Clause
22
Aggregates
levy: exemption for aggregate removed from railways
etc
Question
proposed, That the clause stand part of the
Bill.
Mr.
Goodman:
I simply want to ask for the tonnage of aggregate
to which the Treasury expects the exemption to apply to be put on the
record.
The
Financial Secretary to the Treasury (John Healey):
As the
Committee knows, the aggregates levy is designed to bring environmental
benefits by making the price of aggregates better reflect their true
environmental costs, and therefore encouraging recycling and the use of
alternative
materials.
The clause
introduces a new exemption from the levy for aggregate removed from the
ground along the proposed line of a railway, tramway or monorail in the
course of maintaining, constructing or improving it, provided that the
aggregate was not excavated purely for the purpose of extracting it. It
makes the treatment of railways, tramways and monorail consistent with
those of the construction and maintenance of highways. It is also
consistent with the environmental rationale, which is to give aggregate
produced as a by-product a commercial advantage over directly quarried
aggregate.
We expect
that the cost of the revenue exemption in the clause is unlikely to
exceed £3 million each year. We treat that as an estimate,
therefore there are no specific calculations of the tonnage that will
be affected. I hope that is sufficient information for the Committee to
accept the clause.
Question put and agreed
to.
Clause 22
ordered to stand part of the
Bill.
Clause 23
ordered to stand part of the
Bill.
Schedule
2 agreed to.
Clause
24
Landfill
tax: bodies concerned with the
environment
Question
proposed, That the clause stand part of the
Bill.
Mr.
Goodman:
Members of the Committee will see from the
explanatory notes that the clause gives powers to Entrust—it is
not actually named in the notes, but it is the regulatory body that
oversees environmental bodies that make use of the landfill communities
fund—and to HMRC, which oversees Entrust. The scheme, which
allows a portion of the landfill tax to be given to local community
social and environmental schemes, was reformed in 2003 following fears
that it was being abused to some degree. The HMRC website lists further
changes that the clause will bring about. How many environmental bodies
had their approvals by Entrust revoked in 2004-05 and during subsequent
years, and what is the cost of administering the
scheme?
John
Healey:
The clause should improve the operation of the
landfill communities fund, which was known until last year as the
landfill tax credit scheme. Every member of the Committee will have a
significant number of projects or schemes in their constituency that
have been supported in recent years by the landfill communities
fund—valuable projects, such as improving, building and
repairing village halls, churches or historic buildings, or providing
sports facilities, cycle trails and wildlife sanctuaries. Since the
fund was set up, it has received £875 million towards such ends,
providing projects and schemes that benefit a spectrum of our
communities.
HMRC approves
a regulatory body to oversee the fund. Currently, that body is Entrust.
We have not specified Entrust in the legislation, because, as the hon.
Gentleman will recognise, there might be circumstances—although
we do not have this planned—in which the regulator body would
change. It does not seem sensible, therefore, to specify Entrust in the
legislation.
Entrust
oversees a fund that we increased in the Budget by a further £5
million, so that it will be worth £65 million in this coming
year. It already works to conditions agreed by HMRC that are contained
in its terms of approval, which is a document agreed between HMRC and
Entrust each year. The statutory instrument provided for by the clause
will enable the commissioners to impose enforceable conditions. In the
event of a failure to observe those conditions, they may take steps in
extremis to revoke the approval of the regulatory body.
The statutory instrument will
give a binding effect to any targets or performance measures that the
commissioners might wish to see from Entrust. It will also allow
Entrust to add or remove conditions on environmental bodies in line
with best practice and the principles of better regulation. Under the
conditions of its approval, Entrust will now have to provide the
commissioners with advance notice and obtain their agreement to any
general conditions it intends to impose on environmental
bodies.
