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Mr. Redwood: That may show that they have good tax advisers and are happy to stay here on that basis, or it may show that they are simply not profitable enough because of the general background. I understand why, unfortunately, a lot of companies will not be paying tax in future; it is because of the desperate conditions in which they find themselves.
We all want fair taxation at a fair level. If I were asked whether the complexity was more or less important than the rate, I would say that the rate is the most important thing. However, complexity is an issue, and complexity allied to too many changes or to too vicarious a system can be extremely worrying. A feeling has built up in some parts of the corporate sector. People are not sure what the law is. Furthermore, there can be changes, through the anti-avoidance and anti-evasion measures strengthened and taken by the Governmentsometimes for good reasonsand through judicial or Revenue decisions that try to interpret the rather complex law. That combination of a rate that is no longer that competitive with the legal complexity and too many changes that people cannot understand or do not think were properly heralded, can create uncertainty and lead to companies leaving these shores.
My worry is that length and complexity go together. It is reassuring to hear the architects tell us that many people want the issues spelt out in detail and that that has now happened in lucid and clear prose so that people can relax and know exactly where they are. I confess that, probably in common with most speakers in this debate, I have read some but not all the Bill. Anyone trying to read it would rapidly come to the conclusion that it is difficult for anybody but an accountant specialising in corporation tax to understand what it means for any given business.
a sum...which is received after a person permanently ceases to carry on a trade, and...which arises from the carrying on of the trade before the cessation.
In this Chapter, except in sections 194 and 195, references to a person permanently ceasing to carry on a trade include
(a) in the case of a company, the occurrence of an event treated under section 18 of ITTOIA 2005 (companies beginning or ceasing to be within charge to income tax) as the company permanently ceasing to carry on the trade, and
(b) in the case of a trade carried on by a person in partnership, the occurrence of an event treated under section 246(4) of ITTOIA 2005 (basic meaning of post-cessation receipt) as the person permanently ceasing to carry on the trade.
I shall spare the House clause 191, but it is another little gem, citing another series of sections of legislation to which the relevant people have to cross-refer. That little sample of the delights of this reading for insomniacs tells us that the Bill is certainly not a clear and lucid exposé that an intelligent, rational man or woman could read and immediately understand; they would still need to rush to their advisers to try to get to grips with it.
non-lending relationships not involving discounts.
A company has a relevant non-lending relationship if
(a) the company stands, or has stood, in the position of a creditor or debtor in relation to a money debt,
(b) the money debt did not arise from a transaction for the lending of money...and
(c) the money debt is one of the kinds mentioned in subsection (2).
We then go through five other subsections to clause 479 to try to wrestle with the complicated issue of what a non-lending relationship not involving a discount is. Having passed the GCSE, we can then go on to the scholarshiprelevant non-lending relationships involving a discount. These are just samples to show that this law is getting exceedingly complicated.
One of the clauses that I most like, because it has a topical flavour to it, is clause 524Shares subject to outstanding third party obligations. I wonder if when that was written people had in mind our growing shareholdings in the British banking system. It says:
This section applies to the share held by the investing company if it...is subject to outstanding third party obligations (see subsection (2)), and...is an interest-like investment...For the purposes of this Chapter a share is subject to outstanding third party obligations if...the share is subject to obligations of a kind specified in subsection (4)...the obligations are...obligations of a person other than the investing company, or...obligations of the investing company which, under any relevant arrangements, will or might be discharged directly or indirectly by any other person, and...the obligations are yet to be discharged...Accordingly, those obligations are the third party obligations in the case of that share...The kinds of obligation
are...an obligation to meet unpaid calls on the share
and any other obligation to make a contribution to the capital of the issuing company that could affect the value of the share.
That is all too poignant and topical. Obviously, people had great foresight in putting in those provisions to deal with the burgeoning volume of cash that we, for no good reason, are tipping into banks that need to sort out their costs and lending policies rather more quickly.
I should like the Minister to respond to these points of principle about whether we need to continue with this kind of process in future. Perhaps my hon. Friend the Member for Gosport, who has worked valiantly, should be given a different remit on a future piece of legislation, whereby we would see that there is some connection between length and complexity and that the length of a Bill is not necessarily an indication that it is easier to understand or more likely to avoid all kinds of dispute. Lawyers are very clever people. Private sector lawyers tend to get paid rather more than parliamentary draftsmen and public sector lawyers trying to battle against them in terms of such legislation. Far from reducing the number of uncertainties, the longer the Bill, the more causes for action there will be. The more words there are in a Bill, the more it can be challenged in court and the fewer the people who know the true tax base of the country.
