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Column 1029Skeet, Sir Trevor
Smith, Tim (Beaconsfield)
Spicer, Sir Jim (Dorset W)
Stanley, Rt Hon Sir John
Stewart, Allan (Eastwood)
Stewart, Andy (Sherwood)
Stokes, Sir John
Stradling Thomas, Sir John
Taylor, Ian (Esher)
Taylor, John M (Solihull)
Thompson, D. (Calder Valley)
Townsend, Cyril D. (B'heath)
Waddington, Rt Hon David
Wakeham, Rt Hon John
Walker, Bill (T'side North)
Wardle, Charles (Bexhill)
Winterton, Mrs Ann
Tellers for the Noes :
Mr. Alan Howarth and
Mr. David Maclean.
Question accordingly negatived.
Amendment proposed : No. 57, in page 11, line 11, leave out comes into effect' and insert is passed'.-- [Mr. Lilley.]
Amendment agreed to.
Amendment made : No. 56, in page 12, line 20, at end add-- (2A) In section 28(5) of the Vehicles (Excise) Act 1971, for the words "section 147(1)" there shall be substituted the words "section 146A".'-- [Mr. Lilley.]
Amendment proposed : No. 52, in page 13, line 39, leave out not intended for sale by the recipient'.-- [Mr. Lilley.]
Dr. Marek : We should perhaps say a little about this amendment, because, again, some congratulations to the Government are in order. They have looked at the problems of the distribution of liquefied petroleum gas that we discussed in Committee and they have made certain changes, which I believe will be considered correct. Unfortunately, the hon. Member for Tatton (Mr. Hamilton) is not in the Chamber.
Dr. Marek : I apologise, but I did not see the hon. Gentleman. I wonder whether he could tell us whether he feels that the changes are right. Will they mean that there will be much less administration for small holders and sellers of LPG?
Perhaps the Minister could elaborate a little on amendment No. 55, where it talks about quantities of
Column 1030fewer than 2 tonnes. Is that a realistic limit--too large or too small? I presume that the Government believe that it is about right.
I thank my hon. Friends on the Front Bench for going so far to meet the concern that I expressed in Committee. I heartily endorse the Government's amendments. I hope, therefore, that the spirit of comradeship which has now broken out in the Labour party will spill over on to this side of the House, and that the hon. Gentleman will find it possible within his breast to compliment the Government, as I do.
Mr. James Wallace (Orkney and Shetland) : The hon. Member for Tatton (Mr. Hamilton) has raised some of the issues that I wished to discuss. It appears that the Government have gone a considerable way to meeting a number of the points raised in Committee. However, I hope that the Minister will say a few words of explanation. Certainly he will recognise--as I have had correspondence with him on this point--that in my constituency a large number of people are dependent on cylinder gas. In particular, one of the community co-operatives on the small island of Papa Westray expressed its concern about the possible damage to business, the adverse effects on cash flow and the general administrative costs. It should be borne in mind that for the domestic consumer liquefied petrolum gas is VAT zero-rated, so there is no net gain to the Treasury when one considers input and output VAT. I would be interested to hear from the Minister whether he believes that the amendments will ease the burden that it is feared will fall on many small retailers, especially those in rural parts of the country.
Mr. Lilley : I am grateful to the hon. Member for Wrexham (Dr. Marek) for his tribute to the amendment. I pay tribute in turn to my hon. Friend the Member for Tatton (Mr. Hamilton) for raising the issue so forcefully in Committee and causing us to look again. That has resulted in the amendments, which I believe will meet the two principal objections. The first was that in various parts of the United Kingdom--Ulster, Scotland and especially the west country--a lot of liquefied petroleum gas is distributed by very small distributors in small quantities. Therefore, they are not registered for VAT and they might give up carrying out that useful service if faced with the requirement to register for VAT, even though that would enable them to claim back any VAT on the cylinders. I believe that we have got round that to the satisfaction of the industry by zero-rating consignments of 20 cylinders or fewer. I understand from my discussions with the Liquefied Petroleum Gas Industry Technical Association and others that that meets its concerns about those small distributors, and that it settles that problem.
