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Mr. Laws: I can understand the specific concern that has caused the Financial Secretary to introduce clause 283, but what is her argument against amendment No. 15? Is it a cost argument, or does she believe that it will complicate the administrative job of the Government? What is the argument against that modest amendment?

Ruth Kelly: The argument against an increase in the limit is basically the difficulty that it would cause for land registries, which would have to decide whether a self-certificate is appropriate, or whether a full Inland Revenue certificate should be issued on each occasion. They have suggested to us that a £1,000 limit would be acceptable to them, but that the risk is that the burden would increase were that limit to increase.
 
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Mr. Prisk: I may have missed a point but I am unclear as to why, in issuing a certificate, there is a difficulty in distinguishing between £1,000 and £5,000. I am not quite clear. Can the Financial Secretary expand on that? It seems hazy.

Ruth Kelly: The fact is that a lot fewer transactions will be covered with a £1,000 limit, which is appropriate to exempt the transactions that we are concerned with in this case. Clearly, we will keep that limit under review. If representations are made in due course, we may consider whether it is still appropriate, but I am convinced that it is.

Mr. Prisk: I think that the Financial Secretary is saying not that it is difficult to distinguish between the two categories, but that a much greater number of cases will be applicable under the £5,000 limit, and that it is the administrative burden for the Land Registry that we are talking about. Will she confirm that?

Ruth Kelly: As far as I understand it, the land registries are telling us that it would put a much greater burden on them if the limit were increased, because the scope of the exemption would greatly increase. We think that a £1,000 limit is appropriate for the policy aim of excluding that particular category of unrepresented person, although, as I say, if different situations are put to us, we will consider them in due course, always with the aim of improving the Bill as and when we can. However, there is a case that that group of people, who are unrepresented, should not have to fill in the full stamp duty land tax form, of which I know the hon. Gentleman is a great fan. For that reason, I ask the Committee to reject both amendments.

Mr. Prisk: I am unconvinced on the question of the number. It seems entirely acceptable to apply the ridiculous compliance burdens under schedule 37 of a six-step, three-formula, two-page application in respect of abnormal rents, but when the Land Registry is asked to distinguish between a £1,000 set of certificates and an owner who will perhaps try £5,000, it is insurmountable. It is a peculiar argument.

It is a disappointment that the Government's arguments are remarkably weak. That is unusual. Usually, the Financial Secretary is far more robust and persuasive. On these two amendments, she has not been.

My purpose in tabling the amendments was to put on record the genuine worry of those in the real world whom we are here to represent. I have done that. It is important that we continue to do that. However, on balance, I shall withdraw amendment No. 16. I believe that you will wish me, Sir Nicholas, formally to present amendment No. 15 in due course.

The Temporary Chairman: The hon. Gentleman is seeking leave to withdraw amendment No. 16.

Mr. Prisk: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Temporary Chairman: Does the hon. Gentleman wish to press amendment No. 15?

Mr. Prisk: I think that this is an example of that awkward situation where I need formally to present an
 
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amendment, only in due course to have to withdraw it. We have debated the whole issue. The amendments are interrelated; therefore, I would wish, having formally presented the amendment, formally to withdraw it.

The Temporary Chairman: I am extremely grateful to the hon. Gentleman, who has saved me the trouble of explaining that to the Committee.

Clause 283 ordered to stand part of the Bill.

Clause 284

Claims not Included in Returns

4.15 pm

Mr. Prisk: I beg to move amendment No. 17, in clause 284, page 238, line 26, after 'for "', insert 'for'.

The Temporary Chairman: With this it will be convenient to discuss amendment No. 18, in clause 284, page 238, line 30, after 'for "', insert 'for'.

Mr. Prisk: The amendments are small but not unimportant. They are designed to correct the meaning of the clause. I am grateful to the Law Society for highlighting the errors. My only anxiety about the amendments is that I suspect they will reinforce to friends and colleagues alike my reputation as a parliamentary pedant when it comes to stamp duty land tax. These are none the less matters of substance, so I hope that the Minister will accept the amendments.

Ruth Kelly: To be brief, I urge the Committee to accept the amendments.

Amendment agreed to.

Amendment made: No. 18, in page 238, line 30, after 'for "', insert 'for'.—[Mr. Prisk.]

Clause 284, as amended, ordered to stand part of the Bill.

Schedule 38 agreed to.

Clause 285 ordered to stand part of the Bill.

Clause 286

Charitable Trusts

Question proposed, That the clause stand part of the Bill.

Mr. Laws: Hard on the heels of the great triumph of the hon. Member for Hertford and Stortford (Mr. Prisk), I hope to induce the Financial Secretary to make further changes in this important area, but on this occasion I invite her to come up with her own proposals.

The clause extends charities relief to charitable trusts, and relief is available when the charity intends to hold the property acquired either for use in furtherance of its charitable purposes or as an investment. I understand that the Inland Revenue interprets that as denying relief when a property or part of the property acquired is to be sold off by the charity, on the basis that the purchase for resale is not an investment.
 
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Furthermore, we understand that when a property is acquired partly for use by the charity for its own purposes and partly to be sold off, the latter part causes relief to be denied on the whole acquisition, on the basis that an acquisition is either entirely chargeable or exempt. Clearly, there are circumstances in which a charity has to acquire a particular site or building in its entirety, but then has to sell on the part that is surplus to requirements. In those circumstances, the apparent current interpretation could produce a capricious result. If there is a delay before resale, that might indicate an investment activity, but it would not be possible to foresee that at the time of the acquisition by the charity. It would seem particularly unfair for the charity to bear the whole 4 per cent. stamp duty land tax on the entire acquisition where only a small part had to be resold.

We understand that the principle underlying the Revenue's interpretation is to deny relief for trading transactions by charities that would enjoy an unfair advantage in competing with commercial organisations. However, I suggest that the condition on which the Government are basing clause 286 should be reversed so that relief would be denied where the main purpose of the acquisition was dealing in property, but it would still be possible to have the relief where the main purpose was investment and a portion of the property was being sold on.

I do not know whether the Financial Secretary can offer us any reassurances on that point now, but at the very least I hope that she might consider it during the course of the Bill, and consider coming back with clarifications or Government amendments.

Ruth Kelly: I am grateful to the hon. Gentleman for the way in which he has raised this issue today and for giving me some notice of his point. I hope that I can give him some reassurance, if not the full reassurance that he seeks.

Charities certainly will not lose relief if they dispose of properties. Provided that they have used a property for charitable purposes, its disposal should not cause any clawback of relief. However, the hon. Gentleman is right to point to the fact that relief is not available if a charity acquires property intending to dispose of it—in other words, when it is in effect speculating on the property. I think that he will agree that it would not be right for a charity to be exempt from the tax if it were to engage in pure speculation.

The hon. Gentleman raised the case of a property that is bought and part sold on. That could cause a degree of difficulty, but I should like to think that in practice it is possible to distinguish between the two parts of the transaction, so that one part of it, which is concerned with the charity, benefits from the relief, and the other part is charged to stamp duty. I would be willing to discuss that with him further during the later stages of the Committee, or to discuss it with charitable bodies if they feel that that is not a reasonable solution. However, it strikes me that what I have suggested is probably a fair compromise.
 
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