(Except Clauses 1, 4, 5, 9, 14, 22, 42, 56, 57, 124, 130 to 135, 138, 139, 148 and 184 and Schedules 5, 6, 19 and 25, and any new Clauses and Schedules tabled by Friday 9th May 2003 relating to excise duty on spirits or RÿD tax credits for oil exploration.) - Schedule 22 - Employee securities and options
Finance Bill
3:45 pm
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
As the hon. Gentleman has just said, amendment No. 27 would change the start date of the period within which the Inland Revenue notice must be completed and returned to the date of receipt by the taxpayer rather than the date of issue of the notice. That is a common debate throughout the tax system. The amendment would only add confusion.
An Inland Revenue notice is always dated and will specify the date by which it must be completed. If the date were to run from receipt of the notice, the Inland Revenue would need to know when the notice had been received to check whether the company had complied with its responsibilities, and that would not work in practice. I understand that the hon. Gentleman wishes to ensure that the date of receipt and return are as they should be but, as he knows, that happens elsewhere in the tax system and there are steps that can be taken.
The Inland Revenue is happy to give an assurance that it will not normally require completion of a return before 7 July following the year in question—the period available for the information to be provided without the issue of a return. A return would be required at an earlier date only if the Inland Revenue suspected significant avoidance or evasion.
Amendment No. 28 would result in insufficient information being provided. A transaction may fall into two or more categories. For example, securities may convert into other securities: that is both a conversion of the old security and an acquisition of the new. Both events need to be reported. The amendment would require only the initial acquisition to be reported and not the conversion. That would make the information difficult to interpret. Under the Bill, while the information would need to cover both events, only one return must be made containing all the information required.
Under the new reporting requirements each of four persons has a responsibility to provide information, as the hon. Gentleman said. They are the