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Mr. Laws: I understand the Financial Secretary's intention to consider the point. Will she clarify whether amendments to existing legislation are required to achieve the desired effect that duty will be payable only on the part of the property that is sold on? Is that currently her interpretation of the law as it would be if the Bill was passed unamended, or does she believe that it is necessary for us to discuss the matter further and to table amendments to achieve that effect?
Ruth Kelly: I understand that that is the current intent of the legislation, but I shall write to the hon. Gentleman to make that point clear. If further amendments are needed, he will of course have an opportunity to put those to the Committee. In the light of that clarification, I hope that he will support the clause.
Question put and agreed to.
Clause 286 ordered to stand part of the Bill.
Clauses 287 and 288 ordered to stand part of the Bill.
Schedule 39
Mr. Prisk: I beg to move amendment No. 19, in schedule 39, page 548, line 36, at end add
'which constitutes a chargeable interest'.
Amendment No. 19 applies to new paragraph 12 in schedule 39. Under the provision as drafted, stamp duty land tax will be applied to the transfer of a partnership interest that holds land; however, it should be limited to partnerships holding United Kingdom land. The amendment would restrict the charge to UK property held by partnerships, and it assumes that UK land interests held by a partnership that are not subject to stamp duty land tax—I am thinking probably of licences or mortgages—are not caught.
Paragraph 12 could affect "every interest in land", presumably anywhere in the world. I suspect that that cannot be the intention, and the amendment seeks to correct what is probably an oversight. If it is not, will the Financial Secretary explain the reasoning and how the law could be enforced?
Ruth Kelly: I understand the reasoning behind the amendment—that the charge should apply only to UK land—and I emphasise that at no point has anyone sought to claim that stamp duty land tax will apply to land other than that in the UK. However, parliamentary counsel are aware of this issue and we are currently debating whether the definition is sufficient. We will fully consider it while the Bill is in Committee, and if an amendment is needed I shall certainly table one. On that basis, I hope that the hon. Gentleman will withdraw his amendment.
Mr. Prisk:
I am grateful to the Financial Secretary for her very positive response. This is an important issue and although a degree of pedantry can be involved in these matters, it is important to ensure that the primary legislation is crystal clear. We are dealing with a very complex area, and the danger of—dare I say it?—avoidance, loopholes and so on exists, particularly where international partnerships are concerned. In the
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light of what the Financial Secretary has said, I hope that she will ensure that such an amendment is tabled. On the basis of that assertion, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Prisk: I beg to move amendment No. 20, in page 549, line 7, at end insert—
'(c) any interest in land wholly or partly situated in disadvantaged areas which would be exempt from charge if disposed of at market value'.
Amendment No. 20 again refers to paragraph 12 of schedule 39, into which it seeks to insert a sub-paragraph (c). I understand from a wide range of professionals—including organisations such as the British Property Federation—that the Inland Revenue said during the consultation process that where land held by a partnership is situated in a disadvantaged area, disadvantaged area relief will apply to the transfer of an interest in a partnership, to the same extent that the underlying land would attract DAR if the land itself were transferred.
I suspect that the tax authorities feel that paragraph 22 achieves that purpose, but I and many professionals in the marketplace are concerned that the argument is not clearly accepted by legal opinion in the United Kingdom and, therefore, by those who advise our enterprises.
Mr. Eric Forth (Bromley and Chislehurst) (Con): I admire greatly my hon. Friend's desire, as shown in the previous amendment, to establish these matters beyond doubt; that is very important in a Bill such as this. In that spirit, is he satisfied that the term "disadvantaged", as used in his amendment, is a sufficient term of art to be accurate? Does it not require a capital D? As it stands, could it not be more widely interpreted than my hon. Friend intends? I should be grateful if he enlightened me on that point, and I shall keep my other question in reserve for just a moment.
Mr. Prisk: I am very grateful to my right hon. Friend for making that intervention, because in doing so he highlights a particular problem. We have to use the language of the legislation, and, of course, the term "disadvantaged" is embedded in it and does not necessarily have the wider meaning about which my right hon. Friend is perhaps concerned. It is specific to the Bill, and my right hon. Friend may decide whether that is a good or a bad thing.
