Mr Howard Flight (Arundel & South Downs, Conservative)

The clause is the fruit of much consultation by the Revenue, and it is generally welcomed by the accounting industry. However, there is a slight concern that taxpayers who, in accordance with the Revenue's guidelines, conscientiously check the status of their payees, could be liable for their payees' tax if it subsequently transpires that, contrary to all appearances, the pay is not within the charge to corporation tax. The payer can never know for sure that the pay is within the charge to UK tax. Only the Revenue will know that.

The clause is allegedly a deregulatory clause to remove the requirement to withholding tax on certain payments between companies where the requirements of new section 349A are satisfied, but new section 349C gives the Revenue an arbitrary power to overrule that and instruct a company to resume paying withholding tax. That surely cannot be right, and there should be a requirement for reasonableness by the Revenue. That is what amendment No.44 is designed to achieve, and I believe that it is also the objective of the undoubtedly more perfectly drafted Government amendment.

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