 House of Commons |
Session 2006 - 07 Publications on the internet General Committee Debates Finance |
Finance Bill |
The Committee consisted of the following Members:David
Doig, Hannah Weston, Committee
Clerks
†
attended the Committee
Public Bill CommitteeThursday 7 June 2007(Morning)[Mr. Roger Gale in the Chair]Finance Bill(Except clauses 1, 3, 7, 8, 12, 20, 21, 25, 67 and 81 to 84, schedules 1, 18, 22 and 23, and new clauses relating to microgeneration)9
am
The
Chairman:
Good morning. The selection list is being copied
and I shall make sure that it is distributed as soon as it arrives. I
apologise that it was not here for the start of proceedings as it
should have
been.
I
have been advised that if business is nearing its end, 15 minutes of
what is known as injury time is available to the Committee, at the
discretion of the Chairman, to allow completion if that is possible. I
am acutely conscious that hon. Members might wish to attend questions
on the Floor of the House and indeed to ask questionsin the
House. If any hon. Member is in that position and does not wish us to
run on for 15 minutes, Ishall immediately take account of that
and give it
preference.
We expect
to sit this afternoon. On the other hand, there is no particular merit
in dragging everybody back for what might prove to be a very short
discussion. If hon. Members bear that in mind, we will exercise our
judgment later on in our proceedings this
morning.
I call
Mr. Gauke to speak on clause 97 and amendment No. 251. I am
sure that I speak on behalf of all the Committee in welcoming him to
the Front
Bench.
Clause 97VAT:
joint and several liability of traders in supply chain where tax
unpaid
Mr.
David Gauke (South-West Hertfordshire) (Con): I beg to
move amendment No. 251, in clause 97,page 68, line 20, after
‘above’, insert
‘in respect of any supply made
after the date on which the order has
effect.’.
The
Chairman:
With this it will be convenient to discuss the
following: Amendment No. 252, in
clause 97, page 68, line 22, at
end add—
‘(9C) An order may
not be made under this subsection unless a draft of the statutory
instrument containing the order has been laid before, and approved by a
resolution of, the House of Commons.’.
Clause stand
part.
New clause
3—Missing trader intra community
fraud
—
‘HMRC
shall lay a report before Parliament every three months on the measures
taken by the Government to combat missing trader intra community (MTIC)
fraud and the effects these measures are having on VAT compliance
system
generally.’.
Mr.
Gauke:
I thank you, Mr. Gale, and the whole
Committee for that kind welcome. I also thank the Financial Secretary
for his kind words on Tuesday, although I was not present at the time.
I offer my particular thanks on behalf of Mrs. Gauke, upon
whose illustrious reputation my career is built.
I suspect
that other Committee members might well also be promoted in the weeks
ahead, in particular on the Government Front Bench, and as far as the
Financial Secretary is concerned that would be thoroughly
deserved—[Interruption.]—as, I am sure, it would
be for others as well. On a personal note, it is a pleasure to follow
in some respects immediately in the footsteps of my hon. Friend the
Member for Rayleigh, who addressed the Committee on Tuesday and who
last year addressed it on the subject of missing trader intra-Community
fraud. As it happens, it is not the first time in my political career
that I have followed in his footsteps. He was the Conservative
parliamentary candidate for Brent, East in 1997 and I performed the
same role in 2001. It would be fair to say that that is not the most
auspicious precedent. Neither of us was hugely successful. We won the
arguments, but lost the votes. Perhaps that will happen again today.
Also, I should not forget to welcome you to the Chair, Mr.
Gale.
I turn now to
the matter in hand—[Hon. Members:
“Hear, hear.”]—which is the most popular thing
that I have said so far. I wish first to say a few brief remarks about
missing trader intra-Community fraud in general, after which I shall
discuss new clause 3, which would require a report to be produced
quarterly by the Treasury on its measures with regard to MTIC fraud and
the implications for the VAT system as a whole.I shall then
turn specifically to clause 97 and amendments Nos. 251 and
252.
Clause 97 returns
us to the issue of missing trader intra-Community fraud, of which
carousel fraud is perhaps the most prominent part. The carousel version
of MTIC fraud is defined, among other occasions, by Her
Majesty’s Revenue and Customs in a note that the Financial
Secretary kindly circulated earlier this week. It
involves
“a circular
trading pattern that allows the same goods to be imported and exported
many times, with an unpaid VAT liability and a corresponding VAT
repayment being created in each turn of the
carousel”.
The
scale of the fraud is considerable. HMRC figures, which were quoted
recently in the report of the House of Lords European Union Committee
“Stopping the Carousel: Missing Trader Fraud in the EU”,
show that in the period from 1999-2000 to 2004-05 the size of the
figure was at least £1.1 billion and as high as £2.5
billion in some years. The figure quoted in the report for 2005-06 was
£3.5 billion to £4.75 billion, although that may be a
misinterpretation of the data. It related to the attempted fraud and
the cost to the Exchequer, using the same methodology as used in
previous years, of £1.4 billion to £2.4 billion.
HMRC also introduced a new methodology in respect of the impact on VAT
receipts, which was £2 billion to £3 billion. I am sure
that the Financial Secretary will confirm whether my interpretation of
the House of Lords report is correct. I see that he is nodding in
assent. I am sure that such new methodology is helpful, but it might be
interesting to see whether it could be applied for previous years to
get a sense of the trend. I do not know whether that would be
possible.
I shall
leave the matter with the Financial Secretary. We are talking about big
numbers to the extent that, according to the Office of National
Statistics, MTIC fraud distorts our trade figures. It is substantial.
It is persistent and has the capability of adapting and expanding to
undermine the entire VAT system. For those reasons, there is no dispute
on either side of the House that effective measures must be
taken to tackle
it.
Hon. Members who
discussed last year’s Finance Bill in Committee will recall that
we debated MTIC and the Government’s response to it at some
length. My hon. Friend the Member for Rayleigh made some well-founded
criticisms of the Government’s record in tackling the problem
prior to 2006. I have no doubt that the Financial Secretary will
describe the progress made in tackling the fraud, and I hope that he
will outline the figures for 2006-07, although HMRC has stated
that
“trading activity
associated with carousel fraud has fallen dramatically during
2006-7.”
We all welcome
that progress. None the less there is no room for complacency. It is a
dynamic situation. The fraud evolves and mutates, and our responses
must develop
accordingly.
