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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 Government—sometimes for good reasons—and 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.
Let us look at clauses 190 and 191 on page 85. Clause 190 tries to give a basic meaning of “post-cessation receipt”. It says that it means
“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.”
I can understand that. However, the clause goes on to say:
“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.
The Bill gets more exciting in parts; I did not quote one of the most exciting bits. Clause 479, for example, invites us to learn about
“non-lending relationships not involving discounts”.
The mind boggles at what might be involved in one of those non-lending relationships, but, helpfully, we are told that
“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 scholarship—relevant 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 524—“Shares 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”—
ones with which we are getting very familiar under this Government—
“are...an obligation to meet unpaid calls on the share”—
there will be plenty of those—
“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.
6.13 pm
Mr. Timms: I welcome the broad support that has been expressed—
Mr. Deputy Speaker (Sir Michael Lord): Order. The Minister needs to seek the leave of the House.
Mr. Timms: With the leave of the House, Mr. Deputy Speaker; thank you.
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 support—referred 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 country—105 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 project’s 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.
Bill accordingly read the Third time and passed.
Business of the House
6.17 pm
The Deputy Leader of the House of Commons (Chris Bryant): I beg to move,
That, at this day’s 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 it—why 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.
The House proceeded to a Division.
Mr. Deputy Speaker (Sir Michael Lord): I ask the Serjeant at Arms to investigate the delay in the No Lobby.
The House having divided: Ayes 281, Noes 217.
AYES
Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Allen, Mr. Graham
Anderson, Mr. David
Anderson, Janet
Armstrong, rh Hilary
Atkins, Charlotte
Austin, Mr. Ian
Austin, John
Bailey, Mr. Adrian
Baird, Vera
Balls, rh Ed
Banks, Gordon
Barlow, Ms Celia
Barron, rh Mr. Kevin
Battle, rh John
Bayley, Hugh
Beckett, rh Margaret
Begg, Miss Anne
Bell, Sir Stuart
Benn, rh Hilary
Berry, Roger
Blackman, Liz
Blackman-Woods, Dr. Roberta
Blears, rh Hazel
Blizzard, Mr. Bob
Bradshaw, Mr. Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr. Nicholas
Brown, Mr. Russell
Browne, rh Des
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Butler, Ms Dawn
Byers, rh Mr. Stephen
Caborn, rh Mr. Richard
Cairns, David
Campbell, Mr. Ronnie
Caton, Mr. Martin
Challen, Colin
Chapman, Ben
Chaytor, Mr. David
Clapham, Mr. Michael
Clark, Ms Katy
Clark, Paul
Clarke, rh Mr. Charles
Clarke, rh Mr. Tom
Clelland, Mr. David
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Connarty, Michael
Cook, Frank
Cooper, Rosie
Cooper, rh Yvette
Creagh, Mary
Cruddas, Jon
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
Curtis-Thomas, Mrs. Claire
Davidson, Mr. Ian
Dean, Mrs. Janet
Devine, Mr. Jim
Dhanda, Mr. Parmjit
Dismore, Mr. Andrew
Dobbin, Jim
Dobson, rh Frank
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Eagle, Angela
Eagle, Maria
Efford, Clive
Ellman, Mrs. Louise
Engel, Natascha
Ennis, Jeff
Etherington, Bill
Field, rh Mr. Frank
Fisher, Mark
Fitzpatrick, Jim
Flello, Mr. Robert
Flynn, Paul
Follett, Barbara
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
George, rh Mr. Bruce
Gerrard, Mr. Neil
Gibson, Dr. Ian
Goodman, Helen
Griffith, Nia
Griffiths, Nigel
Grogan, Mr. John
Gwynne, Andrew
Hall, Mr. Mike
Hall, Patrick
Hamilton, Mr. Fabian
Hanson, rh Mr. David
Harman, rh Ms Harriet
Harris, Mr. Tom
Healey, rh John
Hendrick, Mr. Mark
Hepburn, Mr. Stephen
Heppell, Mr. John
Hesford, Stephen
Heyes, David
Hill, rh Keith
Hodgson, Mrs. Sharon
Hoey, Kate
Hood, Mr. Jim
Hoon, rh Mr. Geoffrey
Hope, Phil
Hopkins, Kelvin
Howarth, rh Mr. George
Howells, rh Dr. Kim
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Iddon, Dr. Brian
Illsley, Mr. Eric
Ingram, rh Mr. Adam
Irranca-Davies, Huw
James, Mrs. Siân C.
Johnson, rh Alan
Johnson, Ms Diana R.
