John
Howell: I wish to make a couple of points. My hon. Friend
has asked about the impact of the provision and research on the car
industry, but will the Minister comment on the difference in tax yield
between the proposal under discussion and increasing the amount from
£80,000 to, say,
£100,000?
The
Exchequer Secretary to the Treasury (Kitty Ussher): It is
a pleasure to serve once again under your chairmanship, Mr.
Hood. As it is, or it is also a pleasure—even if I cannot
speak— Mr.
Peter Bone (Wellingborough) (Con):
Overwhelmed.
Kitty
Ussher: Overwhelmed, indeed, by the opportunity and
privilege of debating with the hon. Gentleman again
today. The
points that have been made are valid. The schedule does three things:
shifts down the CO2 emission threshold for the main company
car tax band by 5g CO2 per km; abolishes the cap on company
car list prices for the purposes of CCT; and—I think this is
uncontroversial—simplifies the legislative means by which the
appropriate percentage for electric cars in CCT is set.
On the point
made by the hon. Member for South-West Hertfordshire, we have, of
course, considered the impact on the industry. The impact, if there is
any at all, is negligible, for the simple reason that only around 1,700
company cars retail at more than £80,000. The price range may be
extremely wide. I think the figure of £300,000 was mentioned.
People who purchase that type of car should easily be able to cope with
what we propose. There is no policy reason for a cap. On the point made
by the hon. Member for Henley, it therefore follows that it would not
make any difference if the cap were raised to
£100,000.
Mr.
Bone: I am grateful for the Minister’s explanation,
but given what she has just said, why are the proposals being
introduced at different
times?
Kitty
Ussher: We like to give certainty to the industry, and are
simply setting out what we propose to do in the appropriate years
ahead. Some of those proposals have been pre-announced, fulfilling
different
commitments. Abolishing
the £80,000 cap will, after three years, yield about £5
million, while raising the cap to £100,000 would probably not
yield anything quantifiable. I hope that that goes further towards
answering the question asked by the hon. Member for
Henley. The
hon. Member for South-West Hertfordshire raised an issue that, as I was
aware, he raised with my predecessor in correspondence: car dealerships
that might give employees
a different car to drive every couple of days, or every week. As he
says, while in some firms an employee might be given those different
cars because they are what they would like to drive, in many other
firms employees do not have a choice. He is right that in the past,
just to make it simpler for the employer and the garage, we allowed
average list prices. What we wish to address is the fact that those
prices were negotiated with HMRC on a piecemeal basis, garage by
garage, often with an individual garage in a chain of garages. That
sometimes led to an arbitrariness that perhaps was not conducive to
good policy making, and we are simply formalising the process by means
of a national system. It might help
the hon. Gentleman to know that the effect of the change is cost
neutral to us, and so while there might be differences for
individuals—and they are right to raise those
differences—this is not a revenue-raising measure and there will
be both winners and losers. I am sure he agrees that it is better to
have a proper system, rather than to deal with the issue on an
arbitrary, ad hoc
basis.
Mr.
Gauke: I am grateful to the Minister for responding this
afternoon on that point. I note her comment that the measure is cost
neutral for HMRC, but what assessment has been made of the additional
administrative burden for car dealerships? What consultation was there
with car dealerships and the car manufacturing industry as a whole, and
what was the
response?
Kitty
Ussher: I think that I am able to reassure the hon.
Gentleman on those points. We have consulted extensively with industry
bodies—for example, the Society of Motor Manufacturers and
Traders and the Retail Motor Industry Federation—on the change.
The feeling that we are getting back is that the change will lead to
reduced administrative burdens, because of the certainty that it
provides. Individual employers do not have to use an averaging process
if they do not want to; they can continue with the mainstream system if
they prefer that. However, the purpose of the measure is to reduce
compliance costs and have a far simpler
method.
Mr.