We
are also discussing the necessity to balance the desire to reduce fraud
with the need not to impose a disproportionate burden on legitimate
businesses. Given the need to balance such competing pressures, the
dynamic nature of the fraud and the scale of the problem, it is clear
that the need for proper parliamentary scrutiny is considerable. For
that reason, we have proposed new clause 3, which requires HMRC to lay
before Parliament a quarterly report
“on the measures taken by the
Government to combat missing trader intra community (MTIC) fraud and
the effects these measures are having on VAT compliance system
generally.”
I
make no accusation that the Government and HMRC have tried to conceal
information in any way. Indeed, as I said, the paper circulated by the
Financial Secretary was extremely helpful and informative. Indeed, it
repeated points that had previously been raised by HMRC to those
Members, of whom I was one, who had independently raised concerns or
queries about the Government’s approach. None the less, a formal
document published regularly would provide greater clarity and enable
Parliament to scrutinise the Executive’s actions much more
effectively.
Let me give
one example of an area where Parliament would benefit from the
opportunity for closer scrutiny. Last year we debated at some length
the need to put in place a legislative framework to enable the reverse
charge to come into effect. It was at the heart of the
Government’s strategy to reduce MTIC fraud and would involve
transferring the responsibility for paying VAT from the
seller to the buyer. To implement the reverse charge, it has been
necessary to obtain an EU derogation from the sixth VAT
directive.
Progress
towards that derogation has been somewhat uncertain, and I use the word
“uncertain” to mean that progress has been somewhat slow
and that it has been difficult for Members to evaluate that progress.
That is not because of a lack of Government statements; indeed, there
have been many. They announced that they had submitted an application
for derogation in January 2006. In July, the Paymaster General told
Parliament that she was confident of securing an agreement, and later
that month HMRC stated
that
“we expect to
implement the reverse charge on 1 December 2006.”
It was not implemented in the ECOFIN
meetings on 9 or 28 November, and at the time rumours
circulated that the French Government were reluctant to agree to the
derogation because they feared that fraudsters would turn their
attention to France, which I find a remarkable argument.
On 13 December, the Chancellor,
appearing before the Select Committee on Treasury, said in his opening
remarks following the pre-Budget report that he was
“pleased to tell the Committee
that last night an agreement was reached on the derogation we have
sought with France and, with the support now of other Member States, I
am confident that the derogation will be
adopted.”
I do not know
on what basis he made those remarks, or whether it was in any way an
attempt to dominate the news reports of that hearing, although my
recollection as a member of the Committee is that much of the press
coverage curiously related to the unravelling of education spending
figures. None the less, considering subsequent events, it did not
appear that agreement had been reached.
If the Chancellor thought that
the progress would be swift after 13 December, he was proved to be
mistaken. The derogation was not even on the agenda for the ECOFIN
meetings on 30 January or 27 February and was finally agreed on 19
March, but at what cost? It would appear that his attempts to protect
an element of the rebate were abandoned, according to many reports. As
an EU diplomat quoted in The Guardian on 4 April put
it:
“The
British were given to understand that if they wanted their way on VAT,
there was another issue on which they needed to give
ground”.
That issue
appeared to be the EU rebate. This was not a triumph for British
diplomacy by any means, and the Chancellor’s ability to obtain a
good deal for the UK must be questioned.
I am reminded
by the Chancellor’s attempts to obtain the reverse charge
derogation of the comments of Sir Stephen Wall in the recent
Channel 4 “Dispatches” documentary. Discussing the
Chancellor’s negotiating style, he said that when the Chancellor
negotiated a particular point he
“hammered away at something which
the majority of the member states weren’t prepared to agree to,
he got himself into certain amount of difficulty. And when he tried to
sum up three times, as I recall, in the direction that he wanted rather
than what the majority wanted, in the end people were just sort of
laughing. Because it was, it was so, it had become I thought, sort of
embarrassing.”
I am the first to concede that a degree of
truculence in EU negotiations might be appropriate but, to coin a
phrase, it should be truculence with a
purpose.
Stephen
Hesford (Wirral, West) (Lab): Given that the hon.
Gentleman has followed the hon. Member for Rayleigh in a number of
situations, does that comment mean that he is after the shadow Europe
job
already?
Mr.
Gauke:
The shadow Europe job is in very good hands and I,
for one, would hate to leave the Committee after such a short
time.
The
Chairman:
Order. I have been listening carefully and with
great interest. The intervention of the hon. Member for Wirral, West is
the cue for me to say gently that we are dealing with the Finance Bill
of the United Kingdom and we should move swiftly to a discussion of the
matters before
us.
9.15
am
Returning
specifically to MTIC and the derogation enabling the reverse charge, it
is not disputed that the reverse charge is not quite what was
originally envisaged. Three elements have changed from the original
proposal. The application of the reverse charge has been narrowed to
only mobile phones and computer chips. When we debated the de minimis
requirement last year, it was due to be £1,000; it will now be
increased to £5,000. Indeed, the period for the derogation has
been reduced from the time that we originally applied for, from three
to two years.
Those changes
give rise to a number of questions. Given that the reverse charge was a
key part of the Government’s strategy last year and that they
envisaged bringing it in somewhat earlier, what cost has the delay
incurred for the Exchequer? What will be the cost, if any, of the
concession on the de minimis amount? I have mixed feelings about that
because, as far as business is concerned, the increase from
£1,000 to £5,000 is welcome. None the less, the
Government wanted £1,000. What was the cost of that?
In
particular, what is the Government’s view of the fact that the
derogation is only for two years rather than three and that we have to
negotiate it all over again? Further concessions in other areas may be
necessary to achieve that. That is important because, as we all
recognise, MTIC evolves and mutates. There is no particular reason why
it would necessarily stick to mobile phones or computer chips. If we
find that we need to expand MTIC, we may be in a difficult
position.
I appreciate
that the reverse charge has been in place only for a few days; it came
into effect on 1 June 2007. Will the Financial Secretary make any
observations following its introduction, as I am sure the Committee
would welcome that? However, I appreciate that it is early days. That
brings me back to my point about a regular, quarterly report, which
would enable the Government to set out their views on how the reverse
charge is operating as it is introduced and beds down.
A further part of the
Government’s approach to tackling MTIC fraud, and one that on
the face of it appears successful, is the introduction of extended
verification for VAT repayments. The figures in the HMRC briefing paper
certainly appear impressive. It states that in more than 95 per cent.
of cases where traders are subject to extended verification there was
at least sufficient suspicion for HMRC to continue to investigate. HMRC
add that only 1 per cent. by value of the VAT withheld under the
programme has been found to be correctly claimed and properly payable.
