Schedules
Schedule 1: Former Inland Revenue Matters.
295.See section 7.
Schedule 2: Functions of Commissioners and officers: Restrictions, &c.
Part 1 – General
296.Part 1 of this Schedule places some specific restrictions on the exercise of certain functions. Except for the conduct of prosecutions of revenue and customs offences in England and Wales covered in the section on the Prosecutions Office (sections 34 to 42), all of the functions of the Commissioners and staff of both Inland Revenue and Customs and Excise are transferred to the Commissioners and staff of HMRC by sections 5 to 7. This includes some powers which can be used widely in one of the two predecessor departments, but less widely or not at all in the other. In order to prevent the accidental spread of the wider powers to the whole of the new department's business, it is necessary to ring fence these powers by reference to the matters inherited from each predecessor department. This Schedule supplements the generic restriction on officers' powers in section 7 by some specific restrictions for matters not otherwise covered, such as Commissioners' powers. Most Commissioners' powers do not need to be included here, because they are already defined as relating to particular functions, and would not apply generally anyway.
297.Paragraph 1 limits the Commissioners’ powers to intercept wireless telegraphy to obtain or disclose information about the contents, sender or addressee of any message. This power is currently only available to Customs and Excise, and this paragraph prevents it from being used in relation to matters inherited from the Inland Revenue.
298.Paragraph 2 restricts the Commissioners’ powers to require various types of information return relating to securities. The powers, inherited from the Inland Revenue, will only be able to be used in relation to former Inland Revenue matters.
299.Paragraph 3 restricts the Commissioners’ power to prescribe the form of notices to matters relating to functions inherited from the Inland Revenue. The particular power in question currently relates only to Inland Revenue matters. Powers to prescribe forms for Customs and Excise matters are differently worded, and are often particular to types of form. This ring fencing prevents any confusion.
300.Paragraph 4 limits to previous Customs and Excise functions the Commissioners’ power to depute other persons to exercise the powers of officers, e.g. to enable Ministry of Defence police to undertake anti-smuggling functions in relation to imports and exports of sensitive military equipment.
301.Paragraph 5 restricts the matters in connection with which a member of the armed forces or police can be required to give assistance. At the moment they only do so in relation to Customs and Excise functions, and sub-paragraph (1) prevents the requirement from applying to former Inland Revenue matters. Sub-paragraph (2) gives an assurance to members of the armed forces or police that they are entitled to rely on the word of an officer of Revenue and Customs in interpreting this restriction.
302.Paragraph 6 confines the current Customs and Excise penalties for false declarations and counterfeiting to their current scope by preventing them from applying to former Inland Revenue matters.
303.Paragraph 7 restricts the application of the Police and Criminal Evidence Act 1984 (PACE) in relation to HMRC. (It does not apply in Scotland, because the relevant provisions of PACE do not apply in Scotland.) PACE contains various police powers, such as powers of arrest, search and seizure. Most of these powers are regulated by reference to the conduct of a given police investigation. PACE contains a provision enabling its provisions to be applied by order in respect of Customs and Excise investigations. The general consequential amendments in section 50 of this Act will deem this to refer to any Revenue and Customs investigation, but sub-paragraph (1) excludes investigations relating to former Inland Revenue matters. This maintains the status quo.
304.Sub-paragraph (2) disapplies the generic restriction on officers’ powers (section 7) from PACE powers used by HMRC. This is because Customs and Excise officers using PACE powers for their primary investigation are legally entitled to carry on doing so in relation to an ancillary matter, which could happen to be an Inland Revenue matter. This limited flexibility is being preserved. Thus at present a Customs and Excise officer who has entered premises during a Customs and Excise investigation, to search for evidence of a Customs-related offence, may also seize any evidence he comes across of any other offence, which could include income tax offences. If the generic restriction on officers’ powers were to apply, that capability would be lost. The combined effect of sub-paragraphs (1) and (2) is to maintain the status quo, so that an officer of Revenue and Customs may use ancillary PACE powers in respect of former Inland Revenue matters, but only where he has used primary powers in the context of an investigation relating to former Customs and Excise matters.
305.Paragraph 8 confines to its current scope the Customs and Excise provision which extends information powers to cover electronic media. The provision allows Customs and Excise to gain access to documents stored electronically, and to inspect computers used to store such documents. The equivalent Inland Revenue provision, section 127 Finance Act 1988, applying to the Board of Inland Revenue and persons authorised by them, is already expressly limited to direct taxation. The status quo is preserved by preventing the Customs and Excise power from being used in relation to former Inland Revenue matters.
306.Paragraph 9 performs the same function as paragraph 7, but in relation to PACE as it applies to Northern Ireland.
307.Paragraph 10 restricts the scope for making regulations that might be needed as a result of other EU member states adopting the single currency. Such regulations can currently be made only in relation to matters dealt with by the Inland Revenue, and this maintains the status quo.
308.Paragraph 11 deals with differences in the powers which the two predecessor departments have under the Regulation of Investigatory Powers Act (RIPA). In several areas Customs and Excise have wider powers than the Inland Revenue. Sub-paragraph (1) provides that these wider powers may not be used in respect of former Inland Revenue matters, and sub-paragraph (2) lists them. The wider powers in question are:
the interception of communications under a warrant;
intrusive surveillance;
seeking a disclosure notice for encrypted material received by lawful means other than under statute or a warrant; and
making an anti-tipping-off order in relation to a disclosure notice.
