Finance Bill

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Mr. Spring: I thank the Minister for his explanation. Undoubtedly it will be read avidly by those who wish to pursue this matter. I hope that his answers will satisfy them. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 65 ordered to stand part of the Bill.

Clause 66

Vehicle excise duty: late renewal supplements

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

Mr. Francois: We are approaching the final lap and moving on to part 5. We dealt with clause 69 on the Floor of the House, so we need trouble ourselves no longer with that. That leaves us with three relatively non-controversial clauses in part 5. I shall comment on them only briefly.

Clause 66 relates to vehicle excise duty and varies the powers by which the Government can exercise sanctions against those who renew their VED late. I have a few questions for the Minister. We have received a representation from Mr. Paul Watters, the head of road and transport policy at the AA Motoring Trust. He stated:

    ''The AA Motoring Trust regards the 1 million or so uninsured, untaxed, wrongly registered users of vehicles a serious problem that must not be allowed to grow. That is why these initiatives are being taken. However, our support is conditional on the basis that DVLA modernises (and is given sufficient resources to modernise by government). We are pleased that DVLA has delivered customer service improvements for example, the new electronic road tax renewal system now coming on stream. It is a pity that some of the (close on) £1 billion so far raised in the sale of cherished number plates was not given back to DVLA to invest by Treasury.''

So, I offer that suggestion to the Minister.

Why is the clause amending measures that were passed as recently as in the Finance Act 2002? The clause is slightly confusingly drafted. What is the rationale behind the proposed change? We should know that, not least because the DVLA's business plan for 2005–06 has hardly anything to say about
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the change, which presumably would have been important to it. Given our theme of the afternoon, what steps have the Government and the DVLA taken to ensure that its computers can cope with the changes?

John Healey: The question of the proceeds from the sale of personalised number plates is rather far removed from the provisions of the clause. If the AA Motoring Trust genuinely regards the number of untaxed, unlicensed and uninsured vehicles on our roads as a problem that needs to be tackled—I am sure that it does—it will support the clause's strengthening of the continuous registration scheme.

The hon. Gentleman asked me why the provision was needed so soon after the Finance Act 2002. I shall be frank with him: at the time, it appeared to us that the Vehicle Excise and Registration Act 1994 would enable DVLA officials to act for the Secretary of State in processing court action. We found that that was not the case. The clause is designed to rectify the matter, and I hope that it will receive the hon. Gentleman's support.

Question put and agreed to.

Clause 66 ordered to stand part of the Bill.

Clause 67

Reorganisation of water and sewerage services in Northern Ireland

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

Mr. Francois: We now switch subjects completely. As I understand it, the state effectively still runs the water and sewerage services in Northern Ireland. Water rates are not levied separately but included in local taxation, which in Northern Ireland is still a variant of the old rating system, rather than the council tax that operates in England. In future, water rates are to be run and levied by a newly established company under the auspices of the Department for Regional Development in Northern Ireland.

The clause permits the relevant assets to be transferred to the company on a tax-neutral basis, with details of the transfer to be confirmed in subsequent regulations. The hon. Member for North Antrim (Rev. Ian Paisley) had something to say about that on Second Reading, but I shall not repeat it, not least because I cannot do the accent. The subject is obviously a matter of some concern to people in the Province.

The Paymaster General wrote to Committee members on 24 June to provide detail about what the regulations will cover, and we thank her for that courtesy. The Opposition are not opposed to the creation of the company or to the separating out of the water rates charge in line with the situation in much of the rest of the UK. However, as there are no Northern Ireland Members assigned to the Committee, I shall briefly press the Paymaster General on a few points.

The Paymaster General's letter mentioned that subsequent legislation would give effect to the reorganisation. It said:
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    ''The regulations required to deal with the tax consequences of the reorganisation of the Water Service will be determined by how the reorganisation is structured and the nature of the property, rights and liabilities transferred from the Water Service. The tax regulations will be made after the detail of the legislation dealing with the reorganisation is known.''

That seems the logical sequence of events. I appreciate that the legislation required is unlikely to be a Treasury Bill, but does the Paymaster General have any idea of when it will be forthcoming and when the tax regulations can be expected to follow? Finally—this is an important question, if only to exclude some of the possibilities—how, if at all, will the process be affected if a compromise is reached in Northern Ireland and some form of devolved Government restored?