Secondly, there was the question of whether the normal minimum requirement should be in terms of delivery size or tank capacity. Again, after discussions with the industry, I am persuaded that the tank capacity requirement, as a measure of what is a normal delivery to a final consumer, is appropriate. In response to the specific question from the hon. Member for Wrexham, I can tell
Column 1031him that the 2 tonnes mentioned in the amendment was decided after discussion with the industry and meets its requirement. I am glad that that has all-party support.
Amendment agreed to.
Amendments made : No. 53, in page 13, line 42, at end insert "and either the number of cylinders supplied is 20 or fewer or the gas is not intended for sale by the recipient ;".
No. 54, in page 13, line 43, leave out
not more than 2,500 litres of'.
No. 55, in page 13, line 44, leave out
where the gas is not contained in cylinders'
, otherwise than in cylinders, to a person at any premises at which he is not able to store more than two tonnes of such gas ;'.-- [Mr. Lilley.]
Amendment proposed : No. 92, in page 25, line 23, at end insert-- (2A) Where subsection (1) above applies in the case of emoluments received, or (as the case may be) received in the United Kingdom, after the death of the person who held the office or employment concerned, the charge shall be a charge on his executors or administrators ; and accordingly income tax--
(a) shall be assessed and charged on the executors or administrators, and
(b) shall be a debt due from and payable out of the deceased's estate.'.-- [Mr. Norman Lamont.]
Mr. Nicholas Brown (Newcastle upon Tyne, East) : As I understand it, the purpose of Government amendment No. 92 is to clarify what I believe the Committee already thought was the position--that clause 37 is intended to refer to a personal representative's earnings after the taxpayer has died, and that Government amendments Nos. 93 and 94 merely confirm the timing of the implementation of that section. If it does anything more than that, the Financial Secretary should tell us, but that is my understanding.
Sir William Clark : There is still some concern among employers as to the practical effects of the clause. Will my right hon. Friend confirm that consultation with employers will continue to ameliorate any difficulties caused by the new PAYE rules? If difficulties and practical problems are drawn to his attention, will he deal with them in such a way that no additional burden is placed on employers?
Mr. Norman Lamont : I give my hon. Friend the Member for Croydon, South (Sir W. Clark) that assurance. One or two potential problems have been revealed, but on the whole we have taken the view that the problems have been a little exaggerated. Obviously we are open to consultation and we intend to consult. If it is necessary to make changes in the legislation next year to ameliorate matters we shall do that.
The amendment goes further than the hon. Member for Newcastle upon Tyne, East (Mr. Brown) said. It ensures that a charge to tax can be made on earnings received after a taxpayer's death and provides that the tax on such
Column 1032earnings shall be charged on the personal representatives and be a due debt from the estate. The amendment represents an addition, which makes a provision for after death, rather than being an amendment that drafts or clarifies.
Amendment agreed to.
Amendment made : No. 93, in page 27, line 19, at end insert-- (3) This section shall not apply in the case of emoluments of an office or employment held by a person who died before 6th April 1989.'.-- [Mr. Norman Lamont.]
Amendment made : No. 94, in page 27, line 36, at end insert-- (3A) This section shall not apply to emoluments of an office or employment held by a person who died before 6th April 1989.'.-- [Mr. Norman Lamont.]
(8A) In the application of this section to emoluments of an office or employment under or with a person carrying on business as an authorised Lloyd's underwriting agent, the references in subsections (1)(d) and (5)(a) above to 6th April 1991 shall be construed as references to 6th April 1994.
(8B) Subsection (8A) above shall not apply unless the duties of the office or employment relate wholly or mainly to the underwriting agency business.
(8C) The reference in subsection (8A) above to an authorised Lloyd's underwriting agent is to a person permitted by the Council of Lloyd's to act as an underwriting agent at Lloyd's.'.
Mr. Lamont : This amendment extends, in the case of employees and directors of Lloyd's underwriting agents, the time limit within which a claim for transitional relief must be made to prevent income earned before the introduction of the receipts basis being taxed twice--once when earned before 6 April 1989 and again when received after 5 April 1989. To take account of Lloyd's particular accounting arrangements, the time limit is extended by three years.
The amendment applies the transitional relief that applies to the introduction of the receipts basis to the special accounting requirements of Lloyd's. My hon. Friend the Member for Wanstead and Woodford (Mr. Arbuthnot), who is no longer present, asked about Lloyd's in Committee. His concern is the subject of a later amendment. This one deals purely with the transitional relief. Amendment agreed to.