309.Paragraph 12 restricts the use of a regulation-making power relating to mandatory electronic filing. It ensures that the power can only be used in relation to a taxation matter formerly dealt with by the Inland Revenue, thereby maintaining its current scope.
310.Paragraph 13 adjusts the way the generic restriction on officers’ powers applies to a provision of the Proceeds of Crime Act (POCA). POCA allows a customs officer who is lawfully at any place, e.g. at the frontier, or on premises executing a search warrant, to seize any cash which he suspects is either recoverable property (such as the proceeds of crime), or intended for use in unlawful activity. The power is not limited in its scope, so that a Customs officer could use it if, for instance, he came across money which he suspected to be the proceeds of PAYE fraud, even though PAYE is not currently a responsibility of Customs and Excise. Paragraph 13 maintains the status quo. An officer of Revenue and Customs is only allowed to use the POCA power when exercising a function which is not a former Inland Revenue function. In that case he is allowed to use the POCA power in relation to a suspicion about a former Inland Revenue function. This means that an officer of HMRC would not be able to use the power at all if he were carrying out a PAYE inspection. But if he were carrying out a VAT assurance visit, he would be able to use the power to seize suspect cash, even if he suspected that it related to a PAYE fraud.
311.Paragraph 14 restricts the scope for enabling the Commissioners to exercise powers relating to the provision of evidence of crime to other jurisdictions. The current provision relates only to the Commissioners of Customs and Excise, and that position is maintained by excluding matters relating to former Inland Revenue functions, and their overseas equivalents.
Part 2 – use of information
312.Part 2 of Schedule 2 makes modifications to the terms of various provisions that authorise the supply of information to and by the existing Commissioners and their officers (provisions termed “statutory gateways”), so that they can be applied to the new department. In most cases the information to be supplied is itself specified by the gateway provision, or is in practice specific to the functions of one or other of the predecessor departments. Most gateway provisions, therefore, fall to be converted for use by the new department by a simple change of name of the body authorised to supply or receive it, as the case may be, and that is achieved by the working of section 50 (1) and (2). So, for example, the reference to the Commissioners of Customs and Excise in section 8 Finance Act 1988 (power for those Commissioners to disclose to interested parties the consignee and description of imported goods) becomes a reference to the Commissioners for HMRC, and the power thereby devolves on them, without any change in subject matter.
313.But there are a few gateway provisions, such as section 20 Immigration and Asylum Act 1999, where the information to be supplied to the Home Secretary is described at large only as “information held” by the Commissioners of Customs and Excise. By contrast, the Commissioners of Inland Revenue are authorised under section 130 Nationality, Immigration and Asylum Act 2002 to supply only address details of persons thought to be present or working in the United Kingdom in breach of immigration control. To prevent an inadvertent widening of the scope of these gateways by the integration of the predecessor departments, specific provision is made by paragraphs 15 to 20 to limit the scope of six outward gateway provisions where this might be an issue. In paragraphs 15, 16, 18, and 20, the gateways are inherited from the Commissioners of Inland Revenue, and the limitation is to information obtained or held in exercise of functions related to former Revenue matters, as defined in section 7. In paragraphs 17 and 19, the gateways in question are inherited from the Commissioners of Customs and Excise, and the limitation is to information other than that held solely in the exercise of functions related to former Revenue matters. This reflects the fact that information may now be held for multiple purposes, such as an address held on a common name and address file used for a number of functions, and updated from any of them.
Schedule 3: Revenue and Customs Prosecutions Office (RCPO)
314.Paragraph 1 sets out the qualification for appointment of the Director RCPO: the person to be appointed must have been in practice as a solicitor or barrister for at least 10 years, reflecting the seniority of his position. A similar qualification is required for appointment as the Director of Public Prosecutions.
315.Paragraph 2 provides for the Director to hold and vacate office in accordance with the terms of his appointment.
316.Paragraphs 3 to 5 set out the arrangements for the financing of the Office. Paragraph 3 stipulates that the Director shall be paid such remuneration, expenses and allowances as the Attorney, with the approval of the Minister for the Civil Service, shall determine. Paragraph 4 obliges the Director to follow directions issued by the Attorney with the consent of the Treasury in incurring expenditure to carry out the functions of his Office. Paragraph 5 provides that this expenditure shall be paid out of money provided by Parliament.
317.Paragraphs 6 and 7 stipulate that after the end of each financial year the Director must provide an Annual Report to the Attorney General, which will be published and laid before Parliament. The Report will contain details of the exercise of the Director’s functions during the proceeding year. With the exception of the first financial year, which begins when section 34 comes into force, a financial year is defined as beginning on 1st April and ending on the following 31st March.
318.Paragraph 8 makes it clear that both the Director and his staff will be Civil Servants.
Schedule 4: Consequential amendments
319.This schedule sets out the amendments to Acts identified as necessary as a consequence of the creation of the new department, the abolition of the old departments and the creation of the new Prosecutions Office.
320.The general provision in section 50 is necessary as well as the specific amendments set out in Schedule 4 in order to ensure coverage of all references in the very large body of legislation covering the business of Customs and Excise and Inland Revenue.