That appears to suggest that the extended verification measures have
been extremely well targeted.
However, many
businesses have expressed their concerns, to the extent that one begins
to question the figures. The Federation of Technological Industries
informed the House of Lords European Union Committee that every
participant in the grey markets for mobile phones and computer chips
has had their VAT repayments withheld since spring 2006. Is it possible
to reconcile that with HMRC’s view that the measures have been
extremely well targeted?
For that reason, it might be
helpful to dig a little further into the figures that HMRC has
provided. If 1 per cent. by value of the VAT withheld has been
found to be correctly claimed and properly payable, what is the
comparable figure by case load? The terminology—claims that are
correctly claimed and properly payable—is different from claims
being linked to MTIC fraud. Is there a figure for the claims that are
linked to it? How many of the cases where things have not been
correctly claimed and properly payable are because of a more technical
breach that is entirely unrelated to MTIC fraud?
I have found
no specific figure in the public domain. The House of Lords concluded
that the number could be as high as 1,500, but having looked at how it
reached that calculation, I would say that a certain amount of
guesswork was involved. What amount of VAT is not being repaid because
of the extended verification process? How many people at HMRC are
working on this area? I am sure that the Committee would be pleased if
the Financial Secretary were able to shed any light on those issues. It
would be useful if the information could be provided on a formal and
regular basis.
There
are also problems with the VAT repayment system which appear to be
unrelated to tackling MTIC fraud. That goes to the heart of one of the
House of Lords European Union Committee’s concerns about the
extended verification process, in that it ties up an enormous amount of
HMRC’s time and effort. The Committee said
that
“the system of
extended verification is an inefficient and unsustainable use of
HMRC’s
resources”.
I should be
grateful if the Financial Secretary would tell us whether or not he
agrees with that view, because there is widespread concern about how
the VAT system is working.
One assumes
that resources have been directed to tackling MTIC fraud—that is
not necessarily the wrong thing to do; I have stated several times that
such fraud is a serious problem—but I, like other hon. Members,
have been informed of several cases where there are problems with
repayment systems. My hon. Friends the Members for Rayleigh and for
Fareham have been
contacted by Viking Garages, which is seeking recovery of a VAT
overpayment. Delays have occurred, in part because of delays in
allocating caseworkers. Viking Garages’ professional advisers
have
said:
“HMRC are
putting woefully inadequate resources to the team responsible for
authorising
repayments”.
I
have also been informed about a case taken up by my right hon. Friend
the Member for North-West Hampshire (Sir George Young). It relates to a
building firm that is having great difficulties; there seems to be a
widespread problem with repayments to builders. Neither of those cases
are high risk from an MTIC fraud point of view, but it would appear
that people are being taken away from such areas, and that is causing
problems in the repayment system.
More widely,
there are substantial problems with VAT registrations. I raised that
point with the Paymaster General in last year’s Finance (No. 2)
Bill Committee and have done so subsequently in a Treasury Committee
sitting with senior members of HMRC. At that time, my attention was
drawn to problems with VAT registration by a City lawyer with whom I am
acquainted. There seemed to be a particular difficulty with delays in
getting VAT registrations for companies, and that is a serious concern.
There are cash flow problems, particularly for start-up companies, and
one of the competitive advantages that we have in this country is that
it is relatively easy to get a business started and up and running. The
proposal will put that in
jeopardy.
As I said,
on 24 January 2007 I raised that point with senior HMRC officials. Paul
Gray, the chairman, stated that it was
“one of those areas where we have
had probably the greatest degree of pressure and the performance
certainly was not as good as I might have hoped”.
His colleague, Mike Eland, added that the
problem is with
“trying
to get a balance between facilitating legitimate business and tackling
fraud. We did not get that quite right. We put the emphasis on tackling
the fraud. We are now looking to correct it the other way by
simplifying some of the procedures and also getting better IT backup to
carry out some of the fraud checks so that we can do the checking more
quickly”.
Both
Mr. Gray and Mr. Eland stated that HMRC was
improving but was “not there
yet”.
Some
months later the problem persists. My hon. Friend the Member for
Chipping Barnet was contacted by Ingenious Media plc, which was deeply
concerned about delays in obtaining VAT registrations for start-up
companies in which it invests. Yesterday, I spoke to the finance
director of Ingenious Media plc. He said
that
“there is a crisis
at HMRC in respect of VAT registrations. They are months behind with
their work and seem to be in despair. They are hopelessly short of
staff”.
That is
not an isolated case. John Arnold, chairman of the VAT committee at the
Institute of Chartered Accountants in England and Wales, said
that
“there’s no
doubt that there is a problem with missing trader fraud but to delay
VAT registrations to this extent is
disproportionate”.
He
added:
“in general it
seems to be two or three months from sending the form off. It used to
take three weeks”.
I would be grateful if the
Financial Secretary could indicate whether there has been a decline in
the number of VAT registrations completed within the three-week target,
whether the problems are concentrated in areas that could be seen as
being related to MTIC fraud, or whether they are more general, and
whether there has been an increase in the number of complaints received
by HMRC on that point. Last year, I tabled some parliamentary questions
on that point, and might do so again, depending on the answers that I
receive.
If it is
determined that a VAT registration will take longer, an extended
verification process might be applied. As I understand it, if that is
the case, no notification is given to an applicant, although there
might be good reasons for that—along the lines of not wanting to
tip off the applicant. However, in some cases that causes added
uncertainty and difficulty, and if a company was aware that there was
going to be a delay in achieving VAT registration, it might be able to
take mitigating steps. Has HMRC considered doing
that?
Essentially,
does the Financial Secretary see the problems with VAT registration as
being directly related to MTIC fraud, either because it takes longer to
deal with applications that might be related to MTIC fraud or because
resources are being put into tackling it, or is the problem wider and
more systemic? Are there particular problems within HMRC? Are the
budget cuts affecting HMRC causing particular difficulties and a
decline in the quality of service? I am afraid that that is the
perception of
business.
No doubt we
will hear evidence of improvements in tackling MTIC fraud. Those
improvements might be overdue, but none the less they are welcome.
However, the issue will continue to be of concern, and a regular
report, as proposed in new clause 3, would enable us to scrutinise such
matters in a well-informed
manner.