Amendment made : No. 96, in page 28, line 14, at end insert-- (8D) If in a particular case it appears to the Board reasonable to do so they may direct that subsections (1)(d) and (5)(a) above shall have effect in relation to that case as if for the references to 6th April 1991 or (as the case may be) 6th April 1994 there were substituted references to such later date as they may specify in the direction.'.-- [Mr. Norman Lamont.]
Amendment made : No. 97, in page 30, line 28, at end insert-- (5A) In the application of this section to the calculation of a person's profits or gains as an authorised Lloyd's underwriting agent--
(a) the references in subsections (1)(c), (3)(b), (4) and (5)(a) above to nine months shall be construed as references to three years and nine months, and
(b) the reference in subsection (5)(c) above to two years shall be construed as a reference to five years.
(5B) The reference in subsection (5A) above to an authorised Lloyd's underwriting agent is to a person permitted by the Council of Lloyd's to act as an underwriting agent at Lloyd's.-- [Mr. Norman Lamont.]
(5C) In a case where the period of account mentioned in subsection (1)(a) above begins before 6th April 1989 and ends before 6th April 1990, the references in subsections (1)(c), (3)(b), (4) and (5)(a) above to nine months shall be construed as references to eighteen months.'.
Mr. Lamont : Clause 43 provides that in calculating an employer's profits for tax any remuneration still unpaid nine months after the end of the period of account in which it was earned and for which it was charged should be deducted not for that period but for the period in which it is eventually paid. Clause 44 applies similar provisions to investment and insurance companies. The purpose of the clauses is to ensure that there is not too long a gap between the time at which the employer gets tax relief for the payment of emoluments, and the time at which those emoluments are assessed to tax in the hands of the particular employee under the receipts basis. Without the provisions in the clauses an employer could get a deduction for remuneration which remained unpaid for a long time--perhaps indefinitely.
The new rules apply to calculations of profits for periods ending after 5 April 1989. Since publication of the Bill, representations have suggested that some companies may not be able to adjust their accounting arrangements immediately to determine and therefore pay remuneration within nine months of the end of an accounting period. My hon. Friend the Member for Croydon, South (Sir W. Clarke) may have been hinting at that. The consequence would be, in the short term, before people could adjust to the new regime, that companies would unexpectedly have to pay more tax because they would not get a deduction for unpaid remuneration, leading to cash flow problems in some cases. Where company accounts were more than 12 months in arrears, and were then brought up to date to satisfy the new rules, there would be a "bunching effect" on the payment of remuneration. That would result from more than one year's remuneration being paid in one tax year so that the company can comply with the nine-month time limit and get its deduction for the remuneration. In that situation some employees could find themselves paying tax at the higher rate where they would not otherwise have done so. To ease any transitional difficulties of this kind and to allow companies which need to change their accounting arrangements a longer period to adjust to the new rules, the amendments provide that for a business's first period of account ending after 5 April
Column 10341989, the period during which remuneration must be paid if there is to be a deduction in that period of account is to be 18 months rather than nine months.
The amendment extends the period at the introduction of the new receipts basis to enable companies to get up speed in the preparation of their accounts.
Amendment agreed to.
Amendment made : No. 99, in page 31, line 38, at end insert-- (5A) In a case where the accounting period mentioned in subsection (1)(a) above begins before 6th April 1989 and ends before 6th April 1990, the references in subsections (1)(c), (3)(b), (4) and (5)(a) above to nine months shall be construed as references to eighteen months.'.-- [Mr. Norman Lamont.]
85 to-- 89 and further provisions about insurance companies--
Amendments made : No. 77, in page 64, line 7, leave out from as' to nothing' and insert
the provisions of that Schedule do not have effect in relation to sections 434 and 435 of the Taxes Act 1988'.
No. 78, in page 64, line 9, leave out from second the' to subsection' in line 10 and insert
fraction of the profits referred to in subsection (6) of section 434 and'.- - [Mr. Norman Lamont.]
Amendment proposed : No. 100, in page 64, line 42, at end add other than commissions in respect of industrial life assurance business carried on by the company'.-- [Mr. Norman Lamont.]