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9.45 pm
Mr. Timms: The hon. Member for West Dorset (Mr. Letwin) flatters me by suggesting that courts will pore over my words in the debate for years--indeed, centuries--to come. However, we are considering obscure circumstances that the courts will not study frequently.
The hon. Gentleman is right about the purpose of the element of clause 19 to which he referred. However, I do not believe that the problem that he fears will arise. If the party has moved the aggregate, it is commercial exploitation and tax is due unless we are dealing with an exemption. If commercial exploitation has occurred, and no tax is due, but a second, taxable commercial exploitation takes place, liability arises at that point.
I shall reflect further on the hon. Gentleman's points. I do not believe that there is a problem, but he is right that the subject is complex. It may therefore be appropriate to reflect further and ascertain whether there is a difficulty. If there is, I shall revert to the subject. I hope and believe that there is no difficulty, but the matter is worth further thought.
Clause 35 ordered to stand part of the Bill.
Clause 36
Question proposed, That the clause stand part of the Bill.
Mr. Letwin: Again, I begin by asking the Financial Secretary to confirm that the provision parallels standard clauses in previous legislation. How will that work in the case that we are considering? Representatives of the industry have told me that several people would be caught by subsection (1)(a) and (b). They include sole traders who busy themselves with a quarry; some of them carry out their business in partnership. I stand to be corrected, but I believe that subsection (1) has a wide application to the smaller end of the industry. That is not true of the great aggregates companies--the half dozen or so that comprise the great bulk of production--but of the tail, which must never be forgotten or ignored if we care about our economy. The tail includes many traders who would be caught by subsection (1).
It is therefore unsatisfactory that we are told only:
- "The Commissioners may by regulations make provision for determining by what persons anything required to be done under this Part is to be done where, apart from those regulations, that requirement would fall on"
In particular, it would be good to know what will happen in the odd cases, and how they will be dealt with. The Minister will, of course, tell us that such cases are very unlikely to occur and highly hypothetical. However, let us suppose that two people, both unincorporated, are knocking away at two parts of the same quarry. When we come to the interesting question under clause 19(1) of when the exploitation occurs or to the difficult questions about which substance we are concerned with when mixtures of substances occur in complicated ways and some materials are encased in others, how will we know which party involved is responsible for what? How will the regulations produced by the commissioners deal with such cases?
Those are not straightforward cases. We are dealing with complex processes, in which the levy forces a disentangling of substances and times from one another that is unprecedented and that has been unnecessary for other purposes. The regulations will, therefore, have effects that similar regulations relating to most other taxes would not be expected to have. Will the Minister, therefore, give us a clear guide as to what he expects the regulations to look like? Perhaps he might care to deposit a draft of them before the House, before the end of the deliberations in Standing Committee.
Mr. Timms: These provisions have a great deal in common with other indirect taxes, on which they are based. The wording is lifted directly from the provisions in the legislation for the landfill tax and for VAT. I do not have data about the number of businesses in this sector to which the provisions will apply. However, I do not accept--although this might be splitting hairs--that it is important to get the provisions right only if many businesses are involved. Even when only small numbers of people are affected, the provisions can have a considerable impact on them. It is therefore important to get them right, and that is the view that we take in this case.
Just as the clause is taken directly from the arrangements for landfill tax and for VAT, so I expect the regulations to look like the regulations that apply to partnerships and other unincorporated bodies in the case of landfill tax and VAT. I would advise the hypothetical individuals to whom the hon. Gentleman referred to look at those regulations. They can be pretty confident that these provisions will look rather like them.
Clause 36 ordered to stand part of the Bill.
Clauses 37 and 38 ordered to stand part of the Bill.
Clause 39
Question proposed, That the clause stand part of the Bill.
Mr. Letwin: I do not want to detain the Committee long on clause 39. We have a major issue with clause 40, which
we want to move on to, but I want briefly to ask a question. There is a perfectly reasonable requirement in clause 39--perhaps the Financial Secretary will confirm that this is in common with much previous legislation--that if one is going to hand over one's business to someone else, one has to tell Customs and Excise about it. I should put it another way: rather unfortunately, the clause allows the commissioners to make regulations that will have that effect. Let me make a general point, and say that throughout the Bill, as in a good deal of other legislation, there is reference to far too much regulation on the part of the commissioners--but that is an overall feature of indirect taxation, for which the Financial Secretary and his colleagues should not be blamed personally.I am concerned about a specific matter. If the Financial Secretary will forgive me, I shall return to the hypothetical case of Mr. Jones. Mr. Jones did not think that he was in the business; he thought that he was in another business, which was exempt. The commissioners judged him to be intending to be in a business that would qualify.
Let us move the story on a bit. Mr. Jones had to register--if he had not, he would have been fined--and he had to deposit a security. As it turns out, that was for nothing, because Mr. Jones has never produced anything taxable. He has never produced anything that, on detailed inspection, could be shown to be an aggregate for the purposes of the Bill. I think that there will be many such cases: by the time it is found that those concerned are not caught by the legislation, they will have been subjected to a huge amount of intrusion.
Does clause 39 constitute the next intrusion? Let us suppose that poor Mr. Jones, having at last--or so he thinks--reached the end of all that unnecessary and unjustified intrusion by Customs and Excise, wants to sell the business because he is so fed up, or for some other reason. Will he then--because he has been registered under the regulations for which clause 39 provides--have to inform Customs and Excise that he has sold the business, so that the next person along the line may be subject to exactly the same unnecessary harassment, or will the regulations at least prevent that from happening if the person in question, although registered, has never had to pay any of this wretched tax?
Mr. Timms: The hon. Member for West Dorset (Mr. Letwin) is right again. Clause 39 is a technical provision, securing continuity when a business is transferred from one person to another as a going concern. This is common practice in the case of other indirect taxes.
I do not know the answer to the hon. Gentleman's specific question, but perhaps I can drop him a line.
Clause 39 ordered to stand part of the Bill.
Clause 40
Mr. Ottaway: I beg to move amendment No. 22, in page 33, line 33, leave out "confirmed" and insert "revoked".
The Chairman of Ways and Means (Sir Alan Haselhurst): With this it will be convenient to discuss amendment No. 23, in clause 41, page 34, line 2, leave out from "above" to end of line 3.
Mr. Ottaway: Clause 40 applies to
- "any decision of the Commissioners",
- "Any person who is or will be affected by any decision to which this section applies may by notice in writing to the Commissioners require them to review the decision."
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