Jones, Helen
Jones, Mr. Kevan
Jones, Lynne
Jones, Mr. Martyn
Jowell, rh Tessa
Joyce, Mr. Eric
Kaufman, rh Sir Gerald
Keen, Alan
Kelly, rh Ruth
Kemp, Mr. Fraser
Kidney, Mr. David
Kilfoyle, Mr. Peter
Knight, rh Jim
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Lammy, rh Mr. David
Laxton, Mr. Bob
Lazarowicz, Mark
Lepper, David
Levitt, Tom
Linton, Martin
Lloyd, Tony
Love, Mr. Andrew
Lucas, Ian
Mackinlay, Andrew
MacShane, rh Mr. Denis
Malik, Mr. Shahid
Mallaber, Judy
Mann, John
Marris, Rob
Marsden, Mr. Gordon
Marshall-Andrews, Mr. Robert
Martlew, Mr. Eric
McAvoy, rh Mr. Thomas
McCabe, Steve
McCafferty, Chris
McCarthy, Kerry
McCarthy-Fry, Sarah
McCartney, rh Mr. Ian
McDonagh, Siobhain
McDonnell, John
McFadden, rh Mr. Pat
McFall, rh John
McGovern, Mr. Jim
McGuire, rh Mrs. Anne
McKechin, Ann
McKenna, Rosemary
McNulty, rh Mr. Tony
Meacher, rh Mr. Michael
Meale, Mr. Alan
Merron, Gillian
Michael, rh Alun
Miliband, rh David
Miller, Andrew
Mitchell, Mr. Austin
Moffat, Anne
Moffatt, Laura
Mole, Chris
Moon, Mrs. Madeleine
Moran, Margaret
Morgan, Julie
Morley, rh Mr. Elliot
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Denis
Naysmith, Dr. Doug
Norris, Dan
O'Brien, Mr. Mike
O'Hara, Mr. Edward
Olner, Mr. Bill
Osborne, Sandra
Owen, Albert
Palmer, Dr. Nick
Pearson, Ian
Plaskitt, Mr. James
Pope, Mr. Greg
Pound, Stephen
Prentice, Bridget
Prentice, Mr. Gordon
Prescott, rh Mr. John
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Mr. Ken
Raynsford, rh Mr. Nick
Reed, Mr. Andy
Reed, Mr. Jamie
Reid, rh John
Riordan, Mrs. Linda
Robertson, John
Robinson, Mr. Geoffrey
Rooney, Mr. Terry
Roy, Mr. Frank
Roy, Lindsay
Ruane, Chris
Ruddock, Joan
Russell, Christine
Ryan, rh Joan
Salter, Martin
Sarwar, Mr. Mohammad
Seabeck, Alison
Sharma, Mr. Virendra
Shaw, Jonathan
Sheerman, Mr. Barry
Sheridan, Jim
Simon, Mr. Siôn
Simpson, Alan
Singh, Mr. Marsha
Skinner, Mr. Dennis
Slaughter, Mr. Andy
Smith, rh Mr. Andrew
Smith, Angela E. (Basildon)
Smith, Geraldine
Snelgrove, Anne
Soulsby, Sir Peter
Spellar, rh Mr. John
Starkey, Dr. Phyllis
Stewart, Ian
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Stringer, Graham
Sutcliffe, Mr. Gerry
Tami, Mark
Taylor, Ms Dari
Taylor, David
Thomas, Mr. Gareth
Timms, rh Mr. Stephen
Tipping, Paddy
Touhig, rh Mr. Don
Trickett, Jon
Truswell, Mr. Paul
Turner, Dr. Desmond
Twigg, Derek
Vis, Dr. Rudi
Walley, Joan
Waltho, Lynda
Watson, Mr. Tom
Watts, Mr. Dave
Whitehead, Dr. Alan
Williams, rh Mr. Alan
Williams, Mrs. Betty
Wills, rh Mr. Michael
Wilson, Phil
Winnick, Mr. David
Winterton, rh Ms Rosie
Wood, Mike
Woolas, Mr. Phil
Wright, Mr. Anthony
Wright, David
Wright, Mr. Iain
Wright, Dr. Tony
Wyatt, Derek
Tellers for the Ayes:
Claire Ward and
Barbara Keeley
NOES
Afriyie, Adam
Ainsworth, Mr. Peter
Alexander, Danny
Amess, Mr. David
Ancram, rh Mr. Michael
Atkinson, Mr. Peter
Bacon, Mr. Richard
Baker, Norman
Baldry, Tony
Barker, Gregory
Baron, Mr. John
Barrett, John
Beith, rh Sir Alan
Bellingham, Mr. Henry
Benyon, Mr. Richard
Bercow, John
Binley, Mr. Brian
Blunt, Mr. Crispin
Bone, Mr. Peter
Boswell, Mr. Tim
Bottomley, Peter
Brady, Mr. Graham
Brake, Tom
Brazier, Mr. Julian
Brokenshire, James
Brooke, Annette
Browne, Mr. Jeremy
Bruce, rh Malcolm
Burns, Mr. Simon
Burrowes, Mr. David
Burstow, Mr. Paul
Burt, Alistair
Burt, Lorely
Butterfill, Sir John
Campbell, Mr. Gregory
Campbell, rh Sir Menzies
