Taxation (Cross-border Trade) Bill (First sitting)

Debate between Mark Menzies and Peter Dowd

Tuesday 23rd January 2018 Public Bill Committees

[Peter Dowd]

Q Finally from me, in relation to the appeals process, you identify in paragraph 6.1 of your evidence:

“We are concerned that taxpayers’ rights in relation to an effective appeals process are retained. This Bill could be”—

you do not say “will be”—

“a backwards step in relation to an effective appeals process, because it affords such wide discretion to HMRC. We wish to see the adoption of clear unambiguous legal requirements for customs matters, which minimise commissioners’ discretion.”

Could you tease that out a bit more? That is in paragraph 6.1 of the Chartered Institute of Taxation’s evidence.

Jeremy White: A thorn in the flesh of the people who contributed to that section was clause 23, and in particular where certain results—particularly approvals—are treated as never having been granted if HMRC considers that approval would not have been granted if a deficiency was known at the time it was granted. That is just one example. There are a number of parts of the Bill where this construction is used whereby one authority—an administrative authority, a parliamentary authority or a Minister—considers that kind of discretion.

Yes, that is a useful construction in English for granting a power to make an instrument, but when it comes to affecting a trader’s relationship and whether they can be in business or not because they have got an authorisation, it should then be subject to the ordinary appeal to the simple, low-cost traders’ tribunal that we have learned to admire. All of the other authorisation-type decisions that HMRC could make are subject to appeal, and they are preserved properly by the Bill. The trouble is the Bill then adds in a few more, using a construction such as “considers” and “discretions”. It is bad enough now that sometimes we have to tell a client, “Sorry, you’re going to have to pay the money to go to the High Court and challenge the Ministers or HMRC on the basis of judicial review,” which is very expensive, discourages litigation and often discourages people from obtaining a remedy for their dispute.

This should not be controversial. It should be, “Yes. That is the right thing to do.” If we were able to add to a shopping list, we would say, “Can we please have all of the current disputes going on in the High Court in customs matters dealt with in a tribunal as well, please?” but that may be asking too much. If the scope of the Bill is wide enough for that and you could amend it to get that in, that would be good. We should not really have customs issues going to the High Court at all. They should all be dealt with in the first-tier tribunal tax chamber.

[Mark Menzies (Fylde) (Con)]

Q I would like to return to the point made by Helen Dennis on fair trade. Do you agree that it is very important that the Government have a wide remit within the scope of the Bill? Some of the current rules regarding EU regulations and tariffs are detrimental to fair trade. I will cite one example. Colombian coffee producers export low-value green coffee into the EU for the value to be added, usually in Germany and in some cases in Italy. Massive value is added here in the EU to the benefit of German manufacturers and large German brands, which therefore has huge detriment to the coffee producers back in Colombia. That is one example. There are many. Having a wide scope in the Bill will give the Government, in the fullness of time, the ability to make sure that free trade arrangements work as consumers in this country think they work, as opposed to how the EU has currently drawn them up.

Helen Dennis: A lot has been said about value addition and its potential post-Brexit. Our view is probably that the tariffs are not the key issue here. We already have duty-free, quota-free access for the least developed countries. If we take a country such as Colombia, or a GSP-plus country such as Bolivia, it is able to access the market with roasted coffee as well, duty free, but as I said before, with the free trade agreements, they may not all transition over necessarily. The biggest issue in terms of trade policy and development continues to be subsidy rather than EU tariffs. There are other issues, such as rules of origin or just getting the investment in roasting and processing facilities, that are more of an obstacle to moving into that kind of value-added activity.

Having said that, there is still scope for improving the tariffs. That goes back to the point about how we and the Government do that. Do we say that the Secretary of State has that power and authority, every three years or so, to revise the preference scheme to extend product coverage and potentially country coverage, and so on? Is that a conversation that happens through regulations under delegated powers, or is it something that a Committee of the House or another grouping, or Parliament in its entirety, would want to discuss, debate and have a vote on? There are lots of issues to unpack. I would certainly agree with the premise of your question, but some of the detail on that particular issue around coffee roasting does not impact as many countries as is sometimes talked about.