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Session 2007 - 08 Publications on the internet General Committee Debates Finance Bill |
Finance Bill |
The Committee consisted of the following Members:Alan
Sandall, James Davies, Committee
Clerks † attended the
Committee Public Bill CommitteeThursday 5 June 2008(Morning)[Frank Cook in the Chair]Finance Bill(Except clauses 3, 5, 6, 15, 21, 49, 90 and 117 and new clauses amending section 74 of the Finance Act 2003)9
am Mr.
Philip Hammond (Runnymede and Weybridge) (Con): On a point
of order, Mr. Cook. Is it not customary that it is the
Government’s responsibility to ensure a quorum in the Committee,
using Government Members? Is it not unusual to have a Committee
dependent for its quorum on Opposition
Members?
The
Chairman: I am tempted to inquire how long the hon.
Gentleman has been a Member of the House. He ought to know that there
is no such responsibility. A quorum is a quorum is a
quorum.
Schedule 27Abolition
of allowances: consequential amendments and
savings Amendment
made: No. 148, in schedule 27, page 322, line 35, at end
insert— ‘(1) Sub-paragraph
(2) applies if— (a) an
initial allowance has been made under Part 3 of CAA 2001 in respect of
qualifying enterprise zone expenditure,
and (b) an event occurs in
relation to the building on which the expenditure was incurred which,
if section 307 of that Act (withdrawal of allowance if building not
industrial building when first used etc) remained in force, would
result in the allowance being
withdrawn. (2) Unless the event
occurs more than 7 years after the end of the chargeable period for
which the allowance was made, the allowance is to be withdrawn as if
that section remained in force.’.—[Jane
Kennedy.] Schedule
27, as amended, agreed
to. Clauses
82 to 84 ordered to stand part of the
Bill.
Clause 85Power
to make consequential and transitional
provision Mr.
Jeremy Browne (Taunton) (LD): I beg to move amendment No.
185, in
clause 85, page 47, line 33, leave
out paragraph
(b).
No. 186, in
clause 85, page 47, line 36, leave
out from ‘(2)’ to end of line 37 and add
‘may not be made unless a draft of the regulations has
been laid before, and approved by a resolution of, the House of
Commons.’.
Clause
85 allows the Treasury to make consequential and transitional
provisions in relation to clauses 68 to 84. That is a catch-all power,
and it includes the clauses on the abolition of industrial and
agricultural buildings allowances, which we discussed at length in the
previous sitting. Amendment No. 185 would remove paragraph (b) from
subsection (4), which allows any changes to have retrospective effect
providing that the provision
“does not
increase any person’s liability to tax”.
Amendment No. 186 would
remove the negative resolution procedure and introduce the positive
resolution procedure for any changes made under the
clause. I
tabled the amendments to seek assurances on a couple of matters. First,
I would like to ask the Financial Secretary whether paragraph (b) will
allow the Government retrospectively to alter provisions to reduce
allowances, for example by reducing the phasing-out levels for
agricultural buildings allowances from those decided in clause 82. Will
the right hon. Lady explain whether there is scope for changing the
goal posts agreed in subsequent finance Bills? Secondly, do the
Government think that it is appropriate to use statutory instruments
and the negative resolution procedure to introduce retrospective
provisions? The
context for this part of our deliberations is, as we discussed at
length on Tuesday afternoon, the widespread concern that people who
made planning assumptions about their business investments, in some
cases dating back to the 1980s, as well as people who made those
assumptions as recently as the middle of the current decade, will be
adversely affected by the changes. However, at least they now know the
scope of that adverse effect. They know that the tapering-out will
leave them worse off, but they can make calculations about how much
worse off they will be and make adjustments. Given the state of the
public finances, I am seeking reassurance from the Minister that the
goal posts will not be further moved in subsequent Bills; for example,
that the tapering-out will not take place more rapidly than envisaged
in the
legislation.
The
Financial Secretary to the Treasury (Jane Kennedy): It is
a pleasure to serve under your chairmanship, Mr. Cook. It is
a very fine day and I hope that we can bring that good atmosphere into
the Committee, as has been our practice so far in our
debates.
Given the
scale of the reforms that we have been considering in the last few
clauses—14 of the last 17 clauses having been part of
the package business tax reforms announced in 2007—it is
possible that some of the consequential amendments that need to be made
to other Acts, which refer to legislation that has been repealed or
changed significantly, have been missed. The hon. Member for Taunton
has tabled a probing amendment to ascertain the purpose of the powers
that we would take under the clause. I hope to reassure him by saying
that they could be used only to relieve tax, but not in a way that
would be detrimental to a taxpayer. The clause provides the power to
make any transitional
and savings provisions that are necessary as a result of the reforms.
