Rob Marris: The Government amendments have been ably explained by the Paymaster General. As I understand them, they are mostly a tidying-up exercise. Amendments Nos. 4 and 6 are not so much about that. We have already dealt with amendment No. 3 under clause 291. For obvious, reasons amendment No. 5 was not selected, because it can be dealt with by a stand part debate on clause 294. My understanding is that, as a general indication, the lower the amendment number, the earlier it was tabled. That does not necessarily mean that amendment No. 4 was the fourth that was tabled, but there is a strong tendency that a low amendment number indicates an amendment that was tabled early. As I understand it, they are batched together. This is putting a slight gloss on it, but that suggests to me that four of the top six amendments—
The Chairman: Order. May I assist the hon. Gentleman? Amendments are numbered as they come in. They are grouped as they occur in the Bill.
Rob Marris: They are grouped as they occur in the Bill, of course. It is the numbering to which I refer. It is putting a slight gloss on the matter, but I think that four of the first six Conservative amendments deal with part 7 and are designed to make life easier for those who wish to run tax-avoidance schemes. I think that that is very telling.
Mr. Flight: The hon. Gentleman might be pleased to know that they were amendments that were suggested by Mr. Edward Troup, who is now working for the Treasury, on the ground that he felt that the Government's proposals were unsatisfactory from a legal point of view. They were tabled early because he knew that he was changing jobs and that he needed to table them in good time.
Rob Marris: I stand to be corrected but I do not think that Edward Troup tabled the amendments. That was done by hon. Members.
Mr. Flight: I will take that back, because I do not know whether it was true. However, I asked Mr. Troup to sort out the amendments early.
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Rob Marris: I think that that ably reinforces my point and I am grateful to the hon. Gentleman. Which amendments did he seek to be tabled early? The very ones that make life easier for tax avoiders. I rest my case.
Mr. Flight: I think that the hon. Gentleman raised an extremely unfair issue. Let me put the record straight lest there be misunderstanding. I consulted Edward Troup upfront about the measures relating to VAT and those relating to the clauses that we are discussing. I was unable to speak to him subsequently, because he advised me that he had changed his job. Therefore, I mis-stated what I said earlier.
Dawn Primarolo: I am sure that the hon. Gentleman would agree that anyone who works for the Government will be ensuring that the Government's policy is delivered, and will be in agreement with that.
Mr. Flight: I am sure what the Paymaster General has said is correct, but there are some technical issues to be dealt with. She has said that the point raised by amendment No. 4 is being dealt with in regulations. Therefore, we are at one. With regard to amendment No. 6, she said that she entirely understood the motivation and that, while the amendment did not actually work, she realised the thinking behind it. Neither of those amendments attempt to gain advantage for those seeking to avoid tax, nor do they achieve any. I think that the hon. Member for Wolverhampton, South-West has got his motivation wrong.
The Paymaster General resisted amendment No. 368, talking about avoidance schemes that are being promoted. If that is what these clauses are about, I have no disagreement with her. That has been the issue throughout. If we are essentially talking about avoidance schemes that are being promoted, we are on common ground. There is no problem reporting them within five days. The simple issue that I raise again is that it seems to me and to many others that the clauses and regulations, as they stand, include bespoke tax advice for situations such as takeovers. Things move around the whole time in such situations, where no one is concerned with pre-packaged schemes. The Paymaster General may appreciate that there are potential problems. If she is in effect confirming that we are talking about pre-packaged schemes, my case disappears. If she definitely wants the arrangements to continue potentially to encompass wide situations of tax structuring in relation to commercial activities, I will ask her to rethink as she works on the regulations, because the five-day period is impractical.
Mr. Burnett: The hon. Gentleman will have heard my intervention apropos amendment No. 368. Does not he agree that there could in some circumstances be a promoter who is unaware that the arrangements are for tax avoidance, or that the transaction concerned forms part of tax-avoidance arrangements, and that, in those circumstances, there should not be a liability on such a person?
