Taxation (Cross Border Trade) Bill committee – sittings seven and eight

12 Feb 2018

MPs agreed clauses 23-56 of the Taxation (Cross-Border Trade) Bill, in debates which took place on Thursday 1 February. Topics covered included procedure for agreeing changes to Customs and VAT rules, the impact of the move from acquisition VAT to import VAT, and factors to be taken account of when considering excise duty rates. No changes were made to the Bill.

Taxation (Cross-Border Trade) Bill – Public Bill Committee

For reports on previous sessions of the Committee, see: Taxation (Cross Border Trade) Bill committee hears oral evidence (sittings one and two) Taxation (Cross Border Trade) Bill committee – sittings three and four Taxation (Cross Border Trade) Bill committee – sittings five and six

Sittings seven and eight -  Thursday 1 February 2018

Clause 23 - Approvals and authorisations granted under regulations Clause 24 - Rulings as to application of customs tariff or place of origin

These two clauses were passed without debate.

Clause 25 - Disclosure of information

Clause 25 permits disclosures for customs duty purposes, explained Financial Secretary to the Treasury (FST) Mel Stride. Kirsty Blackman (SNP) drew attention to the Scottish Law Commission’s raising of the point that the relevant data protection legislation for the purposes of the Bill should be the Data Protection Act 2018, not the Data Protection Act 1998. Her amendment 117would make a technical change to ensure that the ‘correct’ legislation is used. The minister responded that given that the Data Protection Bill is not yet in law, it would be inappropriate to refer to it in this Bill. Blackman said that if the Government amended the Bill to specify ‘appropriate data protection legislation’, rather than ‘the Data Protection Act 1998’, that would fix the problem. In any case, she withdrew her amendment.

Clause 26 - Co-operation with other customs services Clause 27 - Fees for exercise of functions in connection with import duty Clause 28 - Requirement to have regard to international obligations Clause 29 - Consequential amendments Schedule 7 - Import duty: consequential amendments

These four clauses and a related schedule were passed without debate.

Clause 30 - General provision for the purposes of import duty

Clause 30 allows the Treasury to make regulations for the purposes of import duty, which will prove necessary to ensure that the UK’s import duty regime operates effectively, explained the FST. Although the Bill sets out the requirements for import duty, the need for more detailed rules will likely arise once the new regime is implemented, he said.

Labour proposed three amendments. Amendment 81 was moved by Anneliese Dodds. This advocates the inclusion of a sunset clause, whereby no regulations can be made under this clause after the end of the two-year period, beginning with exit day, when the UK is set to leave the EU. The European Union (Withdrawal) Bill commits to ensure that delegated powers in many of the areas it covers will not be available in perpetuity but only for the period necessitated by leaving the EU, she noted, but that approach was not replicated in this Bill. She also noted that the OECD’s policy framework for investment explicitly mentions the need to consider including sunset clauses in trade facilitation measures. For the Government, the FST said that if amendment 81 were accepted, there would be a risk of limiting the Treasury’s capacity to make or require changes to the UK’s import duty regime in the future. He argued that while the EU (Withdrawal) Bill makes provision for day one, with the understanding that further primary legislation will be made to supplement it, this Bill will be required in order to maintain a functioning customs regime and effective VAT and excise regimes on an ongoing basis. Dodds asked the minister how many years he envisaged that we might need the ‘last-minute decision-making’ proposed in the Bill for. The minister said that depended on ‘a wide variety of circumstances, some of which will almost certainly necessarily be completely unknown at the current time’. Dodds withdrew her amendment.

Labour also proposed amendments 131 and 132 which would have required regulations under this clause to be subject to the affirmative procedure. The FST responded that the Government believe that the negative procedure for regulations made under this clause provides an appropriate level of parliamentary scrutiny.  These amendments were not pressed to the vote. The clause was agreed without opposition.

Clause 31 - Territories forming part of a customs union with UK

The clause gives Ministers the powers to create a customs union between the UK and another country, overseas territory or multilateral body, including, for example, the EU. The formation of a customs union would be made through the declaration of an Order in Council, cutting out Parliament. Explaining it, FST Mel Stride said there were “various circumstances in which the Government might wish to establish a customs union with a country or territory overseas, and to have that union apply for import duty purposes. One instance might be to establish a customs union with a Crown dependency—namely Jersey, Guernsey and the Isle of Man.”

