Section 20: Public interest disclosure

120.     The section lays down the circumstances under which disclosures of information in the public interest by the new department will be lawful, following the creation of the new department, the commencement of the new all embracing duty of confidentiality under section 18(1).

121.     Subsection (1) provides that a disclosure is lawful for the purposes of section 18(2) (confidentiality) if it

• is made on the instructions, either general or specific, of the Commissioners,

• is a disclosure of a kind to which subsections (2) to (7) apply (specified kinds of public interest disclosure described on the face of the Bill), or is specified in regulations of the Treasury, made under subsection (8), and

• the Commissioners are satisfied it is in the public interest.

122.     The lawful kinds of disclosure specified by subsections (2) to (7) are as follows:

123.      Subsection (2)- to a person exercising public functions, whether in the UK or abroad, for the purpose of preventing or detecting crime, in order to comply with an obligation of the United Kingdom or Her Majesty's Government, under an international or other agreement relating to the movement of persons, goods or services. The reference to "person exercising public functions" draws on the definition of "public authority", under the Human Rights Act 1998, and the agreements in question will typically be Memoranda of Understanding, drawn up by or on behalf of the Commissioners or their predecessors, with public authorities abroad, for the purposes of securing the due administration of their respective customs laws, (cf section 9(b) CEMA).

124.     Subsection (3) - to a body regulating a profession, in relation to misconduct on the part of a member, which relates to a Revenue and Customs function. This would cover a disclosure about the misconduct of a person preparing accounts or returns for tax purposes, but would also extend to other professionals whose misconduct related to a function of the new department, eg in relation to the valuation of assets, or to a professional determination in relation to more recent taxes such as landfill tax, aggregates levy or climate change levy.

125.     Subsection (4) - to a constable who is exercising functions relating to the movement of persons or goods into or out of the UK, or for the prevention or detection of crime. This will cover the provision of criminal intelligence to such officers collocated with frontier staff of the new department, and with immigration service staff, in joint intelligence cells, formed at the larger ports and airports to enhance control of the UK frontier for all purposes, through intelligence and other closer working.

126.     Subsection (5) - to the National Criminal Intelligence Service (NCIS), to allow NCIS to undertake its statutory role of providing a criminal intelligence service to all law enforcement agencies.

127.     Subsection (6) - to a person exercising public functions in relation to public safety or public health, for the purpose of those functions. This is designed to cover disclosures to health and safety or environmental bodies of information acquired by staff of the new department about imminent threats to public health or safety, eg discovery of the marketing of poisonous food, or of unsafe working practices at an oil depot, acquired in the course of their duties.

128.     Subsection (7) - to the Police National Computer, which is maintained by the Police Information Technology Organisation (PITO), on behalf of all participating law enforcement agencies. This holds the national record of outstanding warrants, suspected persons, arrests, seizures, convictions etc.

129.     Subsection (8) sets out the arrangements which are to apply where the Treasury propose to add to the list of categories of lawful public interest disclosures, by means of regulations under subsection (1)(b)(ii). Under paragraph (a), the Treasury must be satisfied that any new category of disclosure relates to national security, public safety, public health or the prevention or detection of crime. Paragraph (b) then sets out a list of ways in which the disclosures to be authorised under the regulations may be limited or restricted, that is - the nature of the information to be disclosed, the person or class of person to whom disclosure may be made, the person by whom the disclosure is made, or some combination of factors. Paragraph (c) provides that the regulations shall be made by statutory instrument, and paragraph (d) that they must be laid in draft before and be approved by each House of Parliament, before coming into force (the affirmative procedure).

130.     Finally, subsection (9) provides that information disclosed both under subsections (2) to (7) and under any Treasury regulations made under the section may not be disclosed further without the consent of the new Commissioners, which may be general or specific. It also gives immediate statutory expression to the Commissioners' consent to further disclosure of information disclosed to the Police National Computer under subsection (7), as the purpose of the Police National Computer is the secure sharing of such information, between participating law enforcement agencies, subject to confidentiality controls and checks overseen by PITO.