Mr. Flight: Everyone knows when they are promoting tax-avoidance schemes. When lawyers and accountants give tax advice for takeovers and other commercial arrangements, we are into what I describe
Column Number: 733as grey territory. The whole debate throughout these clauses has been on where one draws the line, and I believe that that will be the problem with these provisions. One risks either a welter of reporting because advisers will want to ensure that they are not criticised for not reporting what they should have reported, and then the Revenue team will have an impossible burden to deal with; or, as we have argued, a greater filtering and sharpening up that leaves these clauses essentially concerned with tax-avoidance schemes that are promoted as such. If that is the name of the game, it is relatively straightforward, but it is because of the continuing greyness about how far into tax planning the reporting requirements go that both amendment No. 368 and the point made by the hon. Member for Torridge and West Devon arise.
If someone is advising the board of Marks and Spencer on the present takeover situation, and that advice includes tax issues—their advice on tax would be bound to include advice as to how to minimise tax—is that required to be reported?
Mr. Burnett: I am trying to think of a practical example to demonstrate what I said earlier. The Paymaster General has an amused look, but I am going to do my best. It could be that someone giving detailed corporate tax advice as a specialist gives a corporate plan, perhaps to comply with stock exchange regulations, and the plan is used and taken to tax specialists. There is such a level of expertise and specialisation in such matters regarding stock exchange rules, corporation and company law and tax law that a line must be drawn somewhere. I hope that the hon. Gentleman agrees that it is for the Paymaster General to ensure that the person who has to make the notification should be aware of the tax aspects of the case, and should be involved in dealing with them.
Mr. Flight: I thank the hon. Gentleman for that explanation, with which I agree. I accept that the Paymaster General has said things today that filter—I think that is the word she used—what is to be required quite significantly, but, at the risk of becoming repetitive, I must say that all the lawyers and accountants to whom I have spoken are concerned about where the boundary will be drawn.
As I have said three times already: my strongest advice, as the Government finish the regulations, is to focus on what the Paymaster General says—that where schemes are being promoted, everyone knows entirely what they are doing and will have no difficulty in reporting in good time.
Dawn Primarolo: Let us be clear. The hon. Gentleman is talking about amendment No. 368, which does not raise any of those issues. It raises only the issue of whether the period for notifying should be five or 30 days. I made the point that the promoter will know the relevant information at five days and at 30 days, so the period will be five days. He cannot seriously suggest that an adviser would give professional advice to a company without knowing
Column Number: 734what they were advising. That is simply incomprehensible.
Mr. Flight: The Paymaster General is being rather unfair, in that, in speaking to the amendment I made the point that if my point is taken, what is needed is a wider redraft of the clause that leaves a period of five days for promoters of schemes, and a more reasonable period for bespoke tax advice about deals. I also explained in some detail, and perhaps at too great length, the process of tax advice in a commercial deal takeover situation, and how it is completely different from the situations that she describes. This is not a huge point, but realistically, it will be difficult to get reports in within five days if accountants and lawyers giving advice in takeover situations think that they ought to report some tax structuring. I hope, from what she has said, that she is not expecting reports in those situations.
Dawn Primarolo: Can I just refer the hon. Gentleman to what I said about the revised regulations to be published and the exclusions from the definition of promoter? That deals with the question that the hon. Member for Torridge and West Devon raised about the separation of advice when dealing with company law aspects of a scheme as opposed to tax.
Mr. Flight: I am afraid that there is still a lack of clarity in a very simple area, which lies at the heart of concerns about the clauses. Unless the regulations filter rather more, there will be great problems, misunderstandings and concerns, not over the marketing of packaged schemes, if they continue to exist, but over tax advice on commercial deals. I am sure that the Paymaster General must appreciate that very simple point, and I will not repeat it ad nauseam. I do not find her language quite sharp or clear enough, but I hope that she is saying, in everyday language, that the arrangements are intended to apply to promoters and not to tax advice in the normal course of business or takeover activities. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: No. 558, in
No. 559, in
'notifiable arrangements implementing the notifiable proposal'.
No. 560, in
Clause 292, as amended, ordered to stand part of the Bill.
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