Shadow Chief Secretary to the Treasury Peter Dowd moved amendment 6. It would require a Minister to make a statement to the House of Commons on the establishment of a customs union, outlining the specific details of the customs union and how they were reached, as well as the effects of the new customs arrangements on trade with other countries and territories. “I consider that—I think that most people will—to be the minimum level of parliamentary oversight that we should expect,” said Dowd. He added that we need only go back to the time when we first entered what was then the European Economic Community. We failed to take account of the impact on trade with Commonwealth countries, which then accounted for 20% of all imports and exports, he said. The result was unhappy and damaging, with Commonwealth countries losing out. The Labour Prime Minister had had to renegotiate better terms that ensured that trade with Commonwealth countries could continue.  Responding, FST Mel Stride said an Order in Council could be made only if it has first been approved, in draft, by the House of Commons under the draft affirmative resolution procedure. The amendment was withdrawn.

Also discussed was amendment 82 which would limit the period for which a customs union agreed by the Government through delegated legislation could be in force. Peter Dowd said: “We believe six years to be time enough for the House to consider the net benefits or costs of a customs union,” The minister replied that establishing a new customs union with an overseas territory or country is likely to be a long-term process and it would therefore be wrong to limit the ability to adapt the UK’s legislation to a period of five years following exit. The amendment was not pressed to the vote. The clause was agreed without a vote.

Clause 32 - Regulations etc

Clause 32 sets out the parliamentary procedures which apply when regulations are made under Part 1 of the Bill. There were three groups of amendments and new clauses to this clause.

The first group of eight amendments (89-96) and new clause 12 was tabled by the SNP. Kirsty Blackman explained that amendment 89 would subject regulations made under certain provisions of schedule 4 to the affirmative procedure, rather than the negative procedure, and would ensure a higher level of parliamentary scrutiny. (A statutory instrument under the negative procedure will automatically become law without debate unless an annulment motion is accepted for debate . Conversely affirmative procedure refers to a procedure where a statutory instrument must be approved by both the House of Commons and (for most, though not for tax, legislation) the House of Lords to become law.) The SNP has concerns about how the Trade Remedies Authority will operate, and how it will decide things such as the amount of injury that has been sustained. The FST replied that the trade remedies framework contained a great deal of technical detail which is why the Government propose that the regulations are subject to the negative procedure.

Amendments 91, 92 and 93 would subject certain regulations to a ‘super-affirmative’ procedure. Amendment 96 and new clause 12 would apply the super-affirmative procedure in relation to VAT issues, which would mean ‘more scrutiny and that better law is made’, Kirsty Blackman said.  (Use of the super-affirmative process had been mooted by CIOT in its submission to the committee. It is a procedure that already exists for legislative reform orders and involves the laying in draft of regulations, for consideration by a Commons committee, after which they may be revised by government.) Responding, the FST commended Blackman on her ‘creativity’, but said no case had been made that existing procedures were inadequate. To do so would, he said, mark a major precedent in Parliament. He added that under the Value Added Tax Act 1994 powers are already available to deal with the move from acquisition VAT to import VAT. The SNP said they will return to these amendments and to new clause 12 at report stage.  

Kirsty Blackman explained that amendment 94 would delete clause 42(1) and thus remove from the Bill the proviso that direct EU legislation on VAT would no longer have effect in the UK. It would ensure that EU legislation affecting VAT and the operation of the common VAT area would continue to have effect in the UK for the transitional period. The amendment is important because it would address concerns raised by the British Retail Consortium about replacing acquisition VAT with import VAT, she said. Anneliese Dodds (Lab) intervened to mention the enormous problems faced by microbusinesses when they had to comply with the reduction in the threshold for VAT applied to digital services within the EU. Blackman said the effect of amendment 95 would be to ensure that the UK Government do not exclude aspects of the UK’s participating in the EU VAT area or in the EU’s principal VAT directive by delegated legislation. The amendment would ensure that there is more parliamentary scrutiny around any changes. She added that she wanted VAT experts to give evidence to relevant delegated legislation committees. “VAT is incredibly interesting and such a Committee would be an absolute hoot,” she asserted. The minister responded that the Government would look ‘sympathetically and appropriately’ at the particular issue of the change from acquisition VAT to import VAT, including the change in timing of VAT payments with its effect on a large number of businesses as they trade with the EU in future.