The first
condition that is being added will require environmental bodies to
provide project details in advance of spending. That is already
established as best practice and is followed in the vast majority of
cases. However, at present when it is not followed and when there is
resistance from the environmental body, Entrust is not in a situation
in which it can require that the environmental body follows those best
practices. Indeed, as things stand, an environmental body that was
determined not to follow the best practices as set out by the regulator
could challenge Entrust’s ability to insist on them. The clause
and the regulation that stems from it will remove that uncertainty and
reinforce Entrust’s hand, quite rightly, in ensuring that
environmental bodies follow the best practice that it sets. There is
negligible cost to the Exchequer from the changes.
The hon. Gentleman simply asked
how many environmental bodies had had their approvals revoked in
2004-05. A very small number have had them compulsorily revoked. My
estimate, from dealing with this territory in the past few years, is
fewer than five, but, if he will accept this way of dealing with
things, I shall write to him if I recover further information from
HMRC.
12.30
pm
The statutory
instrument goes wider than the clause, but it came into effect on 1
April, in line with, and in time for, Entrust’s new financial
year, and the business plan that applies to it.
Question put and agreed
to.
Clause 24
ordered to stand part of the
Bill.
Schedule
3
Managed
Service
Companies
Mrs.
Villiers:
I beg to move amendment No. 38, in
schedule 3, page 90, line 16, after
‘payments’, insert ‘for a year of
assessment’.
The
Chairman:
With this it will be convenient to
discuss the following amendments: No. 39, in
schedule 3, page 90, line 19, after
‘services’, insert ‘for that year of
assessment’.
No.
40, in
schedule 3, page 90, line 21, leave
out from ‘person’ to ‘the’ in line 22 and
insert
‘whose sole or
main business is the provision and facilitation
of’.
No. 41, in
schedule 3, page 90, line 23, leave
out ‘involved with the company’ and insert
‘regularly involved with all or
most aspects of running the company on an ongoing
basis’.
No. 42,
in
schedule 3, page 90, line 24, at
end insert—
‘(1A) In
considering whether a company is a managed service company within the
meaning of subsection (1), no regard shall be had to any other
companies with which the MSC provider is
involved’.
No.
43, in
schedule 3, page 90, line 35, leave
out ‘subsection’ and insert
‘subsections’.
No.
44, in
schedule 3, page 90, line 35, after
‘(1)(d)’, insert ‘or
(2)’.
No. 45,
in
schedule 3, page 90, line 36, leave
out from ‘providing’ to end of line and insert
‘services of a nature provided by
advisers in a professional capacity, including legal, accounting and
company secretarial
advice.’.
No.
46, in
schedule 3, page 90, line 36, at
end insert—
‘(3A) For the
purposes of subsection 3, accounting advice includes, but is not
limited to, advice and assistance
concerning:
(a) preparation or
provision of records, returns, financial statements, reports or
financial information concerning
accounting;
(b) auditing,
insolvency or taxation
matters;
(c) communication and
representations made on behalf of a client to third parties in matters
concerning accounting, auditing, insolvency or
taxation.
(3B) The Treasury may
by order provide for a non-exhaustive list of professional services
which fall within the meaning of subsection (3) and (3A)
above.
(3C) The Treasury may
not make an order under subsection (3B) unless a draft of it has been
laid before and approved by a resolution of the House of
Commons.’.
Government
amendment No. 97
No.
47, in
schedule 3, page 91, line 2, at
end insert—
‘(3A) An MSC
provider may be a partner in a partnership (other than the individual
referred to in section 61B(1)(a)) and may, for the purposes of section
61B(1)(d), carry on, through the
partnership, the business of promoting or facilitating the partnership
to provide the services of
individuals.’. No.
48, in
schedule 3, page 92, line 2, leave
out ‘mentioned in section 61D(1)(b)’ and insert
‘which satisfies both section
61D(1)(b) and section
61D(1)(c).’.
Mrs.