Gauke: In the correspondence that I have seen, both RMIF
and SMMT have expressed concerns about the proposal. That
correspondence dates back a couple of months or so, and those
bodies’ position might have changed, but what I have seen
suggests concerns about the proposals rather than a general welcoming
of
them. 1.45
pm
Kitty
Ussher: The advice I have been given is that the measure
should lead to reduced administrative burdens, and that that is
understood. We intend there to be a simplification measure. We are
making the change because people have complained that the previous
system of individual car averaging arrangements with individual
employers and garages was unfair, and led to inconsistencies across the
country. Perhaps that is the nub of the problem. If there were
inconsistencies there would obviously be winners and losers as a
result.
I simply want
to reassure the Committee that this is not an attempt to ratchet in
more funds to the Exchequer; it is simply better policy making. If in
ironing out there are inconsistencies and some individual employers
feel
hard done by, I can understand that. But this is a better way forward.
As I said, they have the option of not going down the averaging route
if they prefer. I hope, having explained that, that the schedule will
be accepted by the
Committee. Question
put and agreed
to. Schedule
28 accordingly agreed
to.
Clause
54Taxable
benefit of cars: price of automatic car for disabled
employee
The
Chairman: We now come to amendment
72.
Mr.
Gauke: With your permission, Mr. Hood, as the
amendment is technical in nature, I should like to include in the
debate on it my remarks on clause stand
part.
The
Chairman: Does the hon. Gentleman mean that he does
not want to move his
amendment?
Mr.
Gauke: No, I want to move the amendment, but it may be
helpful if I also include my general remarks on clause 54, if that is
acceptable. If not, I will deal with the amendment
separately.
The
Chairman: I would prefer you to deal with the amendment
separately. Then we can have the stand part
debate.
Mr.
Gauke: Thank you, Mr. Hood, for your
guidance. I
beg to move amendment 72, in clause 54, page 26,
line 6, leave out
‘at or about the
same time’
and
insert ‘in
the same registration
period’. The
amendment seeks to amend one of the elements of the clause. The clause
provides that for disabled drivers of automatic cars who hold a
disabled person’s badge, the list or notional price of an
equivalent manual car will be used instead of the list or notional
price of the automatic car that they actually drive when computing the
car benefit charge if it produces a lower taxable benefit. This removes
the disadvantage that some disabled company car drivers might face when
they must drive an automatic car because of their
disability. Subsection
(3) defines an “equivalent manual car” as a car
that
“is first
registered at or about the same time as the automatic
car”. The
phrase “at or about the same time” seems a bit vague. The
amendment would replace it with the phrase “in the same
registration period”. It is simply an attempt to provide
additional clarity. There may be good reasons for the current wording,
but the amendment was suggested by CIOT and is much more
precise.
Kitty
Ussher: I urge the Committee to resist the amendment. As
the hon. Gentleman suspected, there is an extremely good reason for the
current wording,
which states that the relevant car price should be that for an
equivalent manual car that is registered at or about the same time as
the automatic car. This definition has been used in legislation for
seven years and HMRC has received no representations that it is
difficult to use in practice. However, if the Opposition amendment were
accepted, things would immediately become far more complicated. If a
reference period of six months were used, it would not be at all clear
what the relevant price of a manual car would be for comparison
purposes. Car list prices can change within registration periods, often
quite dramatically, so the suggested wording would not always lead to a
single figure. Indeed, it might encourage all sorts of negotiation
about what the correct figure should be. We think that that would lead
to unnecessary
complication.
Mr.
Field: Without wishing to paraphrase the thoughts
of my hon. Friend the Member for South- West Hertfordshire on
the matter, surely the registration period is an entirely certain
period of time—six months. What does she understand the phrase
“at or about the same time” to encompass, either from her
own experience, or from any non-representations that she has had over
the past seven years from interested
parties?
Kitty
Ussher: It is exactly what it says on the tin. The fact
that nobody has complained about it in the past seven years means that
people understand what “at or about the same time” is. It
is a price that is available at or around the same time. I suppose the
word “around” is used because at that precise moment
there may not exactly, at that infinitesimal moment in time, be a
precise comparison and so it is a reasonable time period to use. If the
amendment were accepted, it could lead to some disabled drivers paying
more in income tax, and that is certainly not our intention. We want to
give disabled company car drivers certainty about how they will be
supported through the tax system.
Mr.