I turn more
briefly to clause 97 and the two amendments relating to it. The clause
will amend the joint and several liability provisions applicable to
traders who know or have reasonable grounds to suspect that VAT will go
unpaid elsewhere in a supply chain. Currently, those provisions apply
to a narrow range of products, such as mobile phones, computers and
certain other electronic goods and their accessories. The clause will
give powers to the Treasury to make orders to extend those into other
areas. I assume that the rationale for that is the danger, if not the
likelihood, that MTIC fraud will mutate away from those goods, with
which traditionally it has been associated, and into other
areas.
I am sure that
the Financial Secretary will elaborate on that in due course. If that
is the reason, how adequate is the reverse charge derogation? At the
very least, it suggests that it will be necessary to return to Brussels
in a couple of years to seek an extension. Given that we have already
had to narrow the scope of our derogation, that throws the difficulties
created by that narrowing into sharp focus.
I want confirmation that the
Government do not perceive any risk of the legislation falling foul of
VAT directives as being disproportionate and therefore ineffective,
which is how they were found to be acting in the bondholder case when
the European Court of Justice found against them. I seek confirmation
that there are no concerns on that point.
Amendment No. 251 would address
the concern that provisions made under the clause may be retrospective
to some extent. Any supplies made after the date on which the order
comes into effect should be affected by the provisions. I presume that
the Financial Secretary will say that that would weaken their
effectiveness, and I will certainly listen to his argument before
deciding whether to press the amendment to a Division, but we are not
dealing with persons involved in fraudulent behaviour and we should
always be wary of retrospective
legislation.
9.30
am
Amendment
No. 252 would require an affirmative resolution in the event of the
Treasury seeking to extend its powers in these areas. The original
provisions under section 77A of the Value Added Tax Act 1994 were
debated at length in the 2003 Finance Bill. I believe that the hon.
Member for Wolverhampton, South-West was a member of the Standing
Committee that considered that Bill, as was the Financial Secretary.
They may recall a lengthy debate on that
point.
The
provision essentially imposes VAT on people who would not otherwise be
liable. There may be good reasons for that, but the imposition of tax
has rightly and traditionally been seen to be a matter for Parliament
and not the Executive. I recognise the arguments for some flexibility
for the Government in these circumstances, but parliamentary scrutiny
is important and I seek recognition from the Financial Secretary that
there will be adequate opportunity for Parliament to scrutinise any
extension of the provisions that were debated at length in
2003.
My
final point was raised by the Institute of Indirect Taxation. Under
existing section 77A of the Value Added Tax Act 1994, a person could
reject the assessment that he had reasonable grounds for thinking that
a transaction was not suspicious because of the low price if he could
prove that the low price payable for the goods was due to circumstances
unconnected with the failure to pay VAT. The provision that we are
debating would enable that presumption to be scrapped, so that even if
someone could prove that the low price was entirely unrelated to
MTIC—“prove” is a fairly high hurdle—there
would still be grounds for thinking that MTIC fraud had occurred simply
because of the low price, whatever the circumstances. Does the Treasury
have it in mind to remove that
presumption?
My
introductory speech from this Bench has been rather lengthy, but I have
raised a number of important points. MTIC fraud costs this country a
great deal of money and is evolving. All parties want to address it,
but if we are to do so sensibly, it would be useful for the House to be
better informed, and new clause three would serve a valuable
purpose.
Julia
Goldsworthy (Falmouth and Camborne) (LD): It is a pleasure to
welcome you to the Chair, Mr. Gale. It is also a great
pleasure to welcome the hon. Member for South-West Hertfordshire to the
Opposition Front Bench. I am sure that he enjoyed making his first
speech and that it will be the first of many; perhaps not on this
Finance Bill but on next year’s if he is not promoted again in
the meantime.
In
yesterday’s First Delegated Legislation Committee considering
the VAT (Payments on Account) (Amendment) Order 2007 and the Value
Added Tax (Administration, Collection and Enforcement) Order 2007,
there was unanimity about the need to tackle the problem of MTIC, so
there is support on both sides of the House for the intention of
tackling it. However, I have a great deal of sympathy with the
amendments tabled by the hon. Gentleman and his colleagues. It seems
reasonable to request a positive resolution procedure, given that it is
important for hon. Members to be aware of how that fraud might be
evolving and the flexible approach that the Government and HMRC will
therefore have to take in tackling it. We have heard about how it might
change to involve different products and about the implications that
that might have for EU derogations. In addition, the legislation that
we have passed and will pass will impact on how the fraud might
change.
I am bearing
in mind your comments about the timetable this morning, Mr.
Gale, so I will keep my remarks brief. There is a great deal of
sympathy with new clause 3. Given that the scale of the problem is so
significant, it is important that there should be transparency and
honesty from the Government. There is a need to restore public
confidence that the problem will be tackled. It is important for the
Government to demonstrate the impact that the new system of reverse
charging will have. Producing a regular report, not necessarily
quarterly, would help to keep people up to date with how the situation
is or is not
improving.
I have a
few questions that relate to issues already raised by the hon. Member
for South-West Hertfordshire. Concerns have been expressed about
whether HMRC is best placed to determine whether taxpayers should or
should not have known that tax would go unpaid. Is the implication that
many businesses will seek pre-approval from HMRC for every transaction?
If so, given that there have been reports of time scales of more than
12 weeks to decide whether to register a taxpayer, will businesses be
expected to wait that long to know whether registration will be
approved or denied for each
transaction?
The
Chartered Institute of Taxation believes that a solution to the problem
would be real-time checking of specified transactions. I would
appreciate the Financial Secretary’s comments on how realistic
he thinks that might be and on the potential benefits or pitfalls. The
key concern, which I raised yesterday, is that there is significant
abuse, which needs to be tackled. We learned yesterday that probably
hundreds rather than thousands of businesses are abusing the existing
loophole. However, there is a concern that innocent businesses will
have to take on the burden, while those abusing the system will either
not comply or find ways of getting around the
system.
There are
concerns that the proposals before us and those that have just been
implemented will generate new types of abuse. I seek reassurance from
the Financial Secretary that the Treasury and HMRC are alive to the
fact that MTIC is a rapidly evolving type of abuse. I appreciate the
efforts being made to respond to the abuses, but what efforts will HMRC
and the Treasury undertake to be alive to such changes and to ensure
that any potential new loopholes or abuses are identified and closed
down as quickly as possible?
