Clause 21 - Business gifts
Finance Bill
9:45 am
Mr Stephen O'Brien (Eddisbury, Conservative)
The Economic Secretary has said that the clause is small and simple. On delving a little further, however, we find that it raises some issues, which I hope that he will consider carefully and respond to. He will note that no amendments have been tabled because we are raising these points to catch his eye, and the eyes of his advisers. He may want to tackle the difficulties that we have identified on Report. If he chooses not to do so, we reserve the right further to consider the clause.
I will not rehearse what clause 21 is intended to achieve, and none of us would dispute its intent or principle, which the Economic Secretary has outlined. The problem is that Customs and Excise might be too rigid in examining what constitutes ''the same year''. Two annual gifts such as those given at Christmas might be given in consecutive years but within a little less than 12 months of each other. The sums may be small, but, for a small business giving a lot of Christmas gifts to clients and sales staff, the cost might be an unwelcome added burden.
I have identified a hassle factor. When one examines a provision that has been described as relatively easy and simple, it is important to consider whether true simplification has been achieved. I recognise that there is no compulsion to conduct a regulatory impact assessment, which I dare say the Economic Secretary did not consider in relation to this relatively small matter. However, the clause may well add an unnecessary and disproportionate burden to small businesses, which need to ensure that their commercial relationships and staff relationships are well cemented.
I hope that the Economic Secretary will carefully examine the idea of allowing businesses to choose a 12-month period, or to use a 12-month period determined in law, such as the VAT year, the accounting year or the period to 31 December. I also hope that he will consider bringing the matter back on Report. The problem was identified by the Institute of Chartered Accountants, which states:
''We welcome the intention to simply these rules. However, by introducing any period of one year in which a succession of business gifts can be aggregated means that businesses will have to keep rolling 12-month records, thus reducing much of the effect of the simplification. We would suggest that either businesses be permitted to choose a 12-month period, or that one should be determined by law'',
which reinforces my point.
The key is to recognise that rolling periods are worse because all companies must have them. If such records were kept, they would impact on those businesses that have already identified the ''same year''. It would be better to have a single date rather than bringing businesses into line by using a rolling period, because businesses dealing with the regulatory burden can anchor to a single date.