Representations on Part 3 of the Bill by the CIOT, dated 26 November 2001. The Chartered Institute of Taxation fully supports the need for effective legislation to deal with the threat of terrorism and other very serious crimes. We also acknowledge that in some circumstances the Inland Revenue and Customs and Excise have a part to play in making such legislation effective. We would however point out that it has always been a cardinal principle of the tax system in the United Kingdom that the information given by a taxpayer to the taxing departments should remain confidential. We believe that this principle has done much to create the atmosphere of voluntary compliance without which our tax system could not operate.
We start, therefore, from the proposition that any breach in the principle of confidentiality should require the fullest possible justification and should go no further than is necessary to deal with the exceptional circumstances which form part of that justification. We are, therefore, pleased to see that the legislation will now contain a five year “sunset” clause, although we would prefer a shorter period.
We note the addition of Clause 19 (2) (a) which was not part of the legislation originally introduced in, but then dropped from, the Criminal Justice and Police Bill earlier this year. This allows information to be disclosed for the purpose of facilitating the carrying out of the functions of the Intelligence services. We are concerned to note that this subsection does not require a criminal investigation or proceedings to exist. We understand that occasionally it may be necessary for this power to be activated, but we believe that there should be a requirement for judicial approval before this is done.
We note that sub clause (3) requires the authority of the Commissioners by whom the information is held for its disclosure. We have discussed with the Inland Revenue how they propose to implement this in practice, but we believe that there should be a statutory requirement to publish a Code of Practice explaining how requests are dealt with and by what rank of officer.
We have some concerns about sub clause (5) which allows a consent to be given to disclosures “made in such circumstances as may be specified or described in the Consent”, other than in relation to a “particular disclosure”. This appears to us to contemplate the release of information in bulk, which we believe would be very undesirable. The draft Code of Practice by the Inland Revenue which we have seen explicitly says that this will not be done, but in our view the legislation should be made clearer. We believe that no disclosure should be made except in relation to a named person or persons.
We are very pleased to see that Clause 20 (2) now appears to ensure that information cannot be disclosed to a foreign state for the purposes of an investigation or prosecution into conduct which would be criminal under the law of that state, but not under the law of any part of the UK. This meets one of our major objections to the clauses which were originally included in the Criminal Justice and Police Bill. There does, however, seem to remain the possibility that a spurious request could be made by a foreign state alleging the existence of a crime, or an investigation into a crime, which was merely a front for a request for information which might then be misused, for example for the purposes of persecution. We believe therefore that the Bill should require the requesting authority in these circumstances to state under what part of its own law the alleged criminal conduct arises and to provide an independent legal opinion supporting that conclusion.
Some of our concerns about these proposals in their original form have been met by the changes which have been made compared to the Criminal Justice and Police Bill clauses, and the drafts which we have seen of the Inland Revenue’s Code of Practice. Whilst supporting the general aims of the Bill, we believe that the importance of taxpayer confidentiality should not be underestimated and that our above proposals will help to ensure that the public continues to regard the taxing departments as reliable repositories for personal information.
Technical Department
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