They allow such amendments to be retrospective only when the change
does not increase someone’s liability to tax. The statutory
instrument that deploys that power would be subject to negative
resolution. I hope that that provides the reassurance that the hon.
Gentleman was seeking. His question was a sensible one. Given my
reassurance, I hope that he is prepared to withdraw his
amendment.
Mr.
Browne: I am grateful to the Minister for her reassurance,
and I am happy to beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Clause
85 ordered to stand part of the
Bill.
Clause 86Balancing
allowances on transfers of
trade
Mr.
Hammond: I beg to move amendment No. 218, in
clause 86, page 48, line 29, leave
out subsection (4) and
insert— ‘(4) Where this
section applies— (a)
section 343(2) shall apply, but as if the words “and are subject
to section 343A (company reconstructions involving business of leasing
plant or machinery)” were omitted;
and (b) section 343A shall not
apply.’. This
is a technical drafting amendment, the authorship of which I do not
claim. It comes from the Law Society, which is concerned about the lack
of clarity in the drafting of subsection (4). The amendment intends to
clarify the intention of that subsection so that it is clear that in a
case to which the anti-avoidance provisions of clause 86 apply, section
343(2) of the Income and Corporation Taxes Act 1988 would be omitted
and, separately, that section 343(A) would not apply in a case to which
this anti-avoidance section applies. There is no question about what
the provision is trying to achieve, but the wording in the Bill is
clumsy and is capable of more than one interpretation. The Law Society
has proposed that subsection (4) be divided into two paragraphs, so
that it says clearly where section 343(2) should apply, but as if the
words,
“and are subject
to section 343(A)”
were omitted, and,
separately, that section 343(A) itself “shall not apply”.
I hope the Minister can confirm that the Law Society’s
interpretation is correct, and that the amendment does not change what
the Government intended. If she will not accept our amendment, will she
at least place on record an acknowledgement that the interpretation as
per the amendment is correct for future guidance of Her
Majesty’s Revenue and Customs decision-makers and the
courts?
Jane
Kennedy: Amendment No. 218 does no more than seek to
clarify the intention of clause 86 (4). I appreciate the way in way in
which the hon. Gentleman moved it, and it may help if I explain how
subsection (4) works. This will be quite a technical reply, but it is a
proper and technical amendment, which has the same effect as the
subsection that it seeks to amend. I will try to explain why we do not
believe that it is necessary.
Subsection (4)
of new section 343ZA applies section 343(2) of the Income and
Corporation Taxes Act 1988 to transactions that fall within the scope
of the new section. Section 343(2) is one of its main operative
provisions, providing that a trade is treated as not ceasing and
commencing for the purposes of the Capital Allowances Act. This is the
effect that is needed for the new clause.
However,
section 343(2) ends with words that ensure it normally applies subject
to the provisions of section 343A. As section 343A ensures that section
343 does not apply in some circumstances, it could have the effect of
allowing a trade to be treated as ceased. Therefore, in applying
section 343(2) to new section 343ZA, it is necessary to ensure that
section 343A does not affect the outcome. This is achieved by omitting
the closing words of section 343(2). It is at moments like this that I
wish I was next door in Committee Room 9 debating the Human
Fertilisation and Embryology
Bill. This
is the effect of subsection (4) of new clause 343ZA. The proposed
amendment would have the same effect. We can debate the elegance of the
wording, but our advice is that the wording in the Bill is what is
required to have the effect I have described. I believe that new
subsection (4) is unambiguous and there is no need to make the
amendment. It would be interesting to hear the views of the Law Society
after that explanation. I ask the hon. Gentleman to withdraw the
amendment.
Mr.
Hammond: As the hon. Gentleman says, that is clear. How
the right hon. Lady can suggest that that is unambiguous is slightly
beyond me. I am quite sure that it is fairly ambiguous. It emphasises
how complex the tax code is. The important point is that although I do
not pretend to have followed precisely the logic of her explanation, as
she read it out, those who need to interpret this statute will not only
have followed it, they will be able to refer to it. Therefore the
matter is clarified for the future guidance of HMRC practitioners and,
if ever necessary, the courts. The purpose of the amendment has been
served, so I beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Clause
86 ordered to stand part of the
Bill. Clauses
87 and 88 ordered to stand part of the
Bill.
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