Draft Finance Act 2003, Part 3 (Amendment) Order 2018

Anneliese Dodds Excerpts

Monday 26th March 2018 General Committees

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is a pleasure to serve with you in the Chair, Mr Davies. It is also a pleasure, as always, to sit across from the Minister, to whom I am grateful for his explanation of the measure.

Before this sitting, I attempted to access the tax information and impact note for this measure—the TIIN system is very good—and the most likely candidate appeared to be that entitled “Finance Act 2003: updates to Part 3”, published on 22 February. However, that refers to the draft statutory instrument being laid before the House of Commons on 5 March. It is not clear whether that is the right one. Perhaps this is more a point for the civil servants than the Minister, but could they not direct those interested to the exact URL for the TIIN concerned in the links of different tax-related SIs rather than to the generic TIIN webpage? Surely that would help all of us who want to look very closely at all the measures we cover in SI Committees and access the relevant information.

The measure at hand is an uncomplicated one, effectively substituting references to the Union customs code for mentions of the previous Community customs code. I do, however, have a couple of brief questions. First, as I understand it, and as the Minister has mentioned, the UCC came into action during spring 2016, so it is unclear why the changes to the Act were not made until now. That seems like a rather large time gap. Perhaps he can enlighten us and reassure us that all civil administrative financial penalties applied between spring 2016 and the current day will not be subject to any challenge as a result.

Secondly, I have found it difficult to access accurate information about how many civil administrative financial penalties have been levied over time. That is surely relevant, given that any effective customs regime needs to include the potential for fines to be levied when behaviour has not been in line with the law. However, the capacity of HMRC to do that currently—let alone in the future—does not appear to have been adequately thought through by the Government, let alone put into place.

The Minister probably recalls that during debate in the Taxation (Cross-border Trade) Bill Committee I indicated the rather extreme challenges facing HMRC—a number of colleagues and industry representatives also did so—especially if in the future it will be required to deliver a new approach to customs, including a potentially unique -in-the-world, highly experimental customs partnership. That would be coming on stream very soon after the implementation of the new customs declaration service system, and all at a time when HMRC’s headcount has been cut substantially compared with 2010.

As I put it in the Bill Committee, the customs function in the UK is arguably already overstretched. The Government have maintained that comparative analysis of its capacity is not possible, but perhaps they have not looked at the World Customs Organisation’s annual reports. The latest one suggests that the UK has about 5,000 customs officers. The Government—in fact, the Minister said this to me in Committee—have committed to providing, potentially, another 5,000, so doubling the number of customs officers. However, even with the existing load of customs declarations to process, each of the customs officers currently in HMRC has to process more than 15,000 customs declarations per annum. That is the number averaged across the workforce, and it is about 10 times as many as every US and Canadian customs officer, 15 times as many as their German counterparts and more than 30 times as many as their Australian counterparts. As I noted in Committee, although there may be issues with comparability, they would have to be enormous if that large gap could be accounted for simply through different reporting conventions.

All this is highly relevant to the statutory instrument, because we need to know that it can feasibly be implemented by an already overstretched HMRC. To finish, I ask the Minister what his assessment is of the ability of HMRC currently to detect activity that ignores, bends or breaks the customs rules and to ensure that that activity is effectively sanctioned through the use of civil administrative penalties.