Villiers:
It is a pleasure to address the Committee in the
pre-lunch graveyard slot. Schedule 3 provides for the insertion of new
section 61B into the Income Tax (Earnings and Pensions) Act 2003, which
contains conditions setting out the definition of what is known as a
managed service company; that is the focus of this measure. Where the
relevant conditions are satisfied in relation to a particular company
it will be obliged to account for PAYE and national insurance on
payments that it has made in connection with the services of the
workers whose services it provides.
If the company does not make
those payments, schedule 3’s proposed new section 688A of ITEPA
allows HMRC to pursue certain third parties for the tax liability. The
provisions represent the Treasury’s latest attempt to police the
borderline between those operating and providing services of a
freelance and contracting nature through companies, and those who are
employed. They are a successor to chapter 8 ofpart 2 of ITEPA,
the controversial measure commonly referred to as
IR35.
Stephen
Hesford (Wirral, West) (Lab): The hon. Lady will recall
our debates in the House on clause 25. She and I discussed IR35, which
she has now conveniently mentioned. I said to her that Opposition
Members had overplayed its problems, and were overplaying the problems
with the schedule, and that no one had ever approached me in my
constituency subsequent to the previous so-called row.
After I said that, one of the
so-called organisations that she seeks to represent put on its website
a message encouraging people in Wirral, West to contact me if they had
had problems with IR35, because I had said that there had not been any.
No one contacted me, except one person who turned out not to be my
constituent. What she is about to say is overplaying the problems with
the
schedule.
Mrs.
Villiers:
I do not accept that we are overplaying concern
about schedule 3, and I shall refer to some of the contractors who have
been in touch with me about the fact that their work is in jeopardy and
they are suffering problems because of the schedule and the uncertainty
associated with it. I understand that IR35 has cost an incredible
amount of money and time in compliance checking. It is regrettable that
the Government have always refused to publish any information on the
revenue that they have collected through IR35, given the significant
compliance burden that it has placed on every contractor; every time
contractors enter into a contract with an end client they must check.
That costs money. I am not convinced that the revenue raised as a
result has justified that compliance cost.
The
Opposition are happy to support properly targeted attempts to crack
down on abusive behaviour in that area. However, we are concerned that
legitimate freelance workers who are genuinely in business on their own
account will be hit by schedule 3 where they choose to outsource
functions relating to the service company with which they are
connected. Similar concerns have been expressed by a range of bodies,
including the Institute of Chartered Accountants in England and Wales,
the Chartered Institute of Taxation, the Law Society, the Professional
Contractors Group, the London Society of Chartered Accountants, the
Institute of Directors and the Association of Technology Staffing
Companies. The goal
of the amendments that we have tabled is to prevent the new framework
from biting on genuine freelance workers who are not in a disguised
employment relationship. We also seek to ensure that those
professionals who advise freelancers and small service companies are
not unwittingly or unfairly caught up in the legislation and made
liable for the tax debts of their clients. Lastly, we seek to prevent
the serious damage that could be caused to the flexibility of the UK
labour market if staffing companies and the end clients who engage
contractors find themselves at risk as a result of schedule
3.
Above all, we will
be seeking clarity and certainty from the Minister about what his
legislation means. That is an incredibly important task for the
Committee—even more important, dare I say it, than in our
previous debate on how many zero-carbon homes there might or might not
be. The confusion surrounding schedule 3 is causing enormous anxiety
and it is already costing people their jobs. To illustrate that, as I
told the hon. Member for Wirral, West, who intervened earlier, I will
refer to just three of many representations that I have received from
people worried about the proposals.
Ian Preece, director of
Greybeard Consulting Ltd, told me:
“the biggest issue I have with the
proposed legislation is the fact that it is impossible to understand if
you will be ‘caught’ or not. Therefore trying to
understand if I will be affected or not is akin to gazing into a
crystal ball.”