I raised yesterday the issue of
the amount of officer time dedicated to MTIC and I received a partial
response from the Financial Secretary. Can he tell us the number of
officials, in full-time equivalent terms, who are currently dedicated
to tackling MTIC and the number of officials who are working on the
introduction of this proposal? He talked about redeployment yesterday,
but it is important to know exactly where we are
now.
Mr.
Brooks Newmark (Braintree) (Con): I, too, welcome you back
to the Chair, Mr. Gale, and I congratulate my hon. Friend
the Member for South-West Hertfordshire, who has been with
me—painfully—both on the Treasury Committee and on this
Committee for some time. He certainly deserves his promotion.
May I begin by thanking the
Financial Secretary for his courtesy in having written to the Committee
in some detail on the Government’s strategy for tackling MTIC
fraud? Carousel fraud is clearly a significant problem. The Government
take seriously their duty to deal with it robustly in order to protect
the Exchequer. Let me make it clear that if I am critical of the
Government’s strategy, it is because there have been significant
problems in the way in which that strategy has been implemented, not
because I challenge the principle of confronting fraud.
In his letter to the Committee,
the Financial Secretary wrote that the Government’s stance on
the issue was founded on the need to
“ensure that HMRC’s
operational strategy is able to respond swiftly and flexibly to future
mutations in MTIC
fraud.”
That must be the
right approach. There is, indeed, a frantic evolutionary process
involving fraudsters and revenue inspectors. In its report on the
Budget, the Treasury Select Committee expressed its expectation that
the Government should remain vigilant in guarding against new methods
of intra-community fraud. If the order-making powers in clause 97 give
the Treasury and HMRC greater flexibility in support of that vigilance,
they should be welcomed, although unbridled flexibility is no good
thing.
I am not
convinced, however, that the powers will do anything much to improve
how swiftly HMRC can adapt or act. I do not know how many members of
the Committee have come across MTIC fraud in the course of their
constituency casework. Unfortunately, I have. As a result, I believe
that there are significant flaws in HMRC’s capacity to handle
the kind of investigation that it is undertaking and that no new
order-making powers should be conferred on the Treasury for the
purposes of tackling MTIC fraud until that capacity is first expanded
and then proven in practice.
Let me share with the Committee
the essentials of the case that I was presented with. My
constituent’s company supplied mobile phones; it had exports
totalling £60 million in 2006. It waited from May 2006 until
January 2007 for a VAT repayment claim of £6.7 million
to be met, while “extended verification” procedures were
carried out on its supply chain. That wait did not have a happy
outcome, because on 17 January it went into administration due
to the substantial dent in operating cash flow represented by that
£6.7 million, which is a substantial sum for a company with
£60 million turnover.
I wrote to the Paymaster General
and she gave me a very gracious answer. However, she said that she
could not comment on the individual case because of the confidentiality
issues raised by the involvement of administrators. My letter was dated
15 January, and not even the most efficient private office, which I am
sure she has, could have turned around a response in two days. In fact,
by some fortuitous accident of the postal system, my original letter
was returned to me, and I see that it was not logged for answer until
long after the company had gone into administration. Unfortunately, as
a result, I have had no explanation as to why it took 10 months for
HMRC to investigate that company and why it was allowed to go to the
wall during that time. Nor, I strongly suspect, will I ever find out
the outcome of that investigation. In the absence of any indication to
the contrary from HMRC, I must conclude that an honest company went out
of business as a direct result of HMRC’s
investigation.
I shall
not give the Committee any further details of the company, or its
troubles, but I believe that this example is illustrative of the
serious delays that can occur while the Revenue is investigating VAT
claims.
Ms
Sally Keeble (Northampton, North) (Lab): If the hon.
Gentleman claims that this problem was caused by maladministration, he
should take the matter to the ombudsman; it is not connected to this
legislation. I have done a similar thing with a company, and the
ombudsman will examine such issues if there is maladministration.
However, the matter has nothing at all to do with the
legislation.
9.45
am
Mr.
Newmark:
If the hon. Lady was listening at the beginning
of my speech, she will know that I was saying that there was a serious
capacity issue in dealing with problems like this one. The point that I
am trying to make is that, although I and other Opposition Members take
MTIC fraud seriously, the fact is that there may not be the capacity to
deal with companies such as this one, which have been victims of a
delay and unfortunately then go into administration, when I believe
that there was no deceit or intent on their part to defraud the
Revenue. That was the point that I was trying to make. The point is
relevant to clause 97 because it seems that the order-making powers
could significantly increase the competence of HMRC to pursue new and
more elaborate forms of MTIC fraud. To me, that implies the need for an
increase in work load, which must be met by increased capacity and an
attendant increase in resources.
Will the Financial Secretary
give me some reassurance that a 10-month wait during an HMRC
investigation is atypical? The Chartered Institute of Taxation is of
the opinion that investigations routinely last in excess of 12 weeks.
Is that figure accurate? Will the Financial Secretary further commit to
ensuring that, in future, HMRC is equipped with the necessary resources
to conduct investigations in as timely a manner as possible?
In a letter
regarding my constituent’s case from the acting chairman of
HMRC, which was written in December 2006, the acting chairman said that
600 extra staff had been redeployed to cope with the burden of checking
VAT claims. Just two months later, the Paymaster General told me that
that figure had risen to 700. Can the Financial Secretary tell me
whether that figure is expected to continue escalating and, if so, what
will be the effect of any new orders that are expected to be made under
clause 97?
I want to
touch briefly on one or two of the wider issues raised my
constituent’s experience. It is the Financial Secretary’s
contention that, when it comes to carousel fraud, black is black and
white is white. He believes that one is either a knowing participant in
an utterly contrived and fraudulent arrangement, or one is an innocent
buffer who is not a party to such an arrangement. More specifically, in
his briefing— underlined for emphasis—he
said:
“It is
difficult to see how any trader operating in a carousel supply chain
can be unaware of the fraud, or not suspicious of the trading patterns
and practices
encountered.”
I agree
with that. However, when the Financial Secretary replies, can he set
out the process of augury by which an innocent buffer is differentiated
from a knowing fraudster?
The Government have taken their
lead from the European Court on the test that ought to be applied for
judging participation in MTIC fraud, which is that a participant must
either have known, or should have known, of the fraud. However, unlike
my hon. Friend the Member for Rayleigh, I am not so enthusiastic about
all things European that I anticipate the need to leave the Committee
in order to pursue my interest. So I would like the Government to look
again at whether the question of those who are involved, uninvolved or
potentially involved in MTIC fraud is really cut and dry.