Carmichael, Mr. Alistair
Carswell, Mr. Douglas
Cash, Mr. William
Chope, Mr. Christopher
Clappison, Mr. James
Clark, Greg
Clarke, rh Mr. Kenneth
Cormack, Sir Patrick
Crabb, Mr. Stephen
Curry, rh Mr. David
Davies, Mr. Dai
Davies, David T.C. (Monmouth)
Davies, Philip
Davis, rh David
Djanogly, Mr. Jonathan
Dorries, Nadine
Duncan, Alan
Dunne, Mr. Philip
Ellwood, Mr. Tobias
Evans, Mr. Nigel
Evennett, Mr. David
Fabricant, Michael
Fallon, Mr. Michael
Farron, Tim
Featherstone, Lynne
Field, Mr. Mark
Foster, Mr. Don
Fox, Dr. Liam
Francois, Mr. Mark
Gale, Mr. Roger
Garnier, Mr. Edward
Gauke, Mr. David
George, Andrew
Gidley, Sandra
Gillan, Mrs. Cheryl
Goldsworthy, Julia
Goodman, Mr. Paul
Goodwill, Mr. Robert
Gove, Michael
Gray, Mr. James
Grayling, Chris
Green, Damian
Greenway, Mr. John
Grieve, Mr. Dominic
Hague, rh Mr. William
Hammond, Mr. Philip
Hammond, Stephen
Hancock, Mr. Mike
Hands, Mr. Greg
Harper, Mr. Mark
Harris, Dr. Evan
Harvey, Nick
Hayes, Mr. John
Heald, Mr. Oliver
Heath, Mr. David
Heathcoat-Amory, rh Mr. David
Hemming, John
Hendry, Charles
Herbert, Nick
Hoban, Mr. Mark
Hogg, rh Mr. Douglas
Hollobone, Mr. Philip
Holmes, Paul
Horwood, Martin
Howarth, David
Howell, John
Hughes, Simon
Huhne, Chris
Hunter, Mark
Hurd, Mr. Nick
Jack, rh Mr. Michael
Jackson, Mr. Stewart
Jones, Mr. David
Kawczynski, Daniel
Keetch, Mr. Paul
Knight, rh Mr. Greg
Kramer, Susan
Laing, Mrs. Eleanor
Lait, Mrs. Jacqui
Lamb, Norman
Lancaster, Mr. Mark
Lansley, Mr. Andrew
Laws, Mr. David
Leech, Mr. John
Leigh, Mr. Edward
Lewis, Dr. Julian
Liddell-Grainger, Mr. Ian
Lidington, Mr. David
Lilley, rh Mr. Peter
Llwyd, Mr. Elfyn
Loughton, Tim
Luff, Peter
Mackay, rh Mr. Andrew
Main, Anne
Malins, Mr. Humfrey
May, rh Mrs. Theresa
McLoughlin, rh Mr. Patrick
Mercer, Patrick
Miller, Mrs. Maria
Milton, Anne
Mitchell, Mr. Andrew
Moore, Mr. Michael
Moss, Mr. Malcolm
Mulholland, Greg
Mundell, David
Murrison, Dr. Andrew
Neill, Robert
O'Brien, Mr. Stephen
Öpik, Lembit
Ottaway, Richard
Paice, Mr. James
Paterson, Mr. Owen
Pelling, Mr. Andrew
Penrose, John
Pickles, Mr. Eric
Price, Adam
Prisk, Mr. Mark
Pritchard, Mark
Pugh, Dr. John
Randall, Mr. John
Redwood, rh Mr. John
Reid, Mr. Alan
Robathan, Mr. Andrew
Robertson, Hugh
Robertson, Mr. Laurence
Rogerson, Dan
Rosindell, Andrew
Rowen, Paul
Ruffley, Mr. David
Russell, Bob
Sanders, Mr. Adrian
Scott, Mr. Lee
Selous, Andrew
Shapps, Grant
Shepherd, Mr. Richard
Simmonds, Mark
Smith, Sir Robert
Spicer, Sir Michael
Spring, Mr. Richard
Stanley, rh Sir John
Steen, Mr. Anthony
Streeter, Mr. Gary
Stunell, Andrew
Swayne, Mr. Desmond
Swinson, Jo
Swire, Mr. Hugo
Syms, Mr. Robert
Tapsell, Sir Peter
Taylor, Mr. Ian
Taylor, Matthew
Taylor, Dr. Richard
Teather, Sarah
Thurso, John
Timpson, Mr. Edward
Tredinnick, David
Turner, Mr. Andrew
Vara, Mr. Shailesh
Viggers, Sir Peter
Villiers, Mrs. Theresa
Walker, Mr. Charles
Wallace, Mr. Ben
Walter, Mr. Robert
Watkinson, Angela
Webb, Steve
Whittingdale, Mr. John
Wiggin, Bill
Willetts, Mr. David
Williams, Hywel
Williams, Mark
Williams, Mr. Roger
Williams, Stephen
Willis, Mr. Phil
Willott, Jenny
Wilshire, Mr. David
Wilson, Mr. Rob
Wilson, Sammy
Winterton, Ann
Winterton, Sir Nicholas
Wright, Jeremy
Yeo, Mr. Tim
Young, rh Sir George
Tellers for the Noes:
Mr. Brooks Newmark and
James Duddridge
Question accordingly agreed to.
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