Mr. Forth: I shall ponder my hon. Friend's reply. Will he help me further, because I am even more concerned about the "wholly or partly situated" provision in his amendment? That strikes me, if I may say so, as strikingly and alarmingly vague. Let us suppose for the sake of argument that the land in question was 1 per cent. situated in the so-called "disadvantaged" area and 99 per cent. outside it. In those circumstances, would my hon. Friend be satisfied that it should still be covered by the terms of his amendment?
4.30 pm
Mr. Prisk:
I am grateful to my right hon. Friend for helping me and, indeed, the Committee to identify weaknesses not only in the Bill but in the amendments
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tabled to it. It is always important that more recent arrivals in the House should listen with due care to their elders and betters. I am certainly happy to do so on this occasion.
There is a danger that a corner of an office block, for example, could be caught within the Government's definition of a disadvantaged area and be appropriate for relief. However, I understand that it is the whole address rather than any part of the hereditament that counts. I am therefore reasonably convinced that the concerns expressed by my right hon. Friend are needless. I am, of course, grateful to him for his contribution.
Will the Financial Secretary confirm that disadvantaged relief would be available in respect of a transfer of a partnership interest to the same extent as it would be if there were a transfer of the underlying property by the partnership? This is a probing amendment, with all the strengths and weaknesses rightly identified by the Committee, and I hope that the Financial Secretary will be able to provide sufficient clarification.
Mr. Forth: I accept the spirit of the amendment tabled by my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) and which stands in the name of many other eminent colleagues; I hope that they all read it before they signed it. Probing amendments are an honourable part of our proceedings—long may that remain so—but I hope that, as well as probing, they help to tease out the original intention of the provisions.
I must admit that I always worry when I see the word "disadvantaged". It may now be well established for all I know, but I worry that we should be giving such apparently wholehearted support to that concept in a Bill as important as this one. I am very much an even playing field sort of man and I have always had the gravest doubts about the philosophy that lies behind discrimination of almost any kind—whether it be in regional policy, local policy or whatever.
It is my hope that this great Conservative party, believing in—as I hope, in the 21st century, it still does—the virtues of capitalism, the ebb and flow of capital and other economic factors, would have at least some doubts about concepts such as "disadvantaged". Instead of accepting and embracing such a concept and building it into a probing amendment, I would hope that, even at this stage, we would be in the business of challenging it from time to time. For every plus to that sort of policy, there may be even more minuses or negatives. Has my hon. Friend given any thought to that? My first worry about the amendment is that we seem all too readily to be accepting the philosophy behind the term "disadvantaged", and then going even further by building it into our own amendments.
My second worry, as I implied in my earlier intervention, which my hon. Friend graciously accepted, is the rather loose terminology of "wholly or partly situated". I know that, in an attempt to satisfy me, my hon. Friend made a brave attempt at explaining it. However, you, Sir Nicholas, and I both know—and my hon. Friend also knows it—that, when we are dealing with amendments to something as important as the Finance Bill, words matter. Were this amendment to be accepted—the flaws that have already been identified
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leave me unconvinced that it should be—I should be worried about the interpretation of the phrase "wholly or partly", which seems to me to be loose in the extreme.
There is a risk, to put it no more strongly, that accepting the amendment into statute would lead to a beanfeast for the tax lawyers. The members of that group in society need little help from the House, as they get enough help as it is. I need to be convinced that the use of the phrase "wholly or partly" would do more than provide ample scope for endless arguments and disputes that would require expensive legal opinion and might even end up in our courts.
I came here full of good will for my hon. Friend, but it has ebbed away rather more quickly than either of us would have wished. Whether or not the amendment is a probing one, if there were the slightest risk that it might be accepted we could find ourselves in very dangerous territory. I look to the Financial Secretary to help the House and say whether the amendment holds water. If she persuades me that it does not, I hope that my hon. Friend will have a stiff word with those other Conservative Members who put their names to the amendment, and ask them to do better next time.
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