Andrew
Frith of AFMS, an IT consultancy based in the north-west, told
me:
“We seem
to have fallen victim to the new MSC regulations even though the
legislation is not yet on the statute books and in any case would not
seem to directly affect our company at all. The problem is that due to
the transfer of debt provisions...recruitment agencies are not prepared
to deal with us ‘just in case’ we come within the
provisions. Our supply of new work for our consultants has dried
up...we are now making a significant loss and have already had to
take action by giving notice to our newest
recruit.”
Chris Cumber,
who runs a small contracting business, said:
“My concern is that my
accountant appears unable to answer my question ‘Does his
involvement make my company an MSC?’. I seem to be spending more
and more time worrying about uncertain taxation and less time actually
producing income for my company. The latest attempt is badly
worded...and designed...to have us contractors running around like
ants”.
He concluded on
this pessimistic
note:
“It will
all end in tears with some case-law, which is totally
counter-productive for the Chancellor’s coffers and for us
contractors”.
Having
introduced the general issues, I will deal with amendments
Nos. 40, 41, 45 and 46, which go to the heart of the concerns
that I have set out. Subsection (1)(d) and subsection (3) of proposed
new section 61B, which these amendments seek to amend,
play a central role in determining the scope of the provisions under
discussion. Paragraph (d) states that a company becomes an MSC if it is
involved with “an MSC provider”, which is defined as
someone who “carries on
a business of promoting or facilitating the use of companies to provide
the services of individuals”.
Subsection (3) provides a limited
carve-out from paragraph (d) for certain professional
advisers.
Amendments
Nos. 40 and 41 would restrict the scope of paragraph (d) so that it
bites only where someone
“whose sole or main business is
the provision and facilitation of”
the use of companies to provide the
services of individuals,
is
“regularly involved
with all or most aspects of running the company on an ongoing
basis”.
Amendments Nos.
45 and 46 would clarify the ambit of the protection afforded to
professionals under subsection (3).
Those four
amendments seek to address the concern that the definition of MSC
provider is very wide, and would catch anyone involved in setting up
companies as part of their business—for example, lawyers,
accountants and company secretaries. The amendments tackle an important
flaw in the legislation, in that it could hit genuine freelancers who
choose to outsource aspects of the management of the companies through
which they work. Without clarification, paragraph (d) could also impose
significant risks on those who regularly advise freelance workers and
it would leave them potentially liable for the tax debts of their
clients, as well as leaving them at risk of being sued by other people
who might be drawn into the MSC net or the third-party debt rules as a
result of the professional adviser’s activities.
The danger is
that that will drive up the cost of professional advice for small
companies, as advisers withdraw from the market or charge higher fees
in order to compensate for the increased risk that they are
undertaking. The intention behind the four amendments is to ensure that
the legislation does not impose unreasonable restrictions on
contractors who want to outsource administrative functions in relation
to their service companies and that ordinary professionals on a
day-to-day basis are not included in the definition of MSC
providers.
The key
question that the Committee needs to address is how do we ensure that a
sensible line is drawn between those professionals operating on an
ordinary, day-to-day basis and the dubious operators whom HMRC wants to
shut down. The Institute of Chartered Accountants has highlighted,
naturally, some of the problems that its profession faces. It points
out that many accountants will recommend a corporate structure to a
client, provide them with an off-the-shelf company for that purpose and
then go on to carry out the necessary company secretarial
services.
Without
clarification of the legislation, it would appear that a professional
accountant who advises her client to incorporate in that way is
“promoting” the use of companies under paragraph (d). If
she provides an off-the-shelf company for that purpose, she is
“facilitating” the use of companies under
that
paragraph. However, as the Institute of Chartered Accountants points
out, those activities are an incidental part of a professional
accountant’s business of providing an all-round service to the
client. Considerable
concern has been expressed about the wide scope of the concept of
“promoting” in paragraph (d). If accountants provide
services relating to company structures, will advertising those
services automatically bring them within the scope of paragraph (d)?
