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5.45 pm

Mr. Mike O'Brien: Does the hon. Gentleman accept that, at the moment, no one can say that he knows exactly how the system will work? The Bill may be substantially amended in progress in Committee, and that could result in enormous changes. The hon. Gentleman need only consider the length, in the schedules in the Bill, of the amendments on amendments that have been made. No one yet knows what the rules are, no one can be prepared now for self-assessment, and I doubt that we shall be able to place people in the position in which they can be fully prepared for very many months--even those people who are working hard at preparing themselves.

Mr. Forman: Hitherto, only a fairly small percentage of taxpayers have had complicated tax positions. That minority, on whom the change might bear hardest, is composed of people who are frequently in fairly regular contact with their advisers, whether they be chartered accountants or others.

The hon. Gentleman underestimates the extent to which, in the process of being in contact with those professional advisers, and in the process of the paper

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moving back and forth, not only between the taxpayer and the Inland Revenue but between the taxpayer and his or her adviser, the ordinary taxpayer learns and, as it were, comes to appreciate, not only the advice that he or she receives from advisers, but the position of the Inland Revenue.

I can assure the hon. Gentleman, even if he does not know it from experience, that, even as a layman, a person who has been in business or has had complicated tax affairs for some time learns about those matters, complicated though they may be. It is even easier when professional advisers are there to help out on difficult or contentious points.

To summarise, first, the hon. Gentleman underestimates the length of time for which useful information has been available to taxpayers and their advisers. Secondly, there is always a tendency for everyone to put disagreeable prospects in the drawer for a while and not pay attention to those things until nearer to deadlines. That would be true whether we adopted the deadline that thehon. Gentleman suggests of 12 months later, or stuck to our deadline, which I strongly recommend the Minister to do.

Thirdly, the hon. Gentleman did not mention the fact that, under the proposals, if corporate or individual taxpayers have considerable difficulties, they retain the option to ask the Revenue to help them or to provide what it judges to be the accurate figures for the taxpayer. In extremis, it is possible for a person who feels overcome by the burden and the complexity of the exercise to say, or write, to his inspector, "Please do it for me."

In those circumstances, the taxpayer always has the option, if he happens not to trust the inspector--which is unwise because in my experience, inspectors usually see to it that the people working for them treat those matters with accuracy and care, and mistakes are rarely made--to ask the Revenue to take on that task and to act, even slightly paternalistically, to help him through the transition period.

If things go wrong, there is an excellent person who may well be known to the hon. Gentleman and from whom I have had the benefit of a tax briefing: Elizabeth Filkin, the tax adjudicator. She can be brought in in extreme cases where the matter cannot be settled sensibly by discussions and correspondence between the Revenue and the taxpayer.

For all those reasons, I say to the hon. Gentleman, in a spirit of good will, that he exaggerates his case. He fans fears that have been expressed--to me, as well as to him--by the small business community. He would do a better service to his taxpaying constituents if he ensured that they received all the relevant information--if he acted as a conduit for the information, explanatory and otherwise, which is now being provided by the Revenue, and helped through the change. I believe that we must change. The net effect of the change, when implemented, will be beneficial to the country. It is a useful deregulatory measure that will simplify matters.

Mr. Malcolm Bruce: The hon. Member for North Warwickshire (Mr. O'Brien) has, at least, asked some important questions to which the Minister must respond. I accept that the hon. Member for Carshalton and Wallington (Mr. Forman) can readily find many sources, in his constituency and elsewhere, who are prepared for

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self-assessment and who would regard a further delay for another year as a frustration and possibly even the cause of wasted expense.

I therefore agree that the hon. Member for Carshalton and Wallington has an argument, but, by the same token, other people are less prepared and they will face the problem of not knowing what is going on. They will run the risk of incurring penalties through lack of proper support and advice. Others may feel that they will have to incur for professional advice costs that they did not previously incur. It may ultimately benefit those people if they obtain the right sort of professional advice at the right sort of price. The accounting industry is no doubt in favour of the change as it is likely to create a substantial amount of business for it--after all, that is what it is there for.

Mr. Forman: Contrary to what the hon. Gentleman says, if, after the transitional period, people can master the new tax demands placed on them and fully understand what is expected of them, their tax bills could be reduced. My point about the photocopier was meant to show that, once people have created the right model, they can use it as the basis on which to go ahead and fill in their tax returns fairly confidently.

Mr. Bruce: I wholly accept the hon. Gentleman's point. In the past I have filled in my tax forms--I currently use an accountant, but only because I am too busy. I pay my accountant a fee; it suits him and he claims, now and again, to get me a better deal than I would have done. He is probably right to say that--not because I could not have got the deal for myself, but because I did not have the time to do so--but I am merely one individual.

My serious concern does not involve individuals, who will--particularly those on a routine income--easily find a formula to suit them, although the transitional period may be painful and difficult, and they may not be properly prepared. Some business men with smaller businesses, who have slightly more complicated matters to determine, may find, as the hon. Member for North Warwickshire said, that the measure creates considerable additional stress for them, on top of everything else.

The Conservative party prides itself on having good connections with, and an understanding of, small businesses. Having run small businesses myself, I know how difficult it is to run the business and to deal with the practicalities of processing orders and invoices, handling inquiries, ensuring that everything comes together and dealing with value added tax. Another administrative burden will mean that there is less time for producing and selling, and securing cash flow. None of those arguments is against self-assessment per se--our debate is about the timing of it. I accept that, whenever the policy is introduced, it will have its disadvantages and there comes a point when one has to bite the bullet and get on with it.

Another concern, which I raised in my earlier intervention, is that the measure is being introduced at a time when the Treasury and the Inland Revenue have undertaken dramatic reductions in their staff. I am not merely point scoring; the Minister may well be able to explain how the matter will be resolved. The headline in an article in Accountancy Age states:

"Revenue cutbacks threaten chaos for self-assessment".

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Such articles suggest that, within the accountancy profession, there is genuine concern that the Revenue will not be geared up for the volume of queries, complaints and requests for help and information that will flood in, particularly at a time when staff numbers have been substantially cut--by 3,000.

I shall give one or two quotes from the article at random. It states:

"Ernst and Young's self-assessment specialist Philip Davis, said the Revenue would ensure the system would be implemented 'come hell or high water', but warned the whole thing was being rushed through unnecessarily and too many problems remained.

He said: 'If you look at the Finance Bill'"--

which is what we are here to do--

"'for instance, there are 16 pages of amendments in the 80 pages of self-assessment legislation covering areas which they didn't get right before'."

I hope that the Minister will accept that I am simply raising the concerns of people working in the industry, who clearly believe that there is potentially a serious problem.

To some extent, I have an open mind on the amendment. I can see both sides of the argument. I am not in favour of pushing back proposals to which one is committed unless there is a good reason. If there are problems, such as cuts in staff and a belief that the issue's complexity has not been fully addressed, I would echo the argument of the hon. Member for North Warwickshire that the Government must recognise that, in an election year, this may not be the sort of chaos over which they want to preside.

I hope that there is clear good faith on the part of Labour Members that, if there is a change of Government in the next year, the principle of self-assessment will not be abandoned, its proposal to postpone the measure will be honoured and the measure will ultimately be implemented. I am not sure about--the hon. Member for North Warwickshire did not give it--the Labour party's policy on the delivery of self-assessment. It would be helpful to know whether the Labour party was in favour of it, against it or genuinely concerned about its timing. Having said that, I think that the hon. Gentleman made some important points and advanced his arguments very well.

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