Section 21: Disclosure to prosecuting authority

131.     The section codifies the arrangements for disclosure of HMRC information to the three territorial prosecutors who will deal with HMRC prosecutions in their respective parts of the UK where disclosure is for the purposes specified in subsection (1). Once HMRC information is in their hands, it may only be further disclosed, or made public, for a purpose connected with the exercise of the prosecutor's functions, or with HMRC consent, eg disclosure in open court in the course of a prosecution, or for associated civil proceedings, e.g. for an interlocutory injunction.

132.     Subsection (1) provides that disclosure by HMRC will be lawful in accordance with section 18, if made to a "prosecuting authority", as defined in subsection (2), for the purpose of enabling the authority to decide whether to institute criminal proceedings in its jurisdiction within the United Kingdom in relation to an RCPO investigation, or to advise in relation to such an investigation.

133.     Subsection (2) defines "prosecuting authority" as the Director of Revenue and Customs Prosecutions, in England and Wales, as the Lord Advocate or a Procurator Fiscal, in Scotland, and as the Director of Public Prosecutions for Northern Ireland, in that jurisdiction.

134.     Subsection (3) then provides that once HMRC information is in the hands of a prosecutor, it may only be further disclosed, or made public, for a purpose connected with the exercise of the prosecutor's functions, or with the consent of HMRC. This would include disclosure in open court in the course of a prosecution, or for associated civil proceedings, e.g. for an order freezing the suspected proceeds of crime. An onward disclosure with consent would cover a disclosure to another specialised prosecutor, like the Department of Trade and Industry, who have special functions in relation to fraud in an insolvency, if an HMRC investigated fraud was found to be insolvency related.

135.     Subsection (4) makes it an offence to contravene subsection (3), and subsection (5) gives a person charged with the offence various defences, which parallel those provided in section 19(3) in relation to HMRC. In particular, he will not be guilty of the offence if he proves that he reasonably believed that the disclosure was lawful, that is that the disclosure fell within the terms of subsection (1). Similarly, he would not be guilty if he proved that he reasonably believed that the information had already been made available to the public, and that this had been done lawfully; it would be no defence as regards a subsequent unlawful disclosure to say that the information had been disclosed previously, if that previous disclosure was itself unlawful.

136.     Subsection (6) lays down the penalties for those found guilty of the offence under subsection (4). The offence is triable either way, that is:

• either summarily, when the maximum penalty will be 12 months imprisonment, or a fine not exceeding the statutory maximum (currently £5,000), or both; or

• on indictment, when the maximum penalty will be two years imprisonment, or an unlimited fine, or both.

137.     Subsection (7) provides that a prosecution for the offence may be instituted in England and Wales only by the Director of Revenue and Customs Prosecutions, or with the consent of the Director of Public Prosecutions.

138.     Subsection (8) provides that prosecutions for the offence may be instituted in Northern Ireland (where the Director of Revenue and Customs Prosecutions has no functions) only by the Commissioners, or with the consent of the Director of Public Prosecutions for Northern Ireland.

139.     No comparable provision is needed in Scotland, because the Procurator Fiscal and the Crown Office automatically have exclusive cognisance of summary and indictable offences in Scotland, under the law relating to Scotland, without the need for specific enabling provision.

140.     Subsection (9) provides that the maximum penalty on summary conviction in Scotland and Northern Ireland is to be six months, rather than twelve, to accord with their arrangements for maximum summary penalties.

141.     It should also be noted that section 55(2) makes a temporary change to the maximum penalty of imprisonment on summary conviction in England and Wales, provided for under subsection (6)(b), reducing it to six months from twelve months, pending the coming into force of a general amending provision about the maximum penalties on summary conviction (section 282 Criminal Justice Act 2003).

Section 22: Data protection, &c.

142.     Section 22 confirms that nothing in the five sections 17 to 21 authorises the making of a disclosure which contravenes the Data Protection Act 1998, or Part 1 of the Regulation of Investigatory Powers Act 2000. There is no intention to do so, but the section puts the issue beyond any possible doubt.

Section 23: Freedom of information

143.     Section 23 clarifies the interaction between the confidentiality sections and the Freedom of Information Act 2000. Where information relates to a person (as defined in section 19) it will be exempt from disclosure under section 44(1)(a) of the Freedom of Information Act 2000. But this exemption does not apply to all other information held by HMRC. As such, this information will be subject to the requirements of that Act.