Arguably, promoting services relating to setting up companies is
promoting the use of those service companies, which could pull them
into the scope of the MSC provisions. Any clarification the Minister
can give on what “promotion” means and how it will
operate in practice would be very
welcome.
Subsection
(2) of proposed new section 61B introduces a second concept:
influencing. The problems in this area are compounded by
newsection 61B(2), with its broad concept of involvement with
a company. It is focused around the concept of
“influence”, yet any professional adviser could be
expected to influence their client. People do not go to professional
advisers and pay them large fees unless they are considering acting on
their advice. Advice and influence are inextricably linked. In
particular, many advisers will give clients advice on the best way to
make payments. That could bring them within new subsection (2)(c).
Surely it is not worth engaging an accountant unless they have at least
some influence over the company’s finances or activities. That
seems to bring them within the scope of new subsection
(2)(d).
The solicitors
Blake Lapthorn Tarlow Lyons, advising members of the Association of
Technology Staffing Companies, commented on the influence
tests:
“Note
that it is enough for any one of these (still rather sweeping and hard
to interpret) tests to be satisfied.
They do not all have to be
satisfied.
Clearly
this captures many so called Personal Service Companies who thought
that they would be outside the new legislation...The test can be
satisfied by the fact of the MSC provider receiving ongoing payments
linked to the contractor’s ongoing services, or
‘influence’ over how payments are made or activities
carried out.
Therefore it is intended that
the only types of PSC who are outside the new regime are ones who
genuinely do not use third party assistance to setup or operate or
manage their
PSC.”
There
is at least a risk that the concept of influence could be so broad as
to cover insurance companies. By way of illustration, selling insurance
to small service companies, for example to cover professional risk,
certainly facilitates the use of such companies, which could pass the
test set out in paragraph (d) of proposed new section 61B. However, an
insurance company that sells such policies to contractors may lay down
particular rules and working practices to mitigate risk. Does that mean
that the insurance company is “influencing” within the
meaning of subsection (2)(b)? There is therefore a danger that it could
become liable for the tax debts of the companies it insures. As an
insurance company, there is no way it could get the protection of
subsection (3), because it cannot be described as offering services
relating to accounting or legal services.
12.45
pm
Similar
problems occur for company formation agents. A core part of their
business is setting up companies. Again, their services facilitate the
use of companies that provide the services of individuals. It seems
that the legislation is not intended to bite in that way. It is not
intended to hit ordinary accountants, insurers or company formation
agents who just happen to be providing services to small service
companies as part of their
business.
HMRC seems
to have indicated that the target of the legislation is those who set
up companies to provide the services of individuals as a discernible
and core part, not an incidental or occasional part, of their business.
Amendment No. 40 translates that informal indication into the wording
of the legislation. Proposed new section 61B(1)(d) would catch only
those whose sole or main business is providing or facilitating the use
of companies through which to provide the services of individuals. It
is these specialists that HMRC seems to be concerned about. The
Opposition believe that amendments Nos. 40 and 41 would greatly assist
in targeting those providers, while leaving other advisers outside the
scope of the legislation.
HMRC has also indicated that
the average accountant, company secretary, or formation agent would not
be caught by the legislation, because they are not sufficiently
involved with the company, even if they have set it up and run its
books and statutory returns. It seems to want to focus on someone who
takes over all the activities of the company, so that its ostensible
proprietor has no meaningful involvement. Why not make this clearer in
the legislation? The situation the Government seem to want to get at is
where the company is essentially the creature of the scheme provider.
In seeking to draw a distinction between what they describe as
“personal service companies” and “managed service
companies”, they seem to be concerned about a situation where
the worker does not really have any involvement with the company at all
and the company is the emanation of the scheme provider and not a
genuine going concern.
Amendment No. 41 would give
real substance to that interpretation by stating that companies would
be caught in the definition of an MSC provider only if they are
regularly involved in almost all aspects of the way the company works.
