Date: 21 June 2011
To all MLAs
Legislative Consent Motion – Finance (No. 3) Bill
1. The Minister of Finance and Personnel has tabled the following Legislative Consent Motion for debate in the Assembly on Monday 27 June 2011:
That this Assembly agrees that the UK Parliament should consider amendments to the Finance (No. 3) Bill to extend to Northern Ireland the provisions dealing with mutual assistance for recovery of taxes etc.
2. The Committee agreed to prepare a short, informal Report to be sent to all MLAs in advance of the debate. This is attached and includes a summary of the Committee’s consideration of the extension to here of the provisions relating to the Mutual Assistance Recovery Directive, correspondence from the Minister and the Department of Finance and Personnel, and correspondence from relevant Assembly statutory committees. The Minutes of Evidence from the evidence session with DFP officials on 8 June 2011 are available on the Committee’s website.
Conor Murphy MP MLA
Conchúr MacMhurchaidh FP CTR
1. The Finance (No. 3) Bill1 was introduced at Westminster on 29 March 2011, and will, inter alia, enable the implementation of the Mutual Assistance Recovery Directive2 (MARD) agreed by EU Finance Ministers in 2010. Under the Directive, EU Member States can provide each other with assistance in the recovery and enforcement of tax debts and other duties, including serving documents and exchanging information about debts across the EU. Replacing legislation originally introduced in 1976 and consolidated in 2008, the new Directive “modernises and expands the scope of the existing Directive. It affects individuals and businesses that owe taxes and duties within the EU”.3 The new Directive must be implemented by 31 December 2011.
2. An amendment to the Finance (No. 3) Bill will extend the application of MARD to Northern Ireland. Given that the scope of the legislation will cover devolved matters, agreement of the Assembly must be granted by way of a legislative consent motion.
3. The Minister of Finance and Personnel wrote on 20 May 2011 to notify the Committee that he was content, in principle, to seek the agreement of the Executive to table a legislative consent motion to extend the provisions of the proposed amendment to Northern Ireland, and to request the view of the Committee on this issue. The Minister’s letter is attached at Appendix 1.
4. The Committee noted that, in addition to the Department of Finance and Personnel (DFP), these provisions may be of interest to the Department of the Environment and the Department of Agriculture and Rural Development, and comments were therefore sought from their respective Assembly statutory committees. The responses from both committees are provided at Appendix 2.
5. On 8 June 2011, the Committee took evidence from Departmental officials on the proposed legislative consent motion relating to MARD4. The DFP officials explained that the Department considered the inclusion of NI in the legislation to be “fairly routine” and that the changes were “unavoidable and non-controversial”. The Committee was also advised that the amendment would extend the same provisions to Scotland, and that the Scottish Government was content with this approach.
6. The Committee heard that it is possible for the Assembly to introduce local regulations to make provisions for the implementation of MARD in respect of devolved matters. While this would provide more control in terms of the immediate timescale, it remains the case that the Directive must be implemented by 31 December 2011; failure to do so could result in infraction proceedings. Members were also advised that regulations made locally would be less comprehensive than if they were to be included in the Finance (No. 3) Bill, and that if any further amendments, additions or extensions were made, or even a replacement directive brought forward, the NI provisions would be limited in scope. Additionally, HM Revenue & Customs (HMRC) would be the central liaison office for the UK, and the extension to cover NI within the Finance (No. 3) Bill would help ensure consistency within the Member State.
7. The DFP officials also stated that, with the exception of OFMDFM, from whom there was no response, all NICS Departments had confirmed that they were either content with the provisions, or had no comment to make.
8. The Committee was advised that the amendment to the Finance (No. 3) Bill would be tabled at Westminster on 9 June 20115, but would subsequently be removed should the Assembly not agree a legislative consent motion by the end of June. Members voiced concern that an amendment would be tabled in advance of consideration by the Executive and the wider Assembly. The DFP officials explained that they had not been made aware of the need for the amendment by HMRC until March 2011, just prior to dissolution of the previous Assembly. The Committee notes that the EU Directive was agreed by EU Finance Ministers in 2010, and asked departmental officials to confirm the date that this was agreed, to determine whether there was any undue delay in HMRC notifying the Department of this change. The Committee recognises that the delay in bringing this matter before the Assembly is not as a result of tardiness on behalf of the Department; indeed, the Committee notes from subsequent correspondence from DFP that the Directive was agreed in March 2010 but there was a lapse in communication with devolved administrations, with the need for formal consent from NI and Scotland not being recognised until March 2011 (Appendix 3). The Committee considers that, moving forward, it is clear that the processes and timescales for dealing with such matters must be developed and refined; in this regard, the Committee has requested clarification on the lines of responsibility for notifying the devolved administrations of legislative or policy changes at a UK level that will impact on transferred matters.
9. Members also queried whether tax-varying powers that may be devolved to the Assembly in the future, particularly corporation tax, would be covered by the provisions of the amendment. The DFP officials advised that specific taxes, duties or levies were not named in the legislation, which refers only to matters within the Assembly’s remit; they considered, therefore “that that does not inhibit or prejudice any change”. The departmental officials undertook to seek further legal advice and to write to the Committee on this matter.6
10. Members considered that the information requested during the evidence session should not delay the process. Therefore, having considered the evidence and the responses from the Committee for Agriculture and Rural Development and the Committee for the Environment, the Committee for Finance and Personnel agreed to support the Department of Finance and Personnel in seeking the Assembly’s agreement that the UK Parliament should consider amendments to the Finance (No. 3) Bill to extend to Northern Ireland the provisions dealing with mutual assistance for recovery of taxes etc.
5 DFP subsequently advised that the amendment was not tabled at Committee Stage as expected, but would be brought forward during the Bill report stage (Appendix 3).
6 The DFP response is provided at Appendix 3.