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THOSE OF MY generation will remember, from their eighteenth century history lessons, the name of John Wilkes. The lawyers amongst us will probably also remember that it was in connection with his political activities that Lord Mansfield quashed a general warrant for his arrest on the basis that it was contrary to common law.
What was a general warrant? In Wilkes' case it was one issued by a Secretary of State authorising the holder to, inter alia, enter any premises and remove anything that looked interesting. (Wilkes was persona non grata because he was the publisher of an anti-government newspaper, The North Briton, a persistent, and very effective, critic of the King's Ministers.)
Customs' powers of entry
But not many members of the public are aware that Customs officers carry a card giving them equivalent powers. This may well have been justifiable in the eighteenth century when smuggling was widespread and the coves and safe houses used were remote from an available magistrate. We are, however, now in the twenty-first century, communications are much improved and, since the time of Sir Robert Peel, we have employed a police force to deter and detect criminal activity.
In fact, a police officer does not have the same powers as a Customs officer. If he suspects that persons or property which it is necessary for him to have access to are in a private house, he has to obtain a warrant from a magistrate. The obvious question which then arises is: how does the Government justify Customs officers having powers of entry without a warrant?
The fact that, when VAT was brought within Customs' remit in 1973, the opportunity was not taken to restrict their powers of entry where the supply of services was involved cannot be seen as any justification for failing to address the wider issue now.
Commissioners for Revenue and Customs Bill
And why is this issue topical now? It is because the Government wishes to amalgamate Customs with the Inland Revenue and has presented the Commissioners for Revenue and Customs Bill to Parliament in order to achieve this. This Bill is not a money Bill and it can therefore be amended in the House of Lords. It ought to be.
The opportunity should have been taken to reduce the powers of the new entity down to those (already substantial ones) that are available to the Inland Revenue, and in particular to put an end to the Customs' 'general warrant'. Needless to say, this has not been done.
Clause 5(1) of the new Bill confers on the officers of the new entity the powers of both of its predecessors; i.e. it will give them powers greater than those that Parliament has decided that it is appropriate for the police to have. Only a cosmetic amelioration is proposed.
Confusingly, there appears to be a difference of view between the Treasury and HM Revenue and Customs on this most important subject. The Treasury press release of 8 December 2004 states:
'The Bill makes no significant changes to those [information and enforcement] powers and ring fences them so that they may only be used for the purpose for which they were originally intended. This means that HMRC officers will need to continue to use different powers in relation to different taxes and duties. For example, powers currently used by Customs and Excise to collect VAT will not be available to collect income tax.'
HM Revenue and Customs (HMRC) — in its draft guidance note (www.inlandrevenue.gov.uk/news/hmrc-powers-rights.pdf), issued on the same date — appears initially to take the same line:
'The existing powers and taxpayer rights for individual taxes and duties have been transferred into the new department without any changes.'
However, the questions and answers reveal a slightly different view.
Q. Will I find that an officer I've been used to as someone who handles my income tax affairs, for example, will now contact me about my VAT?
A. All HMRC officers will in law be authorised to use all the HMRC powers.'
Clause 6
Under clause 6 and Sch 2, para 10 of the Bill, Customs' powers (including those under the Regulation of Investigatory Powers Act (RIPA) 2000) may not be exercised in relation to Inland Revenue matters. But this does not mean that if information is acquired in the course of 'managing' a Customs' tax (e.g. VAT) that the information will not be sent to the 'Inland Revenue'. It is quite clear from clause 16 and para 12 of the explanatory notes that it both will be and that it is intended that it should be.
Even the draft advice note published on the two websites in December gave the game away. After setting out the normal procedure about visits, the document ends up:
'These answers apply to most of the contacts you will have with us. They will not apply if we think you may have committed serious fraud.'
All haste
The lead-in note on the websites revealed that there is to be a general review of the combined entities' powers and that this would be preceded by a consultation to be launched in January 2005. This is totally unsatisfactory.
If it is important to amalgamate the two tax collection bodies now (and seemingly, from published Revenue minutes, when internal budgets do not permit it to be done properly), then it should also have been considered appropriate to address their powers at the same time. Once the body is up and running, procrastination and inertia may mean that the axe is then unlikely to be applied both to outdated provisions and also to why (in the circumstances set out below) 'Customs' should not be obliged to seek authorisations under RIPA 2000 from the police.
The limited role of the tax collector
Certainly, 'Customs' have a role in preventing banned goods entering the country, and even the war on terrorism, but so do others. The prevention and detection of crime is the business of the police, not a tax collection body. Tax officials, like anybody else, may come into possession of information that will aid the work of the police and (provided that Parliament has specified that this information is of a type which may be disclosed in those circumstances) should go out of their way to co-operate with them.
The duty of the tax collector is to deal fairly with the public in relation to the assessment and payment of taxes lawfully due, and to keep taxpayers' affairs confidential. Furthermore, in an era of self assessment, the initiation of an abortive enquiry may be extremely costly for an innocent taxpayer. There should be no scope whatsoever for cross-fertilisation (actual or perceived) of an end-justifies-the-means approach from another part of the same body that is mixed up in the battle against (ordinary) crime. A unified tax authority should, therefore, not only not have, but also be seen not to have, even a secondary 'lead' role to play in the 'wars' against terrorism, drugs, banned species, etc.
At the end of the day, the purposes of amalgamating Customs with the Revenue appear to be:
* to enable taxpayers to deal with the same office; and
* for the collection authorities to look at the overall picture for each taxpayer more easily.
Given these complementary objectives, not only is it never going to be possible to erect a 'Chinese Wall' between the staff administering the two sets of taxes, it would be contrary to the final objective to attempt to do so.
Parliament should adopt the same approach to the current text of the Bill. Clauses 5 and 6 need to be replaced with a common, albeit levelled-down, set of powers subject to outside magisterial control in all the circumstances in which the authority of the police is similarly circumscribed.
Supervising a wider review
This does not mean that a root and branch review of both the powers of and the internal authorisation arrangements for the amalgamated body should not be undertaken — one is clearly overdue. But that should not be organised in-house 'after' the post-legislative consultation; it must be arranged, organised and managed by the all-party Treasury Select Committee of the House of Commons. This is a body that has been extremely critical of the tax collection agencies in the past and would appear to have both the will and the capacity to undertake this essential task.
To return to my thoughts at the start of this article, a statue of John Wilkes — engraved with the words 'A champion of English freedom' — stands in New Fetter Lane, London, not far from Fleet Street, the Inns of Court and, past them, the Royal Courts of Justice. He suffered from the imposition of a general warrant over two hundred years ago, but in R v Wilkes, Chief Justice Pratt said:
'To enter a man's house by virtue of a nameless warrant, in order to procure evidence, is worse than the Spanish inquisition; a law under which no Englishman would wish to live an hour.'
Perhaps, two hundred years later, it is time for Parliament to reconsider Customs' powers in the light of those comments.
Jeremy de Souza is the Chairman of the City of Westminster and Holborn Law Society Revenue Committee and a consultant to White & Bowker.
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