Ms Ruth Kelly (Financial Secretary, HM Treasury; Bolton West, Labour)

Clause 69 is an anti-avoidance rule that amends a special computational rule in the financial instruments legislation to ensure that it works as originally intended. It deals with the recognition of forward premiums and discounts, which are amounts equivalent to payments and receipts which accounting convention requires to be recognised in some circumstances.

The hon. Member for Arundel and South Downs is concerned about whether the rule is in any sense retrospective. I do not believe that it is. The new rule applies only to forward premiums and discounts—which should be recognised under UK GAAP—attributable to the period from 26 July 2001, the date on which the rule was announced and the clause first published.

I reiterate to the hon. Gentleman and to the Committee that such anti-avoidance measures are designed to catch sophisticated, carefully designed processes designed purely to avoid tax that is owed to

the state. I do not for a moment share the philosophical doubts of the hon. Member for Cities of London and Westminster about the legitimacy of raising a fair share of taxation from particular individuals or companies. I take the principled view, which I think is shared on the Labour Benches, that we should create a level playing field where everyone pays a fair share of tax. That is what the clause is designed to do.

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