Appendix 2
S.I. 2006/959: Voluntary memorandum from HM Treasury
Income Tax (Trading and Other Income) Act 2005
(Consequential Amendments) Order 2006 (S.I. 2006/959)
1. The
purpose of this voluntary memorandum is to explain to the Committee
why there has been a breach of the 21 day rule regarding the laying
of this Order. The Order was prepared by Her Majesty's Revenue
and Customs ("HMRC") on behalf of Her Majesty's Treasury
and references to "the Department" below are references
to HMRC.
2. The Order was made on 29th
March 2006 and laid before the House of Commons on that date.
It came into force on 30th March 2006. This amounts
to a breach of the rule that an instrument should be laid at least
21 days before it comes into force. The Department acknowledges
that the Committee has therefore been deprived of the opportunity
of considering the instrument before it came into force.
3. This breach of the 21 day
rule was the result of an error. The error occurred when the drafter
of the completed draft Order sent it to colleagues in charge of
making and laying the Order. At that time the Order contained
an instruction at Article 1(2) which read:
"This Order shall come
into force on [insert day after laying]"
4. In adherence to that instruction,
the officer to whom it was addressed inserted "30th
March 2006". However, the instruction was incorrect. It
had been included at an earlier stage when a lawyer who was supervising
the drafting was misinformed about the Department's intentions.
The drafting lawyer did not appreciate that the instruction was
incorrect.
5. The Department very much
regrets this error and it apologises unreservedly to the Committee.
The Department notes that the error has had no practical effect
upon the period for which the Order applies for reasons given
in paragraphs 7-10 below. But the Department fully acknowledges
that the Committee would nonetheless have wished to consider the
Order before it came into force.
6. Accordingly, the Department
wishes to reassure the Committee that it will make every effort
to ensure that this avoidable error is not repeated in future.
7. The enabling power for the
Order is section 882(2) of the Income Tax (Trading and Other Income)
Act 2005 ("the 2005 Act"). This provides that the Treasury
may by order make such modifications of any enactment as the Treasury
consider appropriate in consequence of that Act.
8. The 2005 Act began the substantial
and complex task of separating the corporation tax and income
tax codes. Section 882 was included in the 2005 Act in order to
enable missed consequential amendments to other legislation to
be made quickly and easily.
9. The Order exercised the
powers contained in section 882 of the 2005 Act in relation to
the provisions of paragraph 3 of Schedule 12 to the Finance (No.2)
Act 1992, sections 143 and 161 of the Taxation of Chargeable Gains
Act 1992 and Schedule 3 to the Finance Act 2002. The consequential
amendments made by the Order had been inadvertently omitted from
Schedule 1 (consequential amendments) to the 2005 Act.
10. The omission of the consequential
amendments had no effect on the law owing to the continuity of
the law provisions in Schedule 2 to the 2005 Act. The amendments
made in the Order were for the purpose of clarifying the law.
They took effect retrospectively as if they had been made in Schedule
1 to the 2005 Act. The purpose of giving retrospective effect
to the amendments was to ensure that users of the Act would be
in no doubt that the law continued unchanged after the 2005 Act
came into force.
11. In summary, the Department
believes that this error will not of itself have a practical effect
on taxpayers but it much regrets the unintended breach of the
21 day rule and offers its full apologies to the Committee for
this.
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