The Paymaster General (Dawn Primarolo): None of the hon. Gentleman's questions are relevant to the clause. It simply provides that if, following consultation in Northern Ireland, the decision is taken to transfer to a wholly owned Government company, the transfer of the assets will be dealt with in the same way as transfers to new companies that are wholly owned by a Department. The legislation, the consultation and therefore the change is a matter for the Northern Ireland Office. The legislation, as requested by that Department, makes sure that if a wholly owned Department company is created, there are no tax consequences, which is normal practice.

Mr. Francois: I thank the Paymaster General for that explanation. As we have no Northern Ireland Ministers or Members in this Committee, it was an important point of principle that the clause should not be allowed to go by without some comment. I am sorry if she does not agree; we will have to agree to differ.

Question put and agreed to.

Clause 67 ordered to stand part of the Bill.

Clause 68

EU Mutual Assistance Directive: notifications

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

Mr. Francois: We switch again, from Northern Ireland to clause 68 on the EU mutual assistance directive, which was first introduced in 1977 and essentially permits the Inland Revenue or Customs—now HMRC—to deliver documents to taxpayers on behalf of other EU revenue authorities in return for reciprocation by other EU member countries on a similar basis.

The directive has been amended over the years to increase its scope—for example, to cover VAT, insurance premium taxes and certain customs duties and to take account of new countries joining the EU. Although I am often wary of the plethora of directives emanating from Brussels, many bilateral tax treaties, including those relating to EU and non-EU countries, already have exchange of information provisions.
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I confirm that we Conservatives will not be calling for a nationwide referendum on the clause, and the Paymaster General can stand down the yes campaign. Is she confident, however, that there nothing in the new clause would affect the normal confidentiality arrangements that apply to UK citizens who may receive documentation by this method, bearing in mind that confidentiality has cropped up a number of times in our proceedings over the past two weeks?

Dawn Primarolo: I can confirm that the original legislation was introduced in 1977. There were changes in the 1980s, followed by more changes in 2000, but the most substantial changes occurred during the period of the Conservative Government. This provision is the last piece and completes the change.

I assure the hon. Gentleman that confidentiality enshrined in legislation that has gone through this House in the formation of HMRC is in no way undermined or compromised. The process is conducted within the terms of the directive under strict confidentiality rules.

Question put and agreed to.

Clause 68 ordered to stand part of the Bill.

New clause 1


    '(1) This Chapter shall not have effect in respect of any company falling within either section 24(1) or section 26(1), in any case where the commissioners for Her Majesty's Revenue and Customs have on application of the company notified the company that the Board are satisfied that the transaction does not have a main purpose of achieving a UK tax advantage.

    (2) Any application made under subsection (1) above shall be in writing, delivered either by post or by electronic mail, and shall contain particulars of the operations that are to be effected and the Commissioners may, within 30 days of the receipt of the application or of any further particulars previously required under this subsection, by notice require the applicant to furnish further particulars for the purpose of enabling the Commissioners to make their decision and if any such notice is not complied with within 30 days or such longer period as the Commissioners may allow, the Commissioners need not proceed further on the application.

    (3) The Board shall notify their decision to the applicant within 30 days of receiving the application or, if they give a notice under subsection (2) above, within 30 days of the notice being complied with.

    (4) If the Commissioners notify the applicant that they are not satisfied that the transaction in question does not have a main purpose of achieving a UK tax advantage or do not notify their decision to the applicant within the time required by subsection (3) above, the applicant may within 30 days of the due date for a decision in accordance with this section require the Commissioners to transmit the application, together with any notice given and further particulars furnished under subsection (2) above, to the Special Commissioners and in that event any notification by the Special Commissioners shall have effect for the purposes of subsection (1) above as if it were a notification by the Commissioners.

    (5) If any particulars furnished under this section do not fully and accurately disclose all facts and considerations material for the decision of the Commissioners or the Special Commissioners, any resulting notification of a decision by the Commissioners or Special Commissioners shall be void.'. —[Mr. Philip Hammond.]

Brought up, and read the First time.

Motion made, and Question put, That the clause be read a Second time:—
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The Committee divided: Ayes 9, Noes 13.

Division No. 6]

Field, Mr. Mark Francois, Mr. Mark Hammond, Mr. Philip Hammond, Stephen
Huhne, Chris Kramer, Susan Newmark, Mr. Brooks Spring, Mr. Richard Williams, Stephen

Austin, Mr. Ian Balls, Ed Flello, Mr. Robert Goodman, Helen Healey, John Lewis, Mr. Ivan McCarthy, Kerry
McFadden, Mr. Pat Marris, Rob Morden, Jessica Primarolo, Dawn Tami, Mark Watson, Mr. Tom

Question accordingly negatived.

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