Mr. Patrick McLoughlin (West Derbyshire): I am interested in all the exemptions from the tax that my hon. Friend outlined. I thought that the Prime Minister and the Secretary of State for Trade and Industry had given an undertaking that they would do everything possible to avoid red tape and complication. Surely my hon. Friend has got the exemptions wrong and the tax is straightforward, or we do not have joined-up government.
Mr. Letwin: I have terrible news for my hon. Friend. Those are not the exemptions; those are merely the matters that are not covered by the present tax. We have not even seen the exemptions--they are not in the document. The exemptions are yet to come; that is the purport of what the Chief Secretary told those on the Liberal Benches. We are to be presented in due course with a scheme of bewildering complexity produced by the genius of the Financial Secretary. I hazard a guess that the scheme will exempt one class, which will be exactly the class of those who extract aggregates. If that does not happen, I will buy the Financial Secretary a lollipop, even in these hard times.
I hope that I have said enough to suggest to the House that the Opposition are not wholly in love with the aggregates tax. Indeed, we shall oppose it. We shall scrutinise it in Committee in the detail that it deserves.
Mr. Letwin: As the Chief Secretary is doing nothing through the tax to tackle the environmental damage caused by quarrying--the tax will not affect the extent of quarrying in the United Kingdom--that is a question for the Department of the Environment, Transport and the Regions. It is a serious question, but his tax does not affect it. As I pointed out, the tax is a tax on land and on construction. It will not affect by one jot the amount of aggregates extracted in the UK.
I move on to two items that are not in the Bill and on which I hope that we can reach agreement in Committee. When we dealt with double tax relief and the control of foreign companies last year--at exhaustive length, as I think that the Paymaster General would agree--and in subsequent statements, the Government made clear two things, both of which I had hoped would be reflected in the Bill, but are not. Although these are properly matters
First, when the splendid resolution on onshore pooling was brought back into the Bill, it was a specific concern to many of us and to a number of major UK multinationals that there might be a problem for those who were forced by the provisions to restructure so as to achieve a flatter structure of subsidiaries, whose subsidiaries were currently held indirectly, in particular in the United States, Japan and Germany.
The problem arises when a UK-based multinational plc holds a low-tax subsidiary which is itself the owner of a high-tax subsidiary or vice versa, and when, in order to achieve the onshore pooling effect, it is necessary to sell the subsidiary of the subsidiary to the UK multinational plc, in order that it should be the direct owner so that the onshore pooling can occur. The Paymaster General will recognise that that is the effect of the Finance Act 2000. During consideration of that legislation, we pointed out that, for some existing UK plcs, the restructuring exercise could produce uncovenanted tax costs in overseas jurisdictions where capital gains can be crystallised by the mere act of reselling holdings within a group structure. I think that the Paymaster General promised that she would consider the matter. I suppose that she might have done so, but it has not been dealt with. The Bill contains no transitional provisions to accommodate the difficulty, but such measures should exist and the Opposition will table amendments accordingly.
Secondly, when the original proposals were made on double taxation relief and control of foreign companies, it was promised that those components would be accompanied by a third measure to allow either exemption or roll-over relief for companies that were disposing of substantial shareholdings. Indeed, I believe that that promise was sustained throughout the long saga of the revision of the double taxation relief proposals. I described a moment ago the manoeuvre in question, which is necessitated by the requirement to establish a flatter structure of holdings.
It would be sensible if companies that were forced into that position by the DTR and CFC provisions could claim either exemption from capital gains tax at the time they sold or restructured their holdings within the group, or a roll-over relief that allowed them to continue indexation--bearing it in mind that it is indexation, rather than tapering, that still goes on in the business world. Alas, that promise appears to have disappeared into a long-grass Green Paper--if Green Papers can be composed of long grass--and is not contained in the Bill, but the Opposition and British business believe that the Bill should contain such provision. Again, we will table amendments accordingly.
In particular, we desperately need measures to refund VAT input charges much more rapidly than usual. I shall explain that point a little more, although I think the Paymaster General will have taken it on board with lightning alacrity, given her great knowledge of the VAT system. Usually, when hoteliers or farmers who have a bed-and-breakfast proposition, or whatever else, come to Customs and Excise and find that at the end of a three-month accounting period the VAT input charges that have been paid on consumables exceed the VAT output charges that they have levied on their customers--the problem being that there were no customers--they have a right to claim a refund.
There is no debate about that arrangement, as it is part of the ordinary workings of VAT, but there is a problem. The Paymaster General will be aware of the difficulty, although I think that most of us will be more aware of it as ordinary citizens and constituency Members of Parliament. The fact is that Customs and Excise is jolly slow at making such payments. The Paymaster General shakes her head, but she stands in danger of being sent copies of all the documents that we have accumulated in respect of cases of slow payment by Customs and Excise.
The Paymaster General (Dawn Primarolo): If the hon. Gentleman has examples of cases of Customs and Excise not responding as quickly as it should have, I sincerely hope that he will send them to me--however great their number--so that I can chase them up.
Mr. Letwin: We certainly will, but let me tell the Paymaster General some sad news. I am surprised that she is not already aware of it. I am not saying that Customs and Excise has not been acting at its usual pace; I am saying that it has acted at precisely its usual pace.
I do not know whether the Paymaster General has had any dealings with Customs and Excise as a customer, so to speak, as opposed to in her capacity as a Minister, but I assure her that the speed with which it responds to requests for money back is not as great as the speed with which it responds to requests from her private office. The pace is, in fact, rather slow. In the normal course of events, that is not a problem: things are settled in time, and interest is paid. The Conservative party proposes that there should be symmetry in the interest charged on late payments in one direction or the other, but we shall let