Powers to obtain contact details for debtors

I beg to move amendment 67, in schedule 49, page 358, line 50, at end insert—

‘(ba) Revenue and Customs has used all reasonable efforts to ascertain contact details of the debtor’.

With this it will be convenient to discuss the following: amendment 68, in schedule 49, page 359, line 24, at end insert

‘such period being not less than 30 days from the date of the notice.’.

Amendment 69, in schedule 49, page 359, line 27, after ‘it’, insert

‘does not have the information or that it’.

Amendment 70, in schedule 49, page 360, line 22, at end insert—

‘Application of data protection legislation

7A A third party who provides information to Revenue and Customs as a consequence of the powers contained in this Schedule shall be deemed to have acted in compliance with his responsibilities under data protection legislation.’.

The schedule relates to HMRC’s powers to obtain contact details for debtors. I shall run through the amendments standing in my name and those of my hon. Friends.

Amendment 67 deals with the requirements relating to when a Revenue and Customs officer may reasonably request contact details for a debtor from a third party for the purpose of collecting a sum. It would simply require that Revenue and Customs must first use all reasonable efforts to ascertain the contact details of the debtor. In other words, it should check the information that it currently has. It is unreasonable for HMRC as a matter of course, as the first port of call, to go to a third party to ask for information which it may have. The amendment would simply require it to check its information first.

Amendment 68 relates to the requirements to comply with notices. Paragraph 3 of the schedule currently states:

“If a notice is given to the third party under this Schedule, the third party must provide the details—

(a) within such period, and

(b) at such time, by such means and in such form (if any), as is reasonably specified or described in the notice.”

We simply want a little clarity on the duration of that period by proposing a minimum period of 30 days from the date of the notice. It would be helpful if the Minister outlined what the Government have in mind for the duration of that period, but 30 days is not an unreasonable amount of time to respond to the notices.

Amendment 69 probes the grounds for a right to appeal. At the moment, such a right exists if it would be

“unduly onerous to comply with the notice or requirement.”

The amendment suggests that an additional ground should be stated explicitly—that the third party does not have the information. One could argue that if one does not have the information, compliance would be “unduly onerous”, in which case the amendment is unnecessary. The amendment might, however, provide a degree of clarity for third parties that receive such notices.

Amendment 70 would provide some protection for a third party that provides information to Revenue and Customs as a consequence of the powers contained in the schedule and that runs into difficulties with data protection legislation. The Minister may well be able to provide some reassurance that the amendment is unnecessary. We would welcome some reassurance that any third party acting in accordance with the provisions of the schedule would not face any data protection difficulties.

We have one other concern in relation to the schedule that I would like to put to the Minister. I should be grateful for your guidance, Mr. Atkinson, on whether I should mention it now or during the stand part debate. It is a brief point, and it might be to the convenience of the Committee if I address it now.

I believe that others wish to speak, so it would be more convenient to save your point for the stand part debate.

Thank you, Mr. Atkinson.

I hope to be able to provide the assurances and clarification that the hon. Gentleman seeks. Amendment 67 would require HMRC to make all reasonable efforts to trace a debtor before using the  formal power. I assure the Committee that HMRC will use that power only as a last resort in the most difficult cases, where it considers that all relevant checks have been made. For its own reasons of cost-efficiency and making progress, HMRC will make reasonable efforts from within its own resources, including the use of commercial products and informal requests, before concluding that there is no way forward other than to issue a formal notice. That is set out in HMRC’s guidance, which has been published in draft form and supplied to the Committee. I therefore do not consider it is necessary to legislate on that matter.

Amendment 68 would put in statute a period of 30 days for the third party to comply. Again, for clarification, we recognise that that is a reasonable point to make, but I believe that it can be safely left to guidance. HMRC has published draft guidance stating that it will usually allow not less than 30 days for a reply. Although in most cases, 30 days would be long enough to provide simple information, such as an address that differs from that on a notice, in exceptional cases a longer or shorter period might be appropriate. HMRC wants the information, not the penalties, and will be open to representations to extend the period if particular requests cause difficulty. Leaving the time period in guidance is in line with schedule 36 to the Finance Act 2006, which operates in a similar way.

The probing amendment, 69, would allow the third party to appeal on the grounds that it does not have the information sought by HMRC. There is no need to appeal. Confirmation by the third party that it holds no contact details that differ from those provided by HMRC is enough to satisfy the notice. Again, that is set out in the draft guidance published by HMRC.

I am concerned about vulnerable people who could be approached by the Inland Revenue for information. Will the Bill give leeway to the Department, for example in a situation in which an 80-year-old mother is the third party? Will there be some compassion over the whole business of application? What guidelines will be given to achieve that?

