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Mr. Baron: I fully accept that explanation and shall look forward to receiving the Paymaster General's letter in due course. I just wish to ensure that she understands the point that I am trying to make, because it is extremely important. I believe that we all agree that a company should get tax relief only on the amount of value that it transfers. The paragraph is worded such that that would not be the case, given the interaction between paragraphs 8(1)(a) and (b). Paragraph 8(1)(b) could allow companies to claim tax relief far in excess of the value of benefits that they had given to employees. It is only fair that the wording should be reconsidered, if only because it creates ambiguity. I stress the two phrases that need clarification. What is meant by ''award'' in paragraph 8(1)(a)? Is it the grant of an option or the exercise of a benefit? In paragraph 8(1)(b), ''or another'' must be clarified, because it could mean that the actual cost of the transfer is double counted. I look forward to receiving the Paymaster General's clarification on those questions. The Chairman: Order. That was a rather long intervention. Dawn Primarolo: I thought, Sir Nicholas, that it was a helpful intervention. I understood the hon. Gentleman to be asking about the difference between the value of the share when it was transferred and the market value, and about the point at which the employee will be taxed and the company will get relief. Column Number: 513 The award of shares is not exercised on an option. It is the giving of the shares to the employee for less than the market value that is the issue. The employee would be taxed on the value obtained, as the hon. Gentleman said. Corporation tax relief would be due on that amount. He asked for clarification of the interaction of those three points. That explanation stands, but I shall write to him on the either/or point to ensure that I have given him the correct answer. However, as I understand it, that is how the clause operates. Mr. Baron: I thank the Paymaster General for that answer. To help me to understand her answer when she finally writes, I suggest that she uses the example that I have given—the £50,000 and the £500,000—because it would keep the argument consistent and help understanding. Dawn Primarolo: Yes. I confirm that we will take the details from Hansard to make sure that we follow that example closely, and I shall ensure that all members of the Committee receive that letter. That is no problem. Mr. O'Brien: The Paymaster General has helpfully addressed the points raised by my hon. Friend the Member for Billericay. I welcome her promise of a letter of further clarification to be placed in the Library, using the example that my hon. Friend quoted. My hon. Friend's point about interaction is important and valid, but he will find that some of the principles underlying paragraphs 8(1)(a) and 8(1)(b) will surface in our discussions on amendment No. 232 and the amendments grouped with it. I believe that most of the arguments will be contained in that section, so we may be able to explore the issue a little further. The issue was touched on in the last debate and we hope that, although the Paymaster General may have been in post for six years, she will not be denied completion of her trenchant defence of the Bill from this day forward. We hope that we shall be able to welcome her to her continuing post. I shall not go back to the detail of our discussion, which would, to coin a phrase that I have not heard since I was studying at university, be otiose. I hope that it is common ground that nobody is trying to gain relief from corporation tax or to promote anti-avoidance schemes to the detriment of revenue due from the taxpayer to the Government. However, a balance must be struck between what the Paymaster General described as the impossibility of operation and intelligibility, or the impossibility of understanding in the first place. Intelligibility is based on consistency and easy cross-referencing of the provisions. As the Paymaster General admitted, there is an interesting interaction between schedules 22 and 23, not least because some of the provisions are hooked to the appointed day. However, consistency not only improves monitoring but enables those who have to put the provision into practice to understand it and, therefore, to comply. We have been seeking intelligibility, as that is most likely to lead to compliance with the provisions and will help the Government to secure the anti-avoidance mischief that they want to address. Column Number: 514 The amendments, which I said at the outset were probing in nature, were deliberately framed to cover alignment. I hope that the Paymaster General does not treat seriously the fact that some drafting inconsistencies may remain. The amendments were intended to elicit a response. I shall not press them to a vote, but I hope that, as a record of the debate will be studied not least for the preparation of the letter, those who have to operate the relief will appreciate any further thoughts that can make the matter clearer. Ultimately, that will also benefit the Government and, in due course, taxpayers who are in receipt of those funds via the Government. I therefore beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Mr. O'Brien: I beg to move amendment No. 223, in
', apart from the release of the old option,'.