Anneliese Dodds moved amendment 121, which was discussed alongside a group of amendments, along with Labour’s new clause 14, all focusing on the ‘made affirmative’ procedure. They were tabled to ensure that the fast-track made affirmative procedure provided under clause 32 is used only in specified circumstances and that, in other circumstances, the draft affirmative procedure is used. Dodds said: “The financial crisis required action just as rapid as is currently necessitated by the Government’s approach to leaving the EU. However, in the former case, there seems to have been a commitment to be sparing in the use of the made affirmative procedure that we do not have in this case.” New clause 14 is concentrated on a small subset of these powers, namely those that apply with respect to setting or increasing tariff rates, charging export and excise duty, some of the general rules for excise duty, and provisions to the extent that they amend or repeal primary legislation. FST Mel Stride said new clause 14 would require a Minister who wished to exercise a power using the made affirmative procedure to make, on each occasion, a declaration that such a procedure is warranted. He argued that the Bill is primarily concerned with the charging of tax and duty. Usual procedure when giving effect to changes in tax policy is the made affirmative procedure, he said. Amendment 121 was withdrawn.

Labour’s Jonathan Reynolds then moved amendment 140, discussed with amendment 141, which focus on limiting the powers of the Executive with regard to public notices because ‘at no point does the Bill indicate what constitutes a public notice’.  The SNP supported Reynolds on this. The FST said a notable effect of the amendment would be to remove the ability to use regulations to cover matters that are dealt with in a public notice, which may limit the Government’s ability to package delegated legislation in the ‘most effective way’. He added that HMRC has extensive experience of producing public notices to communicate changes in tax policy to affected parties. Reynolds replied that the Bill states that regulations can replace public notices, which suggests that the burden of what is being considered is wider than the Government have declared. He withdrew the amendment but warned he may come back to this matter at Report stage. Clause 32 was agreed without a vote.

Clause 33 - Meaning of “domestic goods” Clause 34 - Presentation of goods to Customs on import or export Clause 35 - Exports made in accordance with applicable export provisions Clause 36 - Outward processing procedure Clause 37 - Minor definitions Clause 38 - Table of definitions

These clauses were agreed without debate.

Part Two – Export Duty

Clause 39 - Charge to export duty Clause 40 - Regulations under section 39: supplementary

Having spent five committee sittings considering Part One of the Bill MPs moved onto Part Two at the start of the final sitting. Clause 39 enables the UK to establish an export duty if it is considered appropriate to do so. Clause 40 sets the parliamentary procedure for doing so. Clause 40 specifies that the first regulations made under clause 39, imposing an export duty, are subject to the affirmative resolution procedure

Shadow Economic Secretary Jonathan Reynolds (Lab) moved amendment 13, which would add the interests of manufacturers to the list of factors the Secretary of State and the Treasury respectively must have regard to when recommending or imposing a rate of export duty. He said that, given the amount of detail in the Bill that is left to secondary legislation, all manufacturers seek is minimal reassurance that their interests will be taken into account. Other amendments in the same group called for sustainable development (amendment 79), the public interest (amendment 119), the interests of producers (amendment 142), food safety (amendment 143), environmental protection (amendment 144) and animal welfare (amendment 145) to be taken into consideration. FST Mel Stride said it would be inappropriate to specify an exhaustive list of factors in the Bill. SNP economy spokesperson Kirsty Blackman said the Government must ensure that food safety is high up the agenda, given conversations about trade deals, and that it would be a good statement of direction if the Government explicitly included environmental protection in anything that they do, given that America is not looking at implementing the Paris agreement. She later said: “As far as I am aware, the UK Government have not legislated to give themselves the power to lodge schedules with the WTO in this Bill, the Trade Bill or the European Union (Withdrawal) Bill.” Stride said he would write to Blackman about that. None of the amendments were pressed to the vote.