We have published extensive guidance through HMRC. HMRC tries to act compassionately in cases such as the hon. Gentleman describes. It is unlikely that an 80-year-old woman will have information that HMRC cannot secure through other means, but if she did, every effort would be made to secure that information in an appropriate way. We want the information, not the penalties. We want to work with people and believe that the system will be voluntary. The third parties that have such information are not likely to be 80-year-old women, but banks, other financial institutions, tax agents, landlords, letting agents and other professionals. There might be an octogenarian letting agent, but such circumstances will be rare.

I understand that third parties will want assurance that in providing the contact details, they will not be liable for the disclosure under data protection law. I do not consider that amendment 70 is necessary to achieve that. The clause will create the lawful means by which third parties can provide information to HMRC. The  Data Protection Act 1998 states that when disclosing personal data, it must be lawful and fair to do so. This provision will provide that lawfulness.

HMRC considered statutory protection for the third party carefully in development and concluded that no further protection was needed. That view is supported by the Information Commissioner’s office, whose website includes published guidance on dealing with requests under tax legislation. It states that

“if you are required to disclose personal information under HMRC legislation, it will not breach the Act”, meaning the 1998 Act. There is no comparable provision in other HMRC information powers and that has not caused problems to date. Many organisations already provide such information voluntarily when asked to do so. I am sure that they will continue to do so.

I recognise that the amendments are probing and hope that my assurances and clarifications will enable the hon. Member for South-West Hertfordshire to not press them.

The Minister is right that the amendments are probing. I am grateful for his responses and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

It is a pleasure to speak for the first time under your chairmanship, Mr. Atkinson.

I have a brief query for the Minister to do with how the schedule relates to the Child Support Agency. It touches on the point made by the hon. Member for Northampton, South. The guidance suggests that Departments, friends, neighbours and relatives do not fall within the power, but where does the CSA come in all this? It is moving to a position where private contractors will do a lot of its work and debt collection, but it clearly holds an awful of information that would be of use to HMRC. I would welcome my hon. Friend the Minister’s advice on where the CSA sits and whether HMRC can use the information the CSA holds and its expertise to pursue debt.

It is a pleasure to follow the hon. Member for Plymouth, Devonport. May I make a not entirely dissimilar point? Paragraph 1(3) states:

“This Schedule does not apply if—

(a) the third party is a charity and obtained the details in the course of providing services free of charge, or

(b) the third party is not a charity but obtained the details in the course of providing services on behalf of a charity that are free of charge to the recipient of the service.”

As the hon. Lady rightly points out, there are similar provisions in relation to local authorities.

I should be grateful to hear what the situation is for those who are part of a non-charity not-for-profit organisation that provides assistance to people. One can envisage that certain organisations that might fall within that definition could well find themselves not receiving the protection contained in paragraphs 1(3) and 1(2). Has any consideration been given to broadening out the measure, for example, to volunteers who work for a local authority or non-charity not-for-profit organisation?  In addition, has any consideration been given to extending that carve-out along similar lines to those suggested by the hon. Lady? Will the carve-out be too narrowly defined for some of the circumstances that could apply?

I thank my hon. Friend the Member for Plymouth, Devonport for her comments. In general, HMRC can obtain information from other Departments under the appropriate information gateways. The terms of those obviously vary, but HMRC will make use of such gateways before considering using this power. That could apply to the Child Support Agency, but I do not think that it necessarily applies under this specific clause. However, the Child Support Agency should be able to provide information to HMRC if it is needed for HMRC to perform its duties.

The hon. Member for South-West Hertfordshire raised the issue of whether charities should be excluded. Charities are excluded where they obtained the contact details in the course of giving free advice to the debtor. The exclusion also protects those who staff helplines on behalf of the charity, even if they are carrying on business elsewhere. The power will not be widely available and will be used only by specialist staff in the most worthwhile cases. HMRC will use the power only if there is or has been a business relationship between the debtor and the third party. I hope that clarifies the point for the hon. Gentleman. He also raised a point specifically about local government employees, and I think that might well depend on whether there is a business relationship.

I am concerned about the matter more in the context of not-for-profit organisations that might not be a charity, rather than in relation to charities. They do not appear to benefit from the protection contained in paragraph 1(3) and, indeed, I am not sure whether volunteers working for a local authority benefit from the protection contained in paragraph 1(2). Will the Minister say something specifically about that?

My understanding of the policy intention is that there should be a business relationship between the debtor and the third party. That is unlikely to be the case for not-for-profit advice given on the types of case that the hon. Gentleman is talking about. I give an assurance that HMRC will treat voluntary bodies that acquire addresses in the course of providing free advice to the debtor alike, whether they are a charity or otherwise. I hope that provides the reassurances that he seeks.

May I press the Minister a little further?

No; I have sat down.

What a pity.

If the hon. Gentleman wants to speak in the debate, he can.

No thank you, Mr. Atkinson.

Question put and agreed to.

Schedule 49, as amended, accordingly agreed to.

Clause 97 ordered to stand part of the Bill.

Schedule 50 agreed to.

Clause 98 ordered to stand part of the Bill.

Schedule 51 agreed to.

Clause 99 ordered to stand part of the Bill.