Previous SectionIndexHome Page

Stephen Hammond: I am grateful to the hon. Gentleman for giving way yet again. He mentions tax advice. On Second Reading and in Committee, we
15 Dec 2005 : Column 1496
developed the point that we have changed to a general anti-avoidance regime and that a tax clearance scheme from Her Majesty's Revenue and Customs or the Treasury should therefore run in parallel with that.

Rob Marris: That is way beyond the scope of the amendments. I am prepared to discuss it with the hon. Gentleman if we have time in the Chamber, or outside the Chamber, but it would not be appropriate to consider general clearance now.

Mr. Chope: Before the hon. Gentleman allows us to believe that there is nothing wrong with the date of 2 December 2004, does he accept that the Institute of Chartered Accountants said:

Rob Marris: I have no reason to doubt that such words were said—I think by the Chartered Institute of Taxation—but it does not mean that I agree with them. Professional advisers should have warned those who were about to engage on the schemes or devices of the risk, and I am sure that many reputable advisers did so. If they did not warn of the risk, they could be sued because of effects that were unknown to the individual who entered into a device. If the advisers warned of the risk, the individual entered into it with eyes wide open and knew that the House could introduce a change in the law.

Mr. Mark Hoban (Fareham) (Con): Given the time that has been spent on this first group of amendments, and the importance of the succeeding groups, I do not want to spend too much time on this group.

I shall comment first on amendments Nos. 1, 4, 7, 10 and 11, tabled by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), which deal with consultation. I share my right hon. Friend's view that tax legislation should be based as far as possible on consultation. It is important that good legislation should reflect discussions that the Treasury has had with tax advisers, professionals and representatives of industry, so that their views can be taken on board. The Treasury has a fair record of consultation with external bodies. Indeed, when retrospective taxation was discussed in the debates on what became the Finance Act 1978, one of the preconditions of retrospective taxation in trying to close tax loopholes was that there should be consultation with professional bodies and institutions. That is an admirable principle, and it is usually followed. However, it is not always followed. My hon. Friend the Member for Christchurch (Mr. Chope) highlighted, in his brief intervention on the hon. Member for Wolverhampton, South-West (Rob Marris), the view of the Institute of Chartered Accountants that, based on the Paymaster General's statement of 2 December 2004, no one would have expected the Bill to have taken this form. So, surprises do occur, despite the efforts of the Treasury, and sometimes legislation does not take the form expected by those who take a keen interest in these matters, both inside and outside the House.

Dawn Primarolo: I am sure that the hon. Gentleman will have noticed that the tax part of this anti-avoidance
15 Dec 2005 : Column 1497
measure was in the Finance (No. 2) Act 2005. It was linked to the 2 December 2004 statement, and it was made absolutely clear at that time that there would also be a national insurance part.

Mr. Hoban: At this early stage, I am loth to break the   spirit of consensus that my right hon. Friend the Member for Bromley and Chislehurst accused the Government Front Bench of creating. However, while the Paymaster General believes that those comments were clear, they were not as clear or explicit to others as she would like to think.

I understand why my right hon. Friend has tabled these amendments requiring consultation with the commissioners to appear in the Bill, but, for some of the reasons that he elaborated earlier, I question whether the Commissioners of Revenue and Customs are the right people to consult. He identified their remit and scope from the Act that was passed earlier this year. I put it to him that the short list in amendment No. 2—which was not selected for debate—might have made a better list of parties to be consulted than those referred to in these amendments.

My hon. Friend the Member for Christchurch tabled amendments Nos. 14 and 15 to tackle the question of whether the Treasury should act in an "expedient" or a "reasonable" manner. He has done the House a great service by offering an alternative approach to discussing these matters and to determining who should be the judge in such cases. I shall not trade dictionary definitions with hon. Members, but my hon. Friend and others have flushed out some interesting issues about expediency and reasonableness. I am sure that those whose job it is to implement and follow this legislation will be interested in what the Paymaster General has to say about this.

One issue on which we might want to touch for a moment is the suggestion of the hon. Member for Wolverhampton, South-West that morality does not necessarily play a role in taxation. His strictures on the City of London and avoidance schemes, however, suggest that he applies his view of morality when he chooses.

3 pm

Rob Marris: I think that the Official Report will show—obviously, I stand to be corrected—that I only mentioned the City of London in response to an intervention. I did talk about rich people in relation to the legislation, but I never mentioned the City of London except in response to an intervention.

Mr. Hoban: I apologise for using the hon. Gentleman's remarks in response to an intervention. Next time we come on to the topic, perhaps I should refer to rich people, and that will make him happy. It just shows the problems of responding to interventions from the Opposition, or from the Government Benches, depending on the side of the House on which one sits.

Dr. Vincent Cable (Twickenham) (LD): I want to support amendment No. 14, which seems reasonable and sensible—"reasonable" is the operative word.

We are considering the principle of retrospective taxation. The hon. Member for Wolverhampton, South-West (Rob Marris) has referred to that being
15 Dec 2005 : Column 1498
applied in this case against fat cats. One can support the principle, but it might be applied to fat cats today and poor people tomorrow. There is an underlying principle of retrospection that must naturally concern us.

It might particularly worry the right hon. Member for Bromley and Chislehurst (Mr. Forth) that his position has quite a lot of support not just from me but from the European Court of Justice. He did not cite that in his defence, but European law, not just the Magna Carta, appears to have some concerns in this area. On Second Reading, I quoted a relevant passage from an April judgment by the Court, which was important and would be applied by anybody seeking to use the law in relation to this Bill. It made two points, one unequivocal and the other more nuanced.

The unequivocal point was that

That makes it clear that infringement of legitimate expectation by retrospective legislation is unacceptable in legal terms. The more nuanced expression, on which the legal battles will ultimately be fought, was that

that is, retrospectively—

We are concerned with trying to build into the legislation the maximum possible protection for those legitimate expectations, to ensure that they are respected. Something that is merely expedient from the standpoint of the Treasury, which is practical from its point of view and helps it to garner more revenue—which, of course, we support in a broad sense—is dangerous when applied to that principle. Building in the limited protection that would be given by the word "reasonable" seems the very minimum that one could ask. The hon. Member for Christchurch (Mr. Chope) is therefore to be commended for tabling the amendment, and I will certainly support it.

Dawn Primarolo: This has been a long and broad debate, covering a number of areas. I want to touch on each of them in responding to the amendments. First, I need to remind the House of the context of the proposals that we are considering this afternoon.

Both the right hon. Member for Bromley and Chislehurst (Mr. Forth) and the hon. Member for Christchurch (Mr. Chope) referred to the question of whether this action was just or right, and the hon. Member for Christchurch spoke about using the mechanism to raise higher national insurance. I remind the House that between 1998 and 2005, both the Conservatives and the present Government produced anti-avoidance legislation in Finance Bills to counter an abuse of tax and national insurance, particularly involving high-value bonuses. Individuals were seeking to disguise their bonuses in order not to declare them as salary, or employment remuneration. They tried to conceal the bonuses, or pretended that they had received
15 Dec 2005 : Column 1499
the largesse for some other reason and that therefore it was not subject to the normal, straightforward rules of national insurance and tax.

Next Section IndexHome Page