Shadow Treasury Minister Anneliese Dodds then moved amendment 14, which would have required the Treasury to consider recommendations about the imposition and rate of export duty made by a relevant Select Committee or contained in a resolution of the House of Commons when considering whether to impose export duty. The FST said Select Committees already have the power to question Ministers on the policy within their departmental remit. He said the Bill ensures that the scrutiny procedures applied to the exercise of each power are appropriate and proportionate, taking into account the technicality of the regulations and the frequency with which they are likely to be made. Also discussed were amendments 15-16 and new clause 8, which together would have established a system of enhanced parliamentary procedure for regulations setting export duty, with a requirement for the House of Commons to pass an amendable resolution authorising the rate of export duty on particular goods and related matters.  The amendments were not pressed to the vote. New clauses are not voted on until the end of committee stage.

Part Three – Value Added Tax

Clause 41 - Abolition of acquisition VAT and extension of import VAT Clause 42 - EU law relating to VAT Clause 43 - Other VAT amendments connected with withdrawal from EU Schedule 8 - VAT amendments connected with withdrawal from EU

The three clauses and one schedule in the VAT part of the Bill were debated together, along with three proposed amendments.

Introducing this part of the Bill, the minister, Mel Stride, said that clause 41 will amend sections 1 and 15 of the Value Added Tax Act 1994 so that, on withdrawal from the EU single market, all goods entering the UK will be classified as imports. The clause will also maintain the existing link between the VAT and customs duty on imports. It will abolish the concept of acquisition for goods that enter the UK from the EU, classifying them as imports instead. Clause 42 will result in EU legislation being retained in respect of VAT only where it is ‘sensible to do so’, according to FST Stride. But that clause will retain the VAT implementing regulation as a tool to interpret EU-derived law. This is required for ongoing certainty and consistency of interpretation of the Value Added Tax Act. Clause 43 introduces schedule 8, which makes changes to the Value Added Tax Act 1994 and other consequential changes relating to VAT to take account of the UK’s withdrawal from the EU, should they be needed. The changes made by schedule 8 remove the many references to EU law and EU-specific rules and processes. In addition, said the FST, there is a new provision that enables HMRC to obtain information from businesses so that it can share that with others if doing so is part of an international VAT agreement.

Peter Dowd said that Labour’s amendment 133 would ensure that the modification or exclusion of EU rights, powers and procedures would be subject to affirmative resolution. “I again appeal to members of the Committee to heed the advice of the Delegated Powers Committee and support our amendment,” he said. The Delegated Powers and Regulatory Reform Committee proposed a time limit on the powers under clause 42, which is exactly what amendments 83 and 84 (Labour’s other two amendments) are intended to achieve, said Dowd. Responding, the minister maintained that the aims of this Bill are different from those of other Brexit Bills. “For example, while the European Union (Withdrawal) Bill makes provision for day one, with the understanding that further primary legislation will be made to supplement it, this Bill will be required in order to maintain a functioning customs regime, an effective VAT regime… and an excise regime on an ongoing basis.” Dowd did not accept the minister’s argument, observing that ‘other nations and democracies, much younger than this one, are perfectly capable of dealing with such issues, very detailed issues, without this sort of carte blanche approach that the Government seem to take, where they want to block every opportunity for us to scrutinise’. Amendment 133 was withdrawn and the other amendments were not pressed to the vote. New clauses are not voted on until the end of committee stage.

The clauses and schedule were approved without a vote.

Part Four – Excise Duties

Clause 44 - Excise duties: postal packets sent from overseas

SNP’s Kirsty Blackman said people suddenly may find that their postal packets from overseas are subject to an incredible charge to which they were previously not subject and it is incumbent on the Government, when HMRC make the relevant regulations, that they are as widely publicised as possible. The FST replied that he was due to meet Royal Mail next week to discuss exactly these points. “I will, of course, be happy to share that information,” he said. The clause was approved without a vote.

Clause 45 - General regulation making power for excise duty purposes etc Clause 48 - Regulations under ss. 44 to 47

Clauses 45 and 48 were debated together, alongside four related Labour amendments. The FST, Mel Stride, said that clause 45 provides powers to make changes to ensure the UK has a fully functioning excise regime after EU exit. The powers mean that the UK will be able to implement a range of negotiated outcomes, he said. Clause 48 sets the procedure for making regulations under clauses 44 to 47. It also includes provision to streamline procedures where the new excise powers are combined with some existing powers. 