Hoban: If it is open to abuse, disabled drivers would find
the best comparison price to reduce their tax liability; they would not
put in a price that would actually increase their tax
liability.
Kitty
Ussher: Well, that is not at all clear from the wording
that his party is proposing. There could be all sorts of different
prices out there in a six-month period. There could be a price one day
that is very different from a price 10 or 15 days later. There is the
additional complication of burden of proof, either on one side or
another, whereas the current system is easy to understand and easy to
administer, so I do not see the point in changing
it.
Mr.
Gauke: Does the Minister think it is possible that a
registration within the same registration period would not be at or
around the same time? It seems to me that our amendment actually
narrows the requirement, rather than widens it. I am not sure that her
case is quite as strong as she makes out.
Kitty
Ussher: I am sorry if I am not making the strength of my
case clear, but perhaps I will try again. The list prices of cars can
change quite dramatically during a registration period, which is
currently six months.
It is not clear, therefore, what the relevant, appropriate price of an
equivalent manual car would be. However, if the legislation says
“at or around the same time”, then clearly, as the last
seven years’ experience has shown, it is the price available at
or around the same time that is taken, as opposed to any price over a
six month-period, which could vary quite
widely.
Kitty
Ussher: If the hon. Gentleman wants to try again, I am
happy to take him up on
it.
Mr.
Gauke: Let me make it clear. I have no doubt of the
strength of the way the Minister is putting her case, I just think that
that strength is unwarranted. Could she be clear? Does “at or
around the same time” mean essentially the nearest time to the
date of registration of the automatic car? If that is the
case—the wording is not as clear as it might be—then she
does have a stronger
case.
Kitty
Ussher: That is the case, which is why my argument is
stronger than that which the hon. Gentleman is
proposing.
Mr.
Gauke: Finally, I may be persuaded by the Minister. With a
certain amount of persistence, she may well have articulated her case,
in which case I beg to ask leave to withdraw the amendment.
Amendment,
by leave,
withdrawn. Question
proposed, That the clause stand part of the
Bill.
Mr.
Gauke: Mr. Hood, you anticipated that I have
one or two remarks to make on the clause.
We have
already touched on the essential purpose of the clause. However, I just
want to make one other point. The application of the clause is based
upon an employee holding a disabled person’s badge. The LITRG,
at the prompting of the charity Mobilise, has questioned whether the
blue badge scheme is sufficiently wide to include everyone who needs to
use an automatic vehicle. For example, it has stated
that “single
amputees do not necessarily qualify for a blue badge, but do need to
drive an
automatic”. Consequently
it goes on to say:
“It
would be interesting to know why a definition linked to the disabled
badge
scheme” has
been used in the clause.
The LITRG
also noted another issue that is worth highlighting. The issue of
disabled badge holders arose earlier, of course, in our considerations,
in the debate that the Exchequer Secretary had with my hon. Friend the
Member for Fareham about the definition used in paragraph 22 of
schedule 11. I shall quote from that debate, in which the Exchequer
Secretary responded to a question from my hon. Friend about why that
particular provision could not be simplified to include disabled badge
holders: “The
hon. Gentleman then asked specifically why in paragraph 22
we do not simply use the qualification criterion of a person holding a
disabled badge. The answer quite simply is that the power to award a
badge is devolved to local authorities and we wanted to ensure that we
had a comprehensible and tighter set of criteria, so that the system
and the resources are properly targeted
on those people who need our
support.” ——[ Official Report, Finance
Public Bill Committee, 9 June 2009; c.
234.] I would
be grateful to the Exchequer Secretary if she could explain why the
disabled badge qualification was inappropriate for paragraph 22 of
schedule 11 but is appropriate for clause
54.
For the
clause to work effectively, it will be necessary to publicise the new
provisions contained within it. I should say first that we welcome the
intention behind the clause; the clause is seeking to do something that
is very worthwhile and just. However, as I say, if the clause is to
work effectively it will be necessary to publicise the new provisions,
so that employers and employees know what information to provide to
HMRC to obtain the correct 2009 tax coding restriction. I would be
grateful if the Exchequer Secretary could say what steps were being
taken to publicise the provisions in the
clause.
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