Section 24: Evidence

144.     This section consolidates former provisions relating to the proof of documents.

145.     Subsection (1) provides for any document purporting to be issued or signed by one or more Commissioners for HMRC, or by any other person with their authority, to be treated as having been so issued or signed until the contrary is proved. Such documents are admissible in any legal proceedings.

146.     Subsection (2) provides for any document purporting to be issued by the Commissioners and certifying any of the matters specified in subsection (3) to be treated as accurate until the contrary is proved.

147.     The matters specified in subsection (3) concern the appointment of any particular person as a Commissioner for HMRC or as an officer of Revenue and Customs. They also concern the time and purpose for which a function was delegated to a particular Commissioner, committee or person.

148.     Subsection (4) provides that a photographic or other copy of a document acquired by the Commissioners, which is certified by them to be an accurate copy is admissible in any legal proceedings to the same extent as the document itself

149.     Subsection (5) applies section 2 the Documentary Evidence Act 1868 to any document issued by the Commissioners for HMRC. In all courts of justice and in any proceedings, the 1868 Act authorises proof of such things as orders in the ways set out in section 2 of that Act. These include production of a copy or extract of the London Gazette containing the orders in question. Thus any notice published in the Gazette will be admissible in proceedings.

150.     Subsection (6) applies section 2(3) of the 1868 Act so as to authorise proof by production of a copy or extract, purporting to be certified to be true, by the Commissioners for HMRC or any other person acting on their authority.

151.     Subsection (7) defines a reference in this section to a document as meaning a document issued by the Commissioners for HMRC and makes provision for the section to apply also to any document issued by the Commissioners of Customs and Excise and the Commissioners of Inland Revenue prior to their dissolution.

Section 25: Conduct of civil proceedings

152.     This section specifies those persons who may conduct civil proceedings in relation to any function of the Commissioners for HMRC or an officer of Revenue and Customs ('function of the Revenue and Customs').

153.     Subsection (1) provides that an officer of Revenue and Customs, or any person authorised by the Commissioners, whether or not legally qualified, may conduct any civil proceedings in a magistrates' court or the sheriff court in relation to any function of the Revenue and Customs.

154.     Subsection (2) in conjunction with subsection (5)(e) provides that a member of the Commissioners' staff, who has been admitted as a solicitor and holds a practising certificate, as regards Scotland, and whether or not he holds a practising certificate, as regards elsewhere in the United Kingdom, may act as a solicitor in relation to a function of the Revenue and Customs in connection with civil proceedings in the United Kingdom.

155.     Subsection (3) and subsection (5)(c) provides that a member of the Commissioners' staff who has been admitted as a solicitor or called to the Bar (whether or not he holds a practising certificate) may conduct civil proceedings in the county court in England and Wales and Northern Ireland, in relation to the former Inland Revenue matters specified in section 7.

156.     Subsection (4) requires a court to grant any rights of audience necessary for a person to perform any function under this section.

157.     Subsection (5) gives definitions of terms used in the section.

158.     Paragraph (a) defines a "function of the Revenue and Customs" as meaning either a function of the Commissioners for HMRC or a function of an officer of Revenue and Customs.

159.     Paragraph (b) defines a reference in this section to "civil proceedings" as meaning proceedings other than criminal proceedings in respect of an offence.

160.     Paragraphs (d) and (e) determine the necessary qualification for a "legally qualified" and a "solicitor" member of the Commissioners' staff for the purposes of this section.

Section 26: Rewards

161.     This section gives the Commissioners for HMRC a discretionary power to pay rewards for service to them or their officers by any person in relation to a function of the new department or its officers. The power conferred by the section would replace a similar power in relation to Customs and Excise matters, under section 165 Customs and Excise Management Act (CEMA) 1979, and a more limited power to pay rewards to informers in relation to Inland Revenue matters, under section 32 Inland Revenue Regulation Act 1890. The exercise of this function by the Commissioners is subject to the power of the Treasury to give directions of a general nature as to its exercise, under section 11 of the Act.

