§ Question proposed, That the clause stand part of the Bill.
§ Mr. Letwin
I am sorry that we must return to some of the debate we have just had, but I am glad that we are doing so in that, following the Financial Secretary's helpful clarification, it is clear to me—after another look at clause 19(3)—that my point has not been answered.
Clause 26 reveals the next feature of the scene. Subsection (1) tells us that a person who is registered may be required by the commissioners to give security. It is not just that my poor Mr. Jones has to appear on the register. It is not just that—as was pointed out by my hon. Friend the Member for Croydon, South (Mr. Ottaway)— if he does not make the right noises, attract the attention of Customs and Excise and find himself on the register, he may pay a fine that may be 5 per cent. of what would have been his levy, or £250 if that is the lesser sum. It is not just that Customs and Excise can visit him, inspect him and presume him to be guilty—to be someone who should be paying tax, but is not. He can be required to give security: to lend Customs and Excise money, so to speak. That is the next purpose of his being on the register.
We discover from line 14, the second line of clause 26(1), that a person does not need to be on the register to be required to give security; he can simply be "required to be registered". Whoever drafted the clause had very much in mind precisely the case of my Mr. Jones. We are talking about someone who, it appeared to the commissioners, had the intention—who had not thought himself that he had the intention, and had not asked to be on the register, but has been required to be registered and must now give security.
94 We return to the question of what intention this person must appear to the commissioners to have had in order to find himself in the invidious position of being presumed guilty, inspected, fined if he does not go on to the register and, under clause 26, required to give security. The answer is that he must have had the intention of exploiting commercially. The Financial Secretary thought that he had found a way out of that by explaining—very helpfully—that, under clause 19(3), to be commercially exploiting, someone who is exploiting under clause 19(1), whose definitions of exploitation include simply removing aggregate from a site, must simultaneously fulfil the conditions of paragraphs (a), (b), (c), (d) and (e) of subsection (3).
Let us have a look at those paragraphs. Is any of them, in layman's terms, a normal measure of exploitation—or, to put it another way, selling? That is the word that the Financial Secretary used—incautiously, because it betrayed his real intention, which, unlike the clause, was perfectly rational. The answer is no.
Let us look at subsection (3)(a). It is commercial exploitation if, as part of the phenomenon, the thing in questionis subjected to exploitation in the course or furtherance of a business".Clearly, my Mr. Jones is in the course or furtherance of a business and so will everyone else who is relevant be. Subsection (3)(b) says that it is commercial exploitation ifthe exploitation to whichthe thingis subjected does not consist in its removal from one registered site to another".Mr. Jones is in no such position: he has only one site. Subsection (3)(c) states that it is commercial exploitation if the exploitationdoes not consist in or require its removal to a registered site".Of course, that will not be the case because, again, he has only one site. Subsection (3)(d) states that it is commercial exploitation if the exploitation does notconsist in or require its removal to any premises for the purpose of having china clay or ball clay extracted"—that is not his business; it is not relevant. Subsection (3)(e) states that it is commercial exploitation if the exploitation is not such thatas a result and without its being subjected to any process involving its being mixed with any other substance or material (apart from water), it again becomes part of the land".Again, that is not the case with Mr. Jones and his dust.
Therefore, Mr. Jones can, I fear, be judged by the commissioners in their wisdom to be intending to be commercially exploiting some dust. I speculate; I do not know. The Minister does not know. He cannot tell me whether dust is included, but I think that it might be—some dust that comes about when Mr. Jones is engaged in the admittedly exempt process of cutting some stone to produce some rock to produce some dimension stone. He is not selling the stuff. He is not intending to sell the stuff. The Bill does not ask him to prove that he is selling the stuff, or otherwise. It makes no reference to selling. It must be the case that he fits within subsections (1) and (3) of clause 19, taking 19(3) to mean 19(3)(a) to (e) simultaneously applied.
My Mr. Jones could well fit in exactly that category. What does he have to do? He has to put down security under clause 26. He has to pay a fine if he does not register. 95 He has to permit the Inland Revenue, presumably, to inspect his premises as someone who is registered. When it does, it will undoubtedly ask why on earth he is not paying the tax.
This is a poor situation. Again, I am more than happy to acknowledge my error if I have made one, but, as far as I could make out, the Financial Secretary genuinely thought, as a normal and intelligent person might have, that clause 19, with the various other clauses that we are discussing, including clause 26, would have the commonsensical effect of clobbering all those people in all those ways only if they were intending to sell something. However, that is not what the Bill does. It is very surprising that the Financial Secretary should come here and talk about selling when that is not what the Bill does, unless I have missed something else.
§ Mr. Timms
Clause 26 allows the commissioners to request a payment from a person where they think that that might be necessary to protect the Revenue. The provision is common to other taxes and duties under the care and management of Customs and Excise. The commissioners have the power to decide how much and in what manner such a security must be paid, and may apply penalties in the event that a requirement to provide security has not been complied with.
The security can take the form of a bank guarantee, a bond or indeed a cash deposit. It is a sensible precaution. We need the power to be able to protect the Revenue. We do not intend routinely to ask for security. The powers will be used by Customs only where they are necessary, and where there is a chance that levy that has been collected from customers will not be accounted for.
There is the availability of the commissioners' review and the independent appeal procedures, provided for in clauses 40 and 41. Any appeal against requirement, or the amount of security can be heard without payment or deposit of the disputed amount of security, so the usual safeguards are all in place. These arrangements appear elsewhere in the tax system. I hope that the Committee will not find difficulty with them.
§ Question put and agreed to.
§ Clause 26 ordered to stand part of the Bill.
§ Clause 27 ordered to stand part of the Bill.