We are in danger of not being able to see the wood for the huge number of trees that have been felled to produce the paper for this legislation. I cannot believe that having 821 pages of law to do about the half the
job on corporation tax represents the final statement on simplification. I live in some fear that once people have homed in and boned up on this legislation, some 22 days later the Chancellor may wish to make fairly big changes to it. Of course, I understand that it is a founding text for a period of years, but if Chancellors decide to make too many changes to founding texts, that has the added hazard of all the amendments and complications added on top of the 821 pages of law. Surely there is a better way. This will not be welcomed by the business community currently resident in Britain, and I fear that it is not the answer to those who are leaving this country saying the law is too complex.
I welcome the constructive comments made by those who have spoken in the debate. I am grateful for the broad, if not absolutely universal, support that the Bill enjoys. There has been well deserved recognition for everyone who has contributed to this work. I add my thanks to those that have been expressed to the hon. Member for Gosport (Sir Peter Viggers).
Let me respond to some of the points that have been made. It has been suggested that the rewrite goes only part of the way and that the underlying tax code should be simplified. We are, in fact, committed to simplification. There is a rolling programme in place, with reviews involving businesses and tax professionals and considering, for example, how corporation tax calculations and returns can be simplified for smaller companies and how to simplify rules on corporation tax for related companies. That work builds on recent reforms to the business tax system, and the rewrite complements our commitment.
The hon. Member for South-West Hertfordshire (Mr. Gauke)I am grateful for his supportreferred to the possibility of establishing an independent body to oversee tax simplification. When he made that point in the Second Reading Committee, I responded that in my view another layer of bureaucracy is not the way forward. However, we have already had that debate.
Comments were made about the length of the Bill and of tax legislation in general, to which I responded. I should, though, underline that in addition to making the legislation clearer, rewriting repeals a considerable amount of legislation. What matters most to businesses is not the number of pages in the legislation but the ease of using it. It may be some reassurance to the right hon. Member for Wokingham (Mr. Redwood) and others that in the assessment of the World Bank the UK compares very favourably with countries with shorter legislation. It says that a standard UK company spends less time complying with our tax system than a similar company in any other G7 country105 hours in the UK compared with 119 in Canada, 132 in France, 187 in the United States, 196 in Germany, 334 in Italy and 355 in Japan. I hope that that makes it clear that in fact our legislation is much easier to use.
I am happy to put on the record again the reassurances that I set out in Committee, in response to the hon. Member for South-West Hertfordshire, about the circumstances in which the powers to amend legislation will be used. As with previous rewrite Acts, these powers will not be used unless the tax law rewrite projects consultative and steering committees agree that they should be.
The Bill makes things easier for everybody using this legislation: from small companies to large companies; from local accountancy practices to the large accountancy firms. I am grateful for the broad support that has been expressed and commend it to the House.
That, at this days sitting, the Speaker shall put the Questions necessary to dispose of proceedings on:
(a) the Motions in the name of Ms Harriet Harman relating to membership of Regional Select Committees, not later than one and a half hours after the commencement of proceedings on the Motion for this Order; and
(b) the Motions in the name of Ms Harriet Harman relating to Green Book (Committee on Members Allowances), Liaison Committee (Membership) and Pay for Chairmen of Select Committees not later than three hours after the commencement of proceedings on the Motion for this Order; such Questions shall include the Questions on any Amendments selected by the Speaker which may then be moved; proceedings may be entered upon or continue after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.
This is a very simple business of the House motion. It is a slightly different version from that which was tabled and on the Order Paper last night but was objected to. It allows one and a half hours for a single debate on putting the names of various Members of the House on eight regional Select Committees. This is normally done without debate at the moment of interruption, so it seemed to the Government that an hour and a half was a perfectly adequate amount of time.
Andrew Mackinlay (Thurrock) (Lab): Before my hon. Friend moves from the procedure relating to the motion on regional Select Committees, let me say that I am bewildered. Why have not the names of these Members been before the Committee of Selection? We have that Committee, which costs money and so on, but these appointments were never put to itwhy not?
Chris Bryant: I think, if my hon. Friend will allow, that that is a matter for the next debate [ Interruption. ] I am happy to answer the question; it is a very straightforward matter. The Committee of Selection does not come into play when it is a question of Members being put on a Committee by virtue of a temporary Standing Order. These appointments are made under a temporary Standing Order that lapses at the end of this Parliament; consequently, there is no need for them to go to the Committee of Selection. However, that is for the later debate, because this is merely about the business of the House motion.
A second period of an hour and a half is allowed for relatively minor issues that have been pressed on me by Members in all parts of the House, in one instance by the chairman of the 1922 committee. I hope that hon. Members will feel able to support the motion.
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