for a record-keeping requirement for inheritance tax, which I know has been a bone of contention. That means that records created or kept solely for inheritance tax purposes will not be capable of being inspected. That has allowed us to respond to concerns that inspection visits might have been made to the vulnerable or bereaved at short notice. The schedule provides rights of appeal against information requests and flexibility for any part of the outstanding lifetime estate to be dealt with alongside the inheritance tax issues using the same legislation.

In general, the safeguards are much stronger. Powers already exist to ensure that there are safeguards to protect the taxpayer from misuse of the valuation power. All valuation visits to which the occupier does not agree will have to be authorised by the independent tribunal, which will ensure that the power is used only when it is necessary and proportionate to do so. I do not believe that a further appeal process is needed as we already have an independent tribunal that will have authorised the visit in the first place. I believe that we have gone a long way towards addressing all the concerns of respondents to the consultation.

Question put and agreed to.

Schedule 48 accordingly agreed to.

Clause 96 ordered to stand part of the Bill.