More specifically, I would like
to ask the Financial Secretary a simple question: if involvement in
MTIC fraud is so blindingly obvious when it occurs, why is there the
need for a 10-month investigation into a company that is accused of it?
If it is blindingly obvious who is guilty and who is not, why did the
House of Lords Economic Affairs Committee feel the need to report last
year that
“we recall that
we expressed our own misgivings, in the light of the evidence given to
us in 2003, that safeguards for the innocent trader caught up in a MTIC
fraud-tainted supply chain needed
strengthening”?
My
final
point—
My final point is
about the question of proportionality. The Financial Secretary’s
briefing states—this time the words are in
bold—that
“interventions
are closely targeted at the criminals who orchestrate, and the
participants within, suspect supply chains.”
I hope that I have quoted the extracts to
which he wished to draw my attention, but there must be a high
incidence of MTIC fraud, indeed, if closely targeted interventions
require the attention of upwards of 700 HMRC officers and
still take 10 months to run their course.
In my letter to the Paymaster
General on my constituent’s behalf, I questioned whether the
balance between revenue protection and the burden placed on business
was correctly struck. I would do a disservice to the Financial
Secretary if I expected him to comment on that specific case, because
he does not have any of the details in front of him and he would not be
able to commit himself even if they were available to him. However, I
hope that he is mindful of an old Blackstone’s maxim
that
“the law holds,
that it is better that ten guilty persons escape, than that one
innocent
suffer.”
Perhaps
when the Financial Secretary replies he will be able to provide a
commitment that the Government will continue to assess the
proportionality of their stance on MTIC fraud, and a guarantee that
future orders made by the Treasury under clause 97 will neither further
erode the principles of proportionality nor blur the sharp distinction
between the innocent and the guilty in which he puts such faith at
present.
The
Chairman:
It has already been noted that the Financial
Secretary very courteously circulated both the letter and an extremely
complicated but comprehensive and comprehendible briefing note about
carousel fraud, which is clearly a very important issue arising from
the Bill under discussion. I have quite deliberately allowed hon.
Members a certain amount of leeway in the discussion, because that
briefing note—I suppose this is one disadvantage of circulating
a briefing note—has obviously generated further queries. Having
been lenient with hon. Members making contributions up until now, I
propose to be equally lenient with the Financial Secretary if he wishes
to place things on the record.
The
Financial Secretary to the Treasury (John Healey):
I
welcome you to the Chair, Mr. Gale, and thank you for that
guidance. We have had a very wide debate on what is a very narrow
clause. I shall do my best to deal with the most relevant points that
have been put, but I do not intend to test your patience by straying
beyond your judgment about what is in order in this debate.
I say to the
hon. Members for Braintree and for Falmouth and Camborne that we remain
extremely vigilant about such fraud, as the Select Committee on the
Treasury and the hon. Member for Braintree urged us to be. As the hon.
Member for Falmouth and Camborne urged, we remain alive to the fact
that it is a rapidly evolving and highly sophisticated international
criminal activity whose networks constantly change their methods and
tactics. It requires HMRC officers to undertake some of the most
effective and skilled work of anywhere in the Department, and I pay
tribute to them and their work. I hope that the briefing that I sent to
the hon. Lady and to other hon. Members underlines the point that we
are alive to the fact that the situation is constantly changing. It is
the underlying reason for introducing the clause, which is one of a
range of measures—in this
case, a rather narrow measure—that are necessary to try to deal
with the problem.
The
hon. Lady asked me a couple of direct questions. I do not expect
traders to seek pre-approval for transactions. The legislation that the
measure amends does not and has not worked in that way since it was
introduced in 2003. I should like to put matters in perspective. The
provisions on joint and several liability are used when HMRC identifies
a company that has traded in a supply chain that has involved MTIC
fraud. In those circumstances, HMRC notifies the company, in writing,
that it might face an increased risk of being made liable for VAT debts
elsewhere in the supply chain.
Hundreds of those warning
letters are issued and, in many cases, they deter the sort of activity
that HMRC is concerned about, such as people turning a blind eye to
suspect trading patterns or practices. That is proved by the small
number of cases—the number is in single figures—in which
HMRC has gone on to issue formal notification letters. It has gone on
to issue notices of liability in only four cases. That is largely
because of the deterrent effect of the warning letters.
That is how the original
legislation was designed to work; the clause provides for making minor
adjustments to that legislation. I want all that to be in perspective
when we consider the clause. Any trader who is not satisfied with a
decision taken in HMRC’s verification process can challenge it
at a VAT and duties tribunal. To date, however, the courts have fully
supported HMRC’s approach in that
regard.
The hon.
Member for Falmouth and Camborne asked about the real-time checking of
transactions. Generally, the Government are prepared to consider any
proposals or suggestions that might help us to tackle this fraud, but
we must be conscious of the implications of putting burdens on business
in doing so, and of the complexities for HMRC of managing any
regime.
Real-time
checking is likely to be extremely difficult, for reasons that are
self-evident, such as the volumeof VAT transactions. Some 1.9
million traders are registered for VAT, and about £130 billion
of VAT goes through the system. MTIC is not just about checking a
particular transaction. A challenge that we face, because of the
artificiality, and often the complexity and length, of supply chains,
is that we have to check the entire supply chain to determine the link
between the first defaulting trader and others. On first sight,
therefore, real-time checking does not seem to be a terribly plausible
solution, although we are prepared to consider it.
I address my next comments to
the hon. Member for Braintree. I appreciate that he speaks with some
passion about his constituent’s case, and I shall look into it.
If there is more information on that case that I can encourage
HMRC to give him, I shall certainly do so.
Mr.
Newmark:
I appreciate the courtesy with which the
Financial Secretary is trying to deal with the issue, but the bottom
line—the sad fact—is that the company went out of
business while the individual waited for 10 months for this
serious issue to be dealt with. That is the point that I was trying to
make.
John
Healey:
The point that I was about to make relates
directly to that concern. MTIC fraud and fraudsters have created
increasingly complex and sophisticated transaction chains to disguise
and allow the stealing of VAT from the public purse. They are
characterised by some of the most opaque trading practices that HMRC
comes across. To try to get to the bottom of this and stop it, there is
a duty to check such transaction chains, which often include
international links and therefore require the involvement of
international HMRC-equivalent agencies. Given the complexity involved,
it is not surprising that the process of focusing on the trading
patterns or traders that we suspect are most at risk can take some
time. It is also not surprising that the courts have consistently
supported our approach to verification, including in cases for which it
has taken up to 12 months to complete the verification
checks.
