Select Committee on Statutory Instruments First Report


The Select Committee appointed to consider any instrument which is directed by Act of Parliament to be laid before and to be subject to proceedings in this House only being:

    (a)  a statutory instrument, or draft of a statutory instrument;

    (b)  a scheme, or an amendment of a scheme, or a draft thereof, requiring approval by statutory instrument; or

    (c)  any other instrument (whether or not in draft), where the proceedings in pursuance of an Act of Parliament are proceedings by way of an affirmative resolution:

In pursuance of the Instruction that in considering any such instrument the Committee do not join with the Committee appointed by the Lords, has made progress in the matter referred to it and has agreed the following report:

1. The Committee has considered the instruments listed in the Annex to this Report, and has determined that the special attention of the House does not require to be drawn to any of them.


2. The Committee draws the special attention of the House to the above instrument on the ground that it is defectively drafted.

3. The instrument supplements a provision in the Taxes Act (section 552A; inserted by section 87 of the Finance Act 1998) requiring non-resident insurance companies to have tax representatives in the United Kingdom for certain purposes. It makes provision for the appointment, and termination of appointment, of tax representatives.

4. Section 552A(7) ("subsection (7)") provides that "A person shall not be a tax representative unless—

    (a)  if he is an individual, he is resident in the United Kingdom and has a fixed place of residence there, or

    (b)  if he is not an individual, he has a business establishment in the United Kingdom, ...".

Regulation 6(1) provides that the Board may at any time give notice to both the overseas insurer and his tax representative that they have decided to withdraw their approval of the tax representative on certain specified grounds, including [(a)] that he no longer satisfies the requirements of subsection (7). Where the Board have given notice of their decision to withdraw approval of the tax representative, regulation 6(2)(a) provides that he continues to be the tax representative of the overseas insurer until they give notice of their approval of the nomination of another person or themselves appoint another person in his place. This provision would appear to be capable of producing a result which is prohibited by subsection (7) in that a person continues to be the tax representative (albeit for a limited period) even though he no longer fulfils the requirements of that subsection as to residence or business establishment.

5. The Department's memorandum of 26 April 1999 (printed in the Appendix to this Report), while accepting that no person can continue to act as a tax representative if he does not satisfy the requirements of subsection (7), explains that the giving of a notice of the Board's decision to withdraw approval of the tax representative on the ground that he no longer fulfils the requirements of subsection (7) does not conclusively establish that those requirements are no longer satisfied: the insurer may appeal against the decision or informally dispute its correctness. The Department submit that it is a legitimate exercise of the power in section 552A(9)(f) (power to make supplementary provision as to termination of a person's appointment as tax representative) to require a person to continue as tax representative so long as there is a doubt as to whether or not he satisfies the requirements of subsection (7).

6. The Department's further memorandum of 10 May 1999 (also printed in the Appendix to this Report) addresses a supplementary point raised by the Committee, namely what is the position in a case where there is no doubt that the tax representative no longer satisfies the requirements of subsection (7) (and accordingly the insurer does not wish to challenge the Board's decision) and whether, in such a case, regulation 6(2)(a) has the effect that a person can continue as a tax representative when he no longer satisfies those requirements.

7. The Department explain that regulation 6(2)(a) only has effect in situations where, notwithstanding that the Board have given notice of their decision to withdraw approval, doubts remain as to whether or not the requirements of subsection (7) are no longer satisfied; and that, in a case where the facts are not in dispute, regulation 6(2)(a) is not meant to have (and because it cannot override subsection (7) does not have) the effect that a person who no longer satisfies those requirements can continue to be a tax representative.

8. The Committee considers that, given that regulation 6(2)(a) is only intended to operate in the limited circumstances mentioned in paragraph 7 above, the scope of application of that provision should have been made clear. Regulation 6(2)(a), without any such qualification, misleadingly suggests that it has a wider range of application than that intended. Any appearance of inconsistency with subsection (7) should have been removed by restricting the scope of operation of regulation 6(2)(a). The omission to do so constitutes defective drafting, and it is on that ground that the Committee reports regulation 6(2)(a) to the House.

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