Labour’s Jonathan Reynolds proposed amendments 85 and 86 which introduce a sunset clause to clause 45, as suggested by the House of Lords Delegated Powers and Regulatory Reform Committee, to prevent the indefinite extension of delegated powers by HMRC commissioners where they relate to excise duty. Reynolds said: “It is our duty at this stage to check the powers of the Executive and ensure that we are not giving them carte blanche to change the balance of power permanently in their favour.” The other two Labour amendments (135 and 136) relate to the subsequent regulations relating to changing excise duty, and would make them subject to the affirmative procedure. The rationale being to add a necessary layer of democratic scrutiny to the extensive powers being granted to HMRC. FST Mel Stride defended clause 45 saying the powers mean that the UK will be able to implement a range of negotiated outcomes and ensure that, after EU exit, we retain the same ability to legislate for excise that we have now. If the amendments are accepted, after the relevant sunset period the Government’s ability to legislate quickly to respond to changing circumstances and future business processes will be limited, he said. For example, the current excise duty suspension arrangements secure the movement of goods through a number of different countries, potentially over a large geographical area. On leaving the EU, the movement of excise duty suspended goods may be permitted only within the territory of the UK. The amendments were not pressed to the vote. The two clauses were agreed without a vote.

Clause 46 - Exercise of information powers in connection with excise duty

This clause was passed without debate.

Clause 47 - EU law relating to excise duty Clause 49 - Sections 44 to 48: interpretation Clause 50 - Excise duty amendments connected with withdrawal from EU Schedule 9 - Excise duty amendments connected with withdrawal from EU

These three clauses and one schedule were debated together, along with a Labour amendment to clause 47. The Financial Secretary explained that clause 47 makes changes that ensure that the status of EU law in relation to excise is clear.  Specifically it will disapply EU regulations in relation to excise duty on goods along with directly applicable EU legislation linked to those regulations. Clause 49 gives the definitions of excise duty and HMRC commissioners in relation to this part of the Bill. The clause confines the application of clauses 44 to 48 to matters relating to excise duty on goods—alcohol, tobacco and fuels. Those are the excise duties most affected by EU exit. Clause 50 introduces schedule 9, which makes changes to excise primary legislation in connection with the UK’s withdrawal from the EU, the minister continued. Those mainly introduce housekeeping changes, including changes to the Customs and Excise Management Act 1979, the Hydrocarbon Oils Duties Act 1979 and the Tobacco Products Duty Act 1979. 

Labour’s Anneliese Dodds moved amendment 134 that asks the Government to include a sunset clause of two years for the application of these measures. The FST said it would not be prudent to time-limit these powers at this stage. The amendment was withdrawn. The clauses and schedule were passed without opposition.

Part Five - Other provision connected with withdrawal from EU

Clause 51 - Power to make provision in relation to VAT or duties of customs or excise Clause 52 - Subordinate legislation relating to VAT or duties of customs or excise Clause 53 - Meaning of “excise duty”

These three clauses were grouped together for debate, along with six related amendments – four SNP, two Labour. The minister, Mel Stride, told the committee that clause 51 confers a power on the Treasury or the Secretary of State to make regulations for VAT, customs or excise in consequence of, or otherwise in connection with, the UK’s withdrawal from the EU. Clause 52 allows subordinate legislation to be made containing a provision that it is to have effect on a day appointed by the Treasury in regulations. It also amplifies existing powers to make subordinate legislation to permit supplementary, incidental or consequential provisions, and transitional or transitory provision or savings to be made. Clause 53 defines excise duty for the purposes of part 5 of the Bill as “any excise duty under… the Alcoholic Liquor Duties Act 1979… the Hydrocarbon Oil Duties Act 1979, or… the Tobacco Products Duty Act 1979.”

