|Tobacco Advertising and Promotion Bill [Lords]
Tim Loughton: I am following my hon. Friend's argument closely. He said that the Government have interpreted
as meaning a presence. He and I have served on Committees that considered Finance Bills during which new tax regulations had different definitions that meant that the Treasury treated the definition of
Column Number: 055people who carry on business in the United Kingdom differently from that under the Bill, which provides further analogies.
Mr. Ruffley: My hon. Friend is entirely right. He has high-level experience of financial matters and corporate law, which I think that I do as well. The Minister owes a duty to not only Opposition Members but to those who will examine how the Bill will be viewed by the courts should a case be brought and a prosecution be made under it, should it pass into law.
It is incumbent on the Minister to explain the selection of meanings, perhaps by adverting to how the Inland Revenue defines carrying on business, as my hon. Friend said. Does it import concepts of domicile? What does presence mean? Are there tax law precedents that the court should use in defining and amplifying the meaning of carrying on business in the UK? Is there some other test? Would an agent office with a nameplate that has no employees in this country but that has a registered office and a company number at Companies House in the City count as carrying on business in the UK? I look forward to a detailed, thorough and careful explanation of the legal usages that legal advisers have given Ministers when Ministers put their name to the clause and approved the drafting. It needs clearing up.
The draft regulations to which I referred earlier, which will introduce into UK domestic law the terms of the e-commerce directive, are confused vis-à-vis the directive, not the clause. I hope that I have exposed the potential conflict in the clause, but what about the regulations vis-à-vis the directive?
The draft regulations state that
The directive does not use that language. Will the Minister explain that apparent contradiction?
I hope that the Minister will consider our concerns. Opposition Members want legislation that is clear, does not lead to unnecessary litigation and gives certainty not only to those who want to comply with it, but to the courts that may have to decide cases that fall to them for decision involving those who fall foul of the Bill. If she cannot explain the posers and answer my questions, I expect her to return with a suitable amendment to clear up what seems to be a large mess.
John Barrett: There has been much debate about the difference between carrying on a business and a place of establishment. As a non-lawyer, I assume that the definition of carrying on a business is fairly simple and understandable. It is more complicated to define a place of establishment, and I look forward to the Minister's assurance that the definition of carrying on business is the better definition.
As was said in another place, the country of origin as set out in the e-commerce directive is more precisely dealt with if the business is defined by the place where the business has been carried on, rather than the place of establishment. It would be simple for a company to
Column Number: 056brass-plate an office in another country and say that it was established there.
Yvette Cooper: Hon. Members have made important points about the amendments. The Bill must be in line with the e-commerce directive, and it will be in line with it. However, although consultation on the e-commerce directive has closed, final decisions have not yet been taken. Therefore, with regard to the application of the Bill, we will need to take account of the final wording of the e-commerce directive.
The Bill is in line with the principles behind the e-commerce directive. It addresses the fact that we are regulating a complicated area. With regard to the internet, technology is developing fast and many new questions about the international application of legislation are raised. The Bill has been drafted so that it does not have extra-territorial effect. That is why it states that it applies only to those who carry on business in the UK. Clause 2 (4) states:
Discussions have taken place about what that means. If a company is carrying on business in this country—if it has a branch here and it is operating in this country—it would be covered by the Bill. On the other hand, if, for example, a Japanese tobacco company that is based entirely in Japan were to sell its products to the UK over the internet, that would probably not be interpreted as carrying on business in the UK.
Mr. Ruffley: I am glad that the Minister acknowledges that the points that have been raised are important. However, I have not heard an answer to my question: would a company that is registered in this country, but does not file accounts and merely has a brass plate on a door somewhere—in Birmingham, for example—constitute an organisation carrying on business?
Yvette Cooper: That would probably depend on whether the brass plate referred to anything. A brass plate swinging in the middle of nowhere is different from a brass plate on a door that opens on to a substantial business, or from a brass plate on a door behind which several people are carrying on business in this country.
Mr. Ruffley: I offer the example of a company that has no employees and is registered in this country—it has a company number at Companies House—and a website is registered under its name. The Minister used the term ''a substantial business''; I did not say that. With regard to the scenario that I have outlined, is there any way that that organisation, that does not file accounts and has no employees, would be carrying on business in this country?
Yvette Cooper: In the end, the courts must decide what they regard as carrying on business. In the past, the courts have held that a person who carries on a business where there is a branch only here is carrying on business in this country. In the end, the courts must decide whether business is taking place: however, that requires having a presence in this country.
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The key issue that the amendments address is the proposed legislation's compatibility with the e-commerce directive. When the final decisions are taken about that directive, we will need to ensure that the Bill is in line with it—especially where it addresses matters with EU scope. If necessary, we will do that on Report.
Mr. Ruffley: I was pleased that the Minister thought that there was something in these amendments. New Labour Ministers are not always so gracious when serious points of principle are put to them, so I am grateful to her. However, I did not hear her give any explanation of the word ''establishment'', which seems to be flavour of the month in the EU directive and is referred to in regulations. The phrase used in the clause is ''carry on business''. I regret to say that the Minister has not yet given any explanation for that, and I hope that she will give us a detailed one, so that when courts try to determine the intention of Parliament, they will get some informal guidance on what is going on.
Perhaps the hon. Lady would care to take this opportunity to explain how the concept of ''establishment'' in law may be interpreted differently from ''carry on business''? Does she think that those concepts are identical? If she does, she should say so, because it would be helpful to everyone. If she thinks that there is a difference in practice or in the way that courts may interpret those phrases in practice, she should explain what it is. It would help all hon. Members if the Minister would give an explanation of ''establishment''. What legal advice has she received from officials in the Department as to its meaning and how, whether or if it differs from the meaning of ''carry on business''?
It is important to have such information on the record. The Minister will not be cheering up only me by responding more fully to the questions that I have legitimately asked; she will also cheer up the many observers who wish nothing more than to understand whether they could potentially be caught by this legislation. In the light of that, a legal explanation of ''establishment'' and how the Minister thinks and expects the courts to interpret it, compared with ''carry on business'', would be useful. Opposition Members would like to hear more about such a crucial distinction, if distinction there be.
Yvette Cooper: The advice on ''place of establishment'' has been set out as part of the consultation on the e-commerce directive. At present, we do not propose to use the phrase in the Bill. The phrase in the Bill is ''carry on business'', and there has been considerable discussion in the House and in the other place as to how that phrase may be interpreted. Of course, in the end, that is a matter for the courts.
As I said, once the e-commerce directive is published, we must ensure that it is compatible, but at this stage it would be premature to speculate whether further action will be necessary. Certainly,
Column Number: 058''carry on business'' is perfectly compatible with the principles behind the e-commerce directive. The points made by the hon. Gentleman are speculative.
Mr. Ruffley: This will not do. I do not know why the Minister says that the arguments have already been exposed. They have not been exposed or debated in this Committee, or debated in any sensible or meaningful detail on Second Reading. For her to say that she thinks that the phrase will be compatible is not sufficient. She referred to regulations when she argued that the meaning of ''establishment'' has been teased out and set out. I am asking only that the Minister takes time—it need not detain the Committee long—to explain the legal definitions of ''establishment'' and how, if at all, they contrast with ''carry on business.
Most importantly, will the Minister describe—not speculate—why the words ''carry on business'' have been used in the drafting of the Bill rather than ''establishment''. Why is there a disjunction? Why is there a different use of language? It looks like an error—someone has made a slip. An explanation would be hugely helpful to the Committee.
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