Clause 96 - Penalties under section 26 of FA 2003: extension to excise duty

Finance Bill – in a Public Bill Committee at 2:30 pm on 10 June 2014.

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

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Clause 96 relates to the applicable penalties in respect of undeclared goods imported in excess of the allowance from non-EU countries in specific circumstances. It provides for a customs civil penalty in cases where there is no allegation of dishonest conduct, but where goods are wrongfully imported from a non-EU country. The explanatory notes suggest that the new civil penalty will be introduced by secondary legislation, although it is worth noting that the current policy states that the minimum penalty is £250, which is the first penalty in all but the most serious cases.

I have one question for the Minister. Will the same penalty regime be implemented through secondary legislation with respect to imported goods from non-EU countries—the circumstances that this clause will apply to? As far as I understand it, neither the tax information and impact note nor the explanatory note explicitly state what penalty will apply where such behaviour is deliberate. I would be grateful if the Minister could clarify whether the penalty will apply in the way I have set out, or whether it will be affected by the secondary legislation that the Government propose to introduce to deal with the new civil penalty for the non-deliberate import of non-EU goods.

Photo of David Gauke David Gauke The Exchequer Secretary

Clause 96 will provide for the issue of a customs civil penalty to travellers entering the UK from outside the EU who fail to declare goods in excess of their allowance when stopped before clearing customs controls. The penalty will be used in cases where no dishonest conduct is found, as an alternative to existing penalties, to allow more flexibility in cases of less serious contraventions.

Currently, there is no ability to issue a civil penalty in cases of non-deliberate behaviour, the result of which has been inequity of treatment between EU and third-country travellers. There is a criminal penalty for a failure to declare such goods and a customs civil evasions penalty for cases where HMRC finds dishonest behaviour. However, clause 96 will provide a method for penalising non-compliance where dishonest behaviour is not found and where criminal prosecution would not be appropriate. The clause ensures a level playing field for issuing penalties for excise goods wrongly imported from a non-EU country, as well as those wrongly imported from an EU country. The proposed penalties will address the current risk of reputational damage relating to having a penalty for only intra-EU travellers. It will also protect revenue and support HMRC’s excise strategies.

The schedule sets the maximum penalty for the contravention of a customs provision at either £1,000 or £2,500. There are no fixed penalties. The minimum penalty is £250, which will be the first penalty in all but the most serious cases. Penalties for subsequent contraventions will be issued in progressively larger amounts until the maximum is reached. The normal progression will be £250, £500 and £1,000, with additional steps of £2,000 and £2,500 for the higher maximum. All penalties, including the minimum £250, will be subject to reasonable excuse and mitigation consideration. In the majority of cases a penalty notice will not be issued without the trader first having had a warning letter.

I hope that information on penalties helps the Committee, and I hope I have been able to set out how the penalty fits within the wider set of sanctions that are available. I hope the clause stands part of the Bill.

Question put and agreed to.

Clause 96 accordingly ordered to stand part of the Bill.