Amendment 120 to clause 51 sought to provide that the power to make regulations about VAT, customs duty and excise duty in consequence of UK withdrawal from the EU is only exercised when it is necessary to do so. Kirsty Blackman (SNP) explained that the Law Society of Scotland believe that ‘necessary’ is a stronger word than ‘appropriate’ for this purpose. Amendments 97-99 were tabled by the SNP to apply a sunset clause to clause 51 (stating that regulations may not be made under the clause after 29 March 2021) and change the procedures for the making of regulations, asking that they are made using the draft affirmative procedure. Blackman said that she thought that it would be reasonable for Ministers “to have one process relating to the setting up of a customs or an excise regime, and for that process to be different ever after. That is why a sunset clause would be a good change.” Replying for the Government, Mel Stride said that the Government opposed the four SNP amendments because they would limit their ability to prepare effectively for EU withdrawal. On amendment 120 he prompted laughter with his explanation that “if we had more than one option, one of them may be appropriate but not necessary, because if we chose that particular option there would necessarily be another option that could be chosen. The essential point is that the word “necessary” is not necessary, but in fact unhelpful”. Blackman withdrew amendment 120 but reserved the right to bring it back at report stage.

Jonathan Reynolds spoke to Labour’s two amendments. Amendment 87 sought to limit the duration of the delegated power under Clause 51 to the period ending two years after the UK leaves the EU. Amendment 88 would, he explained, apply the same limits to the powers entitled under clause 52. He was supported by his colleague Peter Dowd, who said the Government “would have us believe that sunset clauses are some foreign or alien concept in parliamentary democracies. Well, they are not… [T]he coalition Government, when introducing the Enterprise and Regulatory Reform Act 2013, basically insisted on sunset clauses to reduce the legislative burden. When it suits the Government to have a sunset clause, they will have a sunset clause”. Responding, Mel Stride said that “we do not yet know the outcome of negotiations with the EU, so it would not be prudent to include a sunsetting clause at this stage. Furthermore, the power is not unfettered. It has a built-in safeguard, which is that regulations can only be made in consequence of, or in connection with, the withdrawal of the UK from the EU.” None of the amendments were pressed to the vote. The three clauses were agreed without a vote.

Part Six - Final provisions

Clause 54 - Consequential and transitional provision

Clause 54 confers a power on the Treasury or the Secretary of State to make provision in consequence of the Bill. Kirsty Blackman (SNP) tabled two amendments (100 and 101). As with amendment 120 (see above), “both amendments would change the word “appropriate” to “necessary”. The first amendment relates to the powers that Ministers have over changing statutory instruments. The second also relates to statutory instruments, but in terms of transitional, transitory or saving provisions. We have previously rehearsed why I think “necessary” is a better word to use in these circumstances.” The minister replied that the Government did not feel that the amendments were either appropriate or necessary. Blackman withdrew them. The clause was passed without a vote.

Clause 55 - Commencement

The committee debated eight amendments to clause 55 and four related new clauses, in four groups. New clause 9 and consequential amendments 17 and 20 were tabled by Labour. These would have required HMRC to provide an assessment of the staffing and IT requirements for implementing the provisions of the Bill, and the prospects of those requirements being met prior to commencement of the main provisions of the Bill. Proposing them, Anneliese Dodds said that the committee had heard ‘compelling evidence from witnesses last week who talked about changes that have occurred within HMRC and the resourcing of the customs element of HMRC’. Kirsty Blackman (SNP) agreed, saying it was important for businesses to have certainty about how the extra resourcing will work. The FST replied it was not appropriate to legislate to require such a review, because HMRC staffing and IT requirements largely depend on the outcome of the negotiations with the EU and the details of the new customs regime, which will be set out in secondary legislation. He repeated assurances that the Government are ‘preparing for every possible outcome’. Labour did not press the amendments to the vote. New clauses do not get voted on until the end of committee stage.