Situations where the company is a genuine going concern and the worker
has merely decided to outsource an aspect of running it, are less
likely to be hit if the Committee were prepared to accept amendment No.
41.
It is not enough
for HMRC to issue guidelines which seek to remove and mitigate some of
the risks, which I have just outlined, for both contractors and their
professional advisers. Guidance does not give enough certainty. Firms
under risk of falling within the MSC provisions are under significant
financial and legal risk to the last penny of their personal wealth.
They are likely to have to make significant provision for litigation
risk, and there are indications that the risk may be uninsurable.
Guidance cannot be litigated in court, so there will be no
clarification through legal proceedings. As the Institute of Chartered
Accountants of England and Wales has pointed out:
“There is no substitute
for having a legal definition.”
Clarification of what this provision means
is needed now and not in two or three years’ time, when a case
may have made its way through the courts.
I turn now to the closely
linked issue of the safe harbour for professional advisers in
subsection (3), because the Minister will no doubt tell me that that
sorts out all the problems. If amendments Nos. 40 and 41 were adopted
to rein in the scope of paragraph (d), most of the problems in relation
to professional advisers would fall away and the scope of the safe
harbour in subsection (3) would become much less important. However,
amendments Nos. 45 and 46 seek further clarification on the safe
harbour for professionals and the meaning of
“providing legal or accountancy
services in a professional
capacity.”
Amendment
No. 45 would broaden the range of professionals who could use the safe
harbour, while retaining the focus on services provided in a
professional capacity, such as through a practice. Amendment No. 46
would set out some of the services that will not trigger problems with
the MSC legislation. Given that the real difficulty in finding a
general formulation that covers the wrongdoers but leaves the innocent
adviser outside the framework, setting out a non-exhaustive list of
services could be one of the simplest and most effective ways to give
the clarity and certainty that we so badly need here. It would give
critically important assurance and guidance to those who want to comply
with the
legislation.
Proposed
new subsection (3)(b) would also give the Treasury power to set out in
secondary legislation further examples of services that professionals
could safely provide without incurring any risk of the MSC legislation.
Parliament would also have the chance to keep a close eye on how the
legislation is working in practice when the secondary legislation came
to it for scrutiny.
The simple question for the
Committee to consider is what types of services can accountants,
lawyers and other professionals continue to offer to small service
companies without losing the protection of the safe harbour set out in
subsection (3). There seem to be at least three possible approaches.
First, a narrow one, which says that a safe harbour covers only basic,
traditional accounting services and legal services, such as
bookkeeping. Secondly, there is a wider definition that could cover any
services ordinarily provided by accountants. The third approach would
cover accountancy services ordinarily provided in the course of an
accountancy business.
We need much greater
clarification on services, such as invoicing and routine tax advice,
company secretarial services and IR35 compliance checking, and on which
side of the divide they fall. Accountants frequently perform many of
those services, so a wide interpretation would not cause a problem.
However, if a more restrictive interpretation is correct, setting up
companies and company secretarial services might fall outside the safe
harbour and leave the accountant at risk of
liability.
Stewart
Hosie:
The hon. Lady is making a good case, but she seems
to be narrowly focusing on accountancy in general and not on
secretarial services. In the case of many contractors, the agents whom
they instruct may
well advise them on specialist training courses before, for example,
taking an offshore North sea job. They could be advised on
accommodation, if they were going to take a job in engineering or a
contract job in the middle east. Those are perfectly legitimate things
to do in the early stages of acquiring a contract, so should we not
agree that the scope of the exemptions must be as wide as possible
rather than using the narrow definition for
accountancy?
Mrs.
Villiers:
If I understand it correctly, the hon. Gentleman
is concerned about the position of employment agencies and staffing
companies, which I shall come to in due course. He is absolutely right
to say that it is not only accountants and lawyers under consideration
here. We must ensure that we get clarity from all the relevant parties,
or contractors are going to find life very difficult—their costs
will increase and the flexibility of the UK labour market will be
damaged as a result.