10
am
I welcome the
hon. Member for South-West Hertfordshire to the Front Bench. On our
side, some are disappointed that the job did not go to the hon. Member
for
Braintree.
John
Healey:
Indeed. The hon. Member for South-West
Hertfordshire has for some time served with great diligence on Treasury
issues from the Back Bench. I am sure that he can look forward to a
successful and long career on the Opposition Front Bench, and I look
forward with interest to watching
him.
The hon.
Gentleman dwelt for some time on the question of reverse charge, which
is not related at all to clause 97. It is disappointing that he did not
make his debut in a Statutory Instrument Committee yesterday, when the
hon. Members for Falmouth and Camborne and for Wycombe and I dealt with
the arrangements for reverse charge and the modifications of them.
Nevertheless, before I turn to the clause, let me try to deal with some
of the much wider questions that the hon. Member for South-West
Hertfordshire
posed.
The hon.
Gentleman and other hon. Members are rightly concerned about potential
burdens on business resulting from the compliance and assurance
activity that is necessary to deal with MTIC fraud. We start from the
recognition that the vast majority of British businesses are not
involved in MTIC fraud and are doing their best to comply with the tax
rules. Therefore, we do whatever we can to focus as tightly as possible
on those that are behind the MTIC fraud chains and that choose to
participate in and profit from the associated trading
activity.
The hon.
Gentleman helpfully cited the extended verification procedures. I want
to stress some figures that we have, because they underline the fact
that we do whatever we can to ensure that the most intense activity is
focused on the highest risk, where the greatest incidence of fraud
takes place. So far, of the case load that HMRC has undertaken on
extended verification, it found that over 19 out of 20 traders that it
targeted have been participating in or profiting from trading that is
linked to MTIC fraud. To put that another way, only 1 per cent. of the
VAT that has been withheld so
far under the verification programme has been found in the end to be
correctly claimed and properly
repayable.
How many
staff are involved? Just over 1,500 staff are involved in dealing with
MTIC and VAT fraud. How many traders are affected? Only a tiny fraction
of the 1.9 million traders are affected by any of the extended
verification procedures, precisely because we go to great lengths to
ensure that the action that we take is as targeted and as focused as
possible.
Adam
Afriyie (Windsor) (Con): May I press the Minister a little
further on how many traders are affected? He said that it is a tiny
percentage, but how many, broadly
speaking?
John
Healey:
I do not have a precise number, and it is quite
difficult to give one for the particular traders that are at any time
subject to the extended verification procedures. However, I hope that I
have made two things clear. First, the action that we are taking is
closely targeted, particularly in relation to joint and several
liability. Secondly, I hope that the figures that I gave earlier show
that we are dealing with a relatively small minority of the large
population of VAT-registered traders—nearly 2 million—the
majority of whom do their best to comply with the tax rules, and trade
legitimately and pay their tax as it is due.
The hon. Member for South-West
Hertfordshire talked about delays in VAT registrations. I should like
to give him some sense of scale: there are almost 300,000 new VAT
registrations every year. Clearly, HMRC aims to process those
registrations as quickly and efficiently as possible. In order to do
so, and given the evidence that the Treasury Committee took, to which
he referred, HMRC has taken steps to streamline that process,
particularly by targeting its pre-registration checking in order to
speed things up.
So
far, the outcome of those steps has been that more people are getting
their applications right first time because of the improved application
form and guidance. A year ago, that number was under 30 per cent.,
whereas it is now more than 70 per cent. Better targeting of the
procedures for identifying risk has meant that about 95 per cent. of
applications are now cleared for registration after the initial check.
The average time that it takes to process those applications is less
than 30 days.
The
hon. Gentleman asked about the costs of the changes in the past year to
the derogation on the reverse charge. The short answer is that they are
minimal. The new de minimis limit is sufficient to deter the fraud that
we seek to stop. The reduction in the scope of the goods is also
needed. It concentrates on computer chips and mobile phones—the
two principal products on which the bulk of MTIC fraud is perpetrated.
The provisions in the clause for extending joint and several liability
sit precisely alongside the reverse charge that is focused on those two
products.
On the
two-year lifespan of the derogation, I think that it is a good
principle not to have legislation on the statute books indefinitely,
and to review whether it is still needed. If, toward the end of the
two-year derogation, we decide that we still need it, we will
certainly apply to extend it. The hon. Gentleman might like to
know—we discussed this yesterday—that one of the
Government’s obligations under the derogation is to report to
the European Commission, by 31 March 2009, on the impact of our reverse
charge derogation, including on its impact on this type of fraud in
other countries.
Finally, the hon. Gentleman
asked whether the joint and several liability legislation is contrary
to the EU directive. It is not. The European Court of Justice ruled, in
a recent case, that UK legislation complies with the directive and is
proportionate.
Let me
now address clause 97 and the provisions on joint and several
liability. The clause introduces a power to amend the provisions that
apply to traders that know or have reasonable grounds to suspect that
VAT will go unpaid elsewhere in the supply chain. The Committee is
aware that the operational strategy and the range of measures that we
have put in place have greatly reduced the level of trading activity
that has in recent times been associated with MTIC fraud.
The hon. Gentleman mentioned
the ONS trading figures, which are produced monthly. Those trading
estimates suggest that MTIC-related activity, particularly of the
carousel type, over the summer last year was around 90 per cent. lower
than in the latter end of 2005 and the early part of 2006. The
Committee will also appreciate, because it has been discussed at length
alongside the proposal to allow the extension of the joint and several
liability provisions, that we have introduced a reverse charge. That is
a significant triumph on the part of my right hon. Friend the Paymaster
General after a year’s hard negotiation, and it is an important
provision for this
country.
Currently,
under the Finance Act 2003, HMRC can direct that another person in the
supply chain other than the seller is responsible for accounting for
the VAT payable, if that person knew or had reasonable grounds to
suspect that it would go unpaid. That presumption is rebuttable on
proof that the price reduction is due to circumstances that are
unconnected with the tax being unpaid. The new power in clause 97 will
allow us to change the circumstances under which a person can be
presumed to know that the tax will go unpaid. Any such change
would also include a provision to lay down how the presumption
can be
rebutted.