The amendment relates to old options. A Law Society representation considers that, in determining the amount of relief when there has been a takeover, any consideration given in respect of the grant of the new option that consists of the release of the old option should be disregarded. If the release of the old option is not disregarded, the amount of relief available when the new option is exercised may be unduly restricted. The amendment is intended to enable the release of an old option to be disregarded for the purposes of determining the amount of relief. The amendment is intended to probe, but as it is simple I hope that the Paymaster General will accept it. Dawn Primarolo: I understand the hon. Gentleman's point. His amendment seeks to put it beyond doubt that the value of options given up in the circumstances dealt with in paragraph 13 is disregarded from the calculation of the relief in the same way as it is disregarded when taxing the employee. I am sorry to do this to the hon. Gentleman, but officials have consulted parliamentary counsel—always the ace in a Committee. Parliamentary counsel confirms that the additional words proposed in the amendment are not necessary to clarify the interpretation. However, it would assist the day-to-day application of the new relief if the point were clearly explained in the Inland Revenue guidance on the operation of the schedule. I said that I was sorry to do that to the hon. Gentleman because, as far as Ministers are concerned, parliamentary counsel is all four aces when it comes to being the final arbiter on the drafting of Bills. Ministers challenge the interpretation at their peril. I sincerely hope that aspiring Ministers in the decades to come will also consider such challenges unwise. Mr. Michael Jack (Fylde) rose— The Chairman: I fear that I have to call a former Treasury Minister. Mr. Jack: I do not want to intrude on the tremendous interplay of intellect, but it has always been my understanding that Ministers are ultimately responsible for the legislation that goes before the Column Number: 515 House and Committees. Parliamentary counsel is wise, but not infallible. Ministers are responsible and it is for them to decide. If, in the judgment of the Paymaster General, the words require further exemplification and clarification in Treasury guidance, that raises the interesting point that there may still be, in the words of my hon. Friend the Member for Eddisbury, some scintillas of doubt. If that doubt remains, on Report a further and entirely clear version of what we are discussing could find its way into the Finance Bill.The Chairman: Order. I think that the Paymaster General was trying to be helpful and transparent. Mr. O'Brien: That is your unique interpretation, Sir Nicholas. The capacity of parliamentary counsel for the work that they have to undertake to meet the volumes of legislative proposals that emanate from the Government knows no bounds, but when they are prayed in aid it is an extraordinarily difficult area of parliamentary proceedings. Making that advice transparent and available to us is always resisted. The issue is real and serious. When parliamentary counsel is prayed in aid the advice should be available to Members for consideration. Mr. John Burnett (Torridge and West Devon): I apologise that I was not able to be here at the start of proceedings today, and I am only just catching up with the debate. Presumably, there can be a netting down if the transactions are done in the same document. Presumably what concerns the hon. Gentleman is that if there is a netting down, the adjudication office might want to consider the matter. It seems entirely unfair that there should be two doses of duty if there is a set-off cost surrendered against the new price.
3.15 pmMr. O'Brien: What the hon. Gentleman says is broadly correct, but the thrust of my proposal is to put the matter beyond doubt and ensure that there is clarity. My right hon. Friend the Member for Fylde (Mr. Jack) asked whether Treasury guidance was needed. If it is needed, it is welcome, and we hope that it would be available. The amendment was an attempt to include it in the Bill. I think that the Paymaster General would agree with me in saying that hopefully the pride of authorship would never creep in to the defence of the drafting of any legislation. I still feel that the amendment makes a helpful clarification to the Bill. It was, after all, Sir Winston Churchill who famously referred to ''advisers on tap, not on top''. It is true that however much parliamentary counsel says guidance is not needed, it is something on which clarification has been sought. Rather than press the matter to a vote, I shall withdraw the amendment. It may be helpful on Report if we introduce a broader clarification of the matter. The fact that we have placed this on the record, may allow the Paymaster General to reflect on it.
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