I
have a series of questions for the Minister about what is meant by
“in a professional capacity” in subsection (3). First, is
it the nature of the services provided that determines whether someone
is an MSC provider, or is the question determined by the qualification
of the professional status of the person providing the service? If
someone is providing services “in a professional
capacity”, do they fall outside the MSC provider definition,
regardless of what services that they perform? Is it possible for
anyone who is not part of a regulated profession to use the subsection
(3) safe harbour? Do people need a current practice certificate in that
profession to use the safe harbour? Does one need to be part of a
traditional professional practice? What about accountants and other tax
professionals, who are not registered but who are instead employed
in-house? And to what extent can service providers outside the remit of
the traditional professional set-up use the safe
harbour?
That brings
me to a series of questions about accounting service companies, which
have emerged in recent years to offer companies cheap, commoditised
services, which were previously offered only by accountants. Does the
Minister envisage that any accounting service companies would be able
under any circumstances to use the carve-out in subsection (3)? Some of
them seem to think that they can carry on almost as normal, if they
have an accountant on their books. Does an accounting service company
have to be owned by qualified professionals with current practising
certificates to use the safe
harbour?
Clearly there
are players in the accounting services sector that the Government want
to shut down. HMRC has some justified concerns in this area, but my
concern is that there is no evidence that all accounting services are
somehow dodgy. Do the Government envisage that any of those companies
will be able to survive under the new framework? Do they want to shut
them all down? If so, a slightly unfortunate side effect of the
legislation seems to be that freelancers would be completely barred
from using specialist providers to manage their company affairs and
would be restricted only to using the more traditional accountants, who
have a more broadly based area of work. I would be interested to hear
whether there will still be room for cheaper and more commoditised,
factory-style services.
As partly
adverted to in the intervention by the hon. Member for Dundee, East, in
focusing in people who hold legal or accounting qualifications,
subsection (3) misses some of the important problems caused by schedule
3—solving a problem for lawyers and accountants does not solve
the problem with schedule 3. For instance, the subsection (3) safe
harbour does not seem to take into account how many professionals hold
qualifications other than accountancy and legal qualifications. Company
formation agents have been mentioned, and other examples include those
holding qualifications relating to company secretarial services or to
tax, such as those from the Association of Taxation Technicians or the
Chartered Institute of
Taxation.
Adam
Afriyie:
Should mention also be made of software
manufacturers, which write software that performs such functions
without the intervention of an
adviser?
Mrs.
Villiers:
My hon. Friend makes a good point. Many
different sectors are affected by the changes, but my concern is
particularly about the impact on the IT sector, where contractors and
freelancers perform such a valuable role. The nature of the IT sector
is that, very often, specific people are wanted to build a specific
project. Keeping permanent employees on an ongoing
basis is very difficult if the project only lasts a few months. Critical
in scrutinising schedule 3 is for the Committee to assess the impact on
the IT sector, including the point made by my hon. Friend the Member
for
Windsor.
I
understand that a number of professional bodies, such as the Institute
of Chartered Secretaries and Administrators, is seriously worried that
their members may fall into the definition of MSC providers
automatically—after all, their business is to set up and run
companies. By amending proposed new subsection (3) as I propose in
amendment No. 45, those professionals can gain the same protection as
accountants and
lawyers.
The status of
other professionals is also uncertain under the current wording of
subsection (3). Other professionals whose activities might conceivably
bring them within the scope of “promoting” or
“facilitating”, yet seemingly without the protection of
the safe harbour, could be management consultants, franchisers who help
franchisees run their business, factoring and invoice discounting
houses which help follow up unpaid invoices, payroll companies and
business advisers. I would be very interested to hear from the Minister
how he sees their status under proposed new section
61B.
It being One
o’clock,
The Chairman
adjourned
the Committee without Question put, pursuant to the Standing
Order.
Adjourned
till this day at half-past Four
o’clock.
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