Section 27: Inspection

162.     This section provides for Her Majesty's Inspectors of Constabulary (HMIC) Her Majesty's Inspectors of Constabulary for Scotland (defined as "the Scottish inspectors") and Her Majesty's Inspectors of Constabulary for Northern Ireland (the "Northern Ireland inspectors") to scrutinise how HMRC ensures compliance with the laws, rules and procedures of the criminal justice system.

163.     Subsection (1) provides for the Treasury to make regulations to enable HMIC, the Scottish inspectors and Northern Ireland inspectors to undertake inspection functions in relation to the Commissioners for HMRC and the officers of Revenue and Customs.

164.     Subsection (2)(a) to (e) lists the matters in relation to which regulations may be made.

165.     Paragraph 2(a)(i) provides for HMIC to carry out a programme of inspections in HMRC in England and Wales similar to those carried out by them of Police Forces in England and Wales. The approach is not simply to apply the relevant provisions of the Police Act 1996 because arrangements will need to be tailored to the circumstances of HMRC.

166.     Paragraph 2(a)(ii) provides for the Scottish inspectors to carry out a programme of inspections in HMRC in Scotland similar to those carried out by them of Police Forces in Scotland. The relevant provisions of the Police (Scotland) 1967 Act may be applied or modified to meet the circumstances of HMRC.

167.     Paragraph 2(a)(iii) provides for the Northern Ireland inspectors to carry out a programme of inspections in HMRC in Northern Ireland similar to those carried out by them of the Police Service of Northern Ireland. The relevant provisions of the Police (Northern Ireland) 1998 Act may be applied or modified to meet the circumstances of HMRC.

168.     Paragraph 2(b) provides for Ministers and the Commissioners for HMRC to require the carrying out of specific inspections of functional business activities of, and operational business units within, HMRC.

169.     Paragraph 2(c) provides for reports on inspections to be made. Such reports may be edited according to provisions in the regulations and then published. Examples of reasons for editing might include national security or where it is felt that individual's safety might be jeopardised. It is expected that the regulations will specify that reports shall be made to the Chancellor and the Commissioners for HMRC.

170.     Paragraph 2(d) provides for an annual report by HMIC. It is envisaged that this report will be made to the Chancellor and the Commissioners for HMRC in respect of the inspections performed in HMRC during the year and be published.

171.     Paragraph 2(e) provides the option for payment arrangements to be made if necessary and appropriate by the Commissioners for HMRC in respect of inspections carried out by HMIC, the Scottish inspectors or the Northern Ireland inspectors.

172.     Inspections will not cover the full range of HMRC's activity, but will be focussed on those areas involved in law enforcement where their expertise is most relevant.

173.     Subsection (3) ensures that there is no duplication between the inspection functions under the section and wider public audit functions by providing that an inspection by HMIC, the Scottish inspectors or the Northern Ireland inspectors should not cover the issues of overall efficiency, effectiveness and economy in use of resources that are conducted on behalf of the Comptroller and Auditor General under the National Audit Act 1983.

174.     Subsection (4) requires that an inspection, or any part of inspection, of HMRC activities in Scotland should be performed jointly by HMIC and the Scottish inspectors.

175.     Subsection (5) provides that the regulations to be made under subsection (1) are to be made by Statutory Instrument subject to annulment by either House of Parliament (negative resolution procedure).

176.     Subsection (6) defines the term "Scottish inspectors" as those inspectors of constabulary appointed under the Police (Scotland) Act 1967 and the "Northern Ireland" inspectors as those inspectors of constabulary appointed under the Police (Northern Ireland) 1998 Act.

Section 28: Complaints and misconduct: England and Wales

177.     This section provides for the Independent Police Complaints Commission's (IPCC) remit to be expanded to provide coverage of HMRC.

178.     Subsection (1) provides for the Treasury to make regulations setting out the arrangements for such coverage. This covers both Commissioners and officers to ensure comprehensive coverage.

179.     Subsection (2)(a) provides for the IPCC to carry out for HMRC a similar role to that it performs in respect of Police Forces in England and Wales where it examines police complaint handling procedures and undertakes or supervises investigations. The approach is not simply to apply the relevant provisions of the Police Reform Act 2002 because arrangements will need to be tailored to the circumstances of HMRC. The IPCC will look at allegations of criminal conduct or gross misconduct within HMRC. Again reflecting the practice for the Police, where IPCC has a role, they may choose not to investigate directly, but decide to supervise or manage an investigation instead, depending on the circumstances.