I shall now
deal with the new clause, then with the two amendments. The hon. Member
for South-West Hertfordshire said that parliamentary scrutiny in this
area is important. He is right. However, new clause 3 will not add much
to the scrutiny by Parliament and is not necessary. I shall explain
why. Parliament leads well established reporting and scrutiny
arrangements looking at MTIC, which is the right thing to do, given the
importance and scale of the problem that we face. The National Audit
Office audits HMRC activities every year and, for the past two years,
its section 2 audit work has specifically included a look at MTIC VAT
fraud. The NAO’s work is overseen by the Public Accounts
Committee, which reported on the NAO’s findings in its 2005
standard report. The NAO was subject to a PAC hearing in January this
year and we expect a PAC report on this area shortly.
The House of Lords, as the hon.
Gentleman has recognised, recently concluded and reported on an
inquiry into missing trader fraud in the European Union. He will know
that the Treasury Committee, particularly the Sub-Committee that
oversees HMRC’s work, scrutinises its operational activities and
measures in this area. HMRC publishes a spring report and an annual
report, both of which deal with and update activities in relation to
MTIC and are laid before the Libraries of the House. Normally—it
was the case with the spring report—those reports are subject to
a Treasury Committee
hearing.
Generally,
every year alongside the pre-Budget report, HMRC produces a report on
its latest measurements of indirect tax losses, including on VAT and
MTIC. The ONS also produces national statistics each month, which
include estimates of the effect of carousel trading on the UK’s
balance of payments. In addition to all that information—that
regular scrutiny—Members of Parliament can and do ask
parliamentary questions to probe further. I hope that the briefing that
I have supplied to Committee members, and to others who are interested,
has been helpful. I have placed that briefing in the Libraries of both
Houses.
We already
have a significant amount of regular reporting and scrutiny. If the
hon. Gentleman is still concerned that Parliament is not paying
sufficient attention to this matter, I think the answer is more to step
up the scrutiny and cross-examination of what HMRC is doing rather than
looking for a greater frequency of figures.
With VAT, there is a problem
with quarterly reports, for example. Returns and payments of VAT are
generally submitted quarterly, but the return dates are staggered so
that a proportion is received each month. The returns are also subject
to verification checks, which means, in part, that we can check whether
MTIC is suspected. I do not believe that quarterly reports of this
nature would add to the useful information that is available to
Parliament. If the hon. Gentleman feels that they would, despite the
extensive scrutiny in this field, that is a question for the bodies in
Parliament. I remind the Committee that the UK remains the only EU
country that produces annual estimates of MTIC fraud. As I have said,
we publish them each year alongside the pre-Budget report. I hope that
the hon. Gentleman will not press his new clause to a
vote.
10.15
am
I can deal with
amendment No. 251 quite briefly. As the hon. Gentleman explains, it
tries to ensure that the new power cannot be applied retrospectively. I
understand his concern, but the amendment is not necessary because any
order exercising that power can be applied retrospectively only if the
power, in this case proposed new subsection (9A), made it clear that
there was provision for it to be applied retrospectively. Since
proposed new subsection (9A) does not, it cannot.
Let me turn now to amendment
No. 252. It is not clear what the hon. Gentleman seeks to do and
whether the amendment is intended to refer to the existing power, the
new power or both in changing the procedure from negative to positive.
The way in which the amendment is drafted means that it would
be defective.
The existing
power is to amend the scope of the joint and several liability
provision by altering the goods to
which it applies. Incidentally, we have just used that power; it came
into effect from 1 May. That extension passed almost without comment
and no hon. Member prayed against the use of that power to extend the
goods to include iPods, digital camcorders and so on. The new
order-making power does not allow fundamental changes. It is about the
burden of proof, not about creating a VAT liability that would not
otherwise be there. Nevertheless, there is a case for considering
whether it is right to stick to the approach that was set out in the
2003 legislation. There is an argument that the provisions might be
better scrutinised where the order-making powers are invoked by
positive rather than negative resolution procedure.
As hon. Members will know, I
have always been inclined to use the positive order-making procedure
where appropriate rather than the negative procedure. I have always
believed that it is important that Parliament has a stronger position
and power to scrutinise the decisions and legislation of the Executive.
I am prepared to consider tabling an amendment on Report to make the
sort of change that I think that the hon. Gentleman is arguing
for—although it was not entirely clear what he is
after.
I hope that
that will be welcomed and will help the hon. Gentleman to believe that
he does not need to press his amendments or his new clause to a vote. I
warn him—this is his first outing on the Finance Bill on the
shadow Treasury Front Bench—that he will not find progress as
easy in future.
Mr.
Gauke:
I thank the Financial Secretary for his generosity.
On the point that he just made about positive resolution, I do not
expect such generosity to be repeated regularly but I am grateful for
it on this occasion.
We have had a broad and
wide-ranging
debate—[
Interruption.
]
The
Chairman:
Order. The hon. Member for Surrey Heath (Michael
Gove) is not a member of the Committee. He must leave the area of the
Committee Room reserved for Committee
members.
Mr.
Gauke:
As I said, we have had a broad and wide-ranging
debate, thanks both to your guidance, Mr. Gale, and to the
fact that new clause 3 would address many aspects of MTIC fraud. As I
have suggested, any such report under new clause 3 would have to
address a wide range of issues, and the Financial Secretary manfully
attempted to address many of them in his remarks. However, I think that
it will be found that there were a number of questions that, quite
understandably, he was unable to answer this morning.
The Financial Secretary
commented on the amount of MTIC fraud scrutiny that we have, and I
fully take on board the fact that Parliament performs considerable
scrutiny through the Public Accounts Committee, with the assistance of
the National Audit Office; the House of Lords reports to which I
referred; and the Treasury Committee, of which I was a member until
recently.
The new
clause would assist in such scrutiny, because although the information
may well be available in ad
hoc or informal documents such as the briefing that was released earlier
this year, in HMRC’s annual reports or in ONS statistics, it
would be helpful to place it in one document. For that reason, I am
inclined to press for a vote on new clause 3. I am grateful for the
clarification on amendment No. 251, which I shall withdraw, and in
particular for the clarification on amendment No. 252. The Financial
Secretary’s comments are very much appreciated. I beg to ask
leave to withdraw the amendment.
Amendment, by leave,
withdrawn.
Clause 97 ordered to stand
part of the Bill.
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