The second group of amendments consisted of Labour’s new clause 10 and consequential amendments 18 and 21. Peter Dowd explained that new clause 10 “seeks to require the Treasury to carry out a pre-commencement review considering the likely effects of the implementation of the provisions of the Bill on the prospects for frictionless trade within the EU after the United Kingdom’s withdrawal from the EU.” Kirsty Blackman (SNP) stated that: “Jeremy White from the Chartered Institute of Taxation said: “The only frictionless trade known to man is customs union.” [Official Report, Taxation (Cross-border Trade) Public Bill Committee, 23 January 2018; c. 28, Q33.] I wholeheartedly agree. The Scottish National Party’s position is and has always been that we should remain in the customs union with the EU. That is the only sensible way of eliminating all barriers to frictionless trade.” Mel Stride assured the Committee “that the Government are committed to providing information on the impact once the outcome of the negotiations is clearer. [But] we believe that putting those requirements on the face of the Bill is unnecessary.” Labour did not press the amendments to the vote. New clauses do not get voted on until the end of committee stage.

Labour’s final set of amendments consisted of new clause 11 and two consequential amendments (19 and 22).These would require HMRC to provide an assessment of the effects of implementation of the Bill on the border experience of importers and exporters and those engaged in associated economic activities, with particular reference to trade with the European Union, prior to commencement of the main provisions of the Bill, Proposing this, Peter Dowd said the reasoning behind new clause 11 was simple: “we are facing a shift of enormous magnitude, which demands a corresponding change in our approach to how we practically handle the processing of customs at the border.” Kirsty Blackman (SNP) said that although the Government were talking about putting extra people into HMRC, she had not heard enough about equivalent extra staff being put into the Border Force so that it can appropriately police things in relation to customs. For the Government, Mel Stride replied that it was not appropriate to legislate for such a review because the experience of businesses at the border will depend on the outcome of the negotiations with the EU, the resulting details of the new customs regime and the resulting changes needed to maintain a fully functioning and legally operable VAT and excise regimes. On the Border Force he noted that this was a Home Office matter but reassured her ‘that we are working across Government and closely with the Home Office to ensure that, whatever occurs in the negotiation and whatever the results for our day one arrangements, we will be ready in terms of both the Border Force and Customs and Excise.’ The amendments were not pressed to the vote. New clauses do not get voted on until the end of committee stage.

The last set of amendments debated by the committee came from the SNP. Amendments 102 and 103 would require the UK Government to make an impact assessment on the effects of leaving the EU VAT Area before any system of upfront import VAT could be applied to goods lawfully being imported into the UK from the European Union under EU Law. Kirsty Blackman said she was ‘neither convinced nor clear’ that the Government have adequately undertaken an assessment of the impact of the move from acquisition VAT to import VAT. New clause 13 would ensure that in the event that the UK is no longer a member of the EU VAT area, the Secretary of State must by draft affirmative regulation introduce a VAT deferral scheme. Blackman said that she appreciated that the Minister had said he was sympathetic to making changes on the VAT deferral scheme, but she intended to press new clause 13 to a vote so that it ‘is written on the Bill and is not just words from the Minister that the Government agree to a VAT deferral scheme’. The minister replied that: “We certainly do not wish for a situation in which we are significantly damaging businesses as a consequence of any changes.” Amendments 102 and 103 would ‘prevent the Government legislating for a future outside the EU VAT area before we produce an impact assessment on the effects that leaving the EU will have on imports’, he added. The amendments were not pressed to the vote. Clause 55 was agreed without a vote. New clauses do not get voted on until the end of committee stage.

Clause 56 - Short title

This was passed without debate.

New clauses

Votes took place on the following new clauses - New clause 1 - Setting the customs tariff: enhanced parliamentary procedure – defeated 10-9 New clause 2 - Preferential rates under arrangements: enhanced parliamentary procedure – defeated 10-9 New clause 3 - Quotas: enhanced parliamentary procedure, etc. - – defeated 10-9 New clause 4 - Preferential rates given unilaterally: enhanced parliamentary procedure, etc. – defeated 10-9 New clause 5 - Dumping of goods and related activities: enhanced parliamentary procedure, etc. - – defeated 10-9 New clause 9 - Pre-commencement review: resource implications for HMRC – defeated 10-9 New clause 13 – VAT deferral scheme – defeated 10-9

The other new clauses were not pressed to a vote.

Finally, on a point of order the ministers, Mel Stride and Graham Stuart, thanked committee members and officials for their work during committee stage. Peter Dowd thanked his staff. Kirsty Blackman thanked the clerks. The Bill was reported to the House without amendment.

George Crozier and Hamant Verma CIOT External Relations Team