180.     Subsection(2)(b) provides for IPCC or a person acting on its behalf, to be given, as necessary, the same powers as an officer of Revenue and Customs, to enable the discharge of its responsibilities in respect of HMRC.

181.     Subsection (2)(c) provides the option for payment arrangements to be made if necessary and appropriate by the Commissioners for HMRC in respect of the functions carried out by the IPCC.

182.     Subsection (3) provides that the IPCC and the Parliamentary Commissioner for Administration ("PCA") may disclose information to each other for the purposes of IPCC exercising a function under this section and PCA exercising functions under the Parliamentary Commissioner for Administration Act 1967.

183.     Subsection (4) provides that the IPCC and the PCA may jointly investigate a matter in relation to which the IPCC has functions under this section and PCA has functions under the 1967 Act.

184.     Subsection (5) provides that the regulations to be made under subsection (1) are to be made by Statutory Instrument subject to annulment by either House (negative resolution procedure).

185.     Subsection (6) confines the scope of the regulations to functions exercised in or in relation to England and Wales.

Section 29: Confidentiality, &c.

186.     This section covers the use and disclosure by HMIC, the Scottish Inspectors, the Northern Ireland inspectors and the IPCC of information obtained in the course of their functions.

187.     Subsection (1) requires that information obtained by HMIC, the Scottish inspectors or the Northern Ireland inspectors may only be used by them for the purposes of carrying out an inspection and may not be disclosed without the consent of the Commissioners for HMRC.

188.     Subsection (2) requires that any report made by HMIC, the Scottish inspectors or the Northern Ireland inspectors may not include information relating to a specified person without his consent.

189.     Subsection (3) requires that information obtained by the IPCC from HMRC or the Parliamentary Commissioner for Administration in the course of an investigation may only be used by it for the purposes of that investigation. Any disclosure of such information is subject to any restrictions imposed by or under regulations made under section 28 (Complaints and misconduct: England and Wales).

190.     Subsection (4) specifies that an offence will be committed by any persons contravening the provisions in respect of disclosure.

191.     Subsection (5) provides a defence for any person charged with an offence of disclosing or using information where he can prove that he reasonably believed disclosure or use was lawful, or that the information had already been lawfully made available to the public.

192.     Subsection (6) sets out the penalties where a person is found guilty of unlawful disclosure under these provisions.

193.     Subsection (7) lays down the roles and responsibilities for mounting prosecutions under these provisions in England and Wales.

194.     Subsection (8) sets out the maximum term for imprisonment on summary conviction for a person found guilty of unlawful disclosure in Scotland.

195.     Subsection (9) defines the meaning of the terms "Scottish inspectors" and "Northern Ireland inspectors" by reference to section 27.

196.     It may be noted that section 55(3) specifies liability to a reduced sentence on summary conviction in England and Wales where the offence under these provisions was committed before the commencement of section 282 of the Criminal Justice Act 2003.

Section 30: Impersonation

197.     Under subsection (1) it is a criminal offence for any person to attempt to pass themselves off as a Commissioner for HMRC or officer of Revenue and Customs in order to gain any form of benefit. A 'benefit' includes obtaining entry to property or obtaining information. The individual does not actually have to receive any benefit from the impersonation for an offence to be committed - an intention to obtain a benefit is sufficient.

198.     Subsection (2) provides for the penalty for committing the offence. A person may, upon conviction in England and Wales, be imprisoned for a maximum of 51 weeks, may be fined (up to £5,000), or may be both imprisoned and fined. This maximum penalty is, however, subject to section 55(4). Where an offence is committed before section 281 of the Criminal Justice Act 2003 comes into force, the maximum sentence for the offence will be 6 months and / or a fine (the Criminal Justice Act provisions increase the maximum sentence for summary only offences, such as this, from 6 months to 51 weeks).

199.     Subsection (3) provides for a lower penalty of 6 months for offences committed in Scotland and Northern Ireland to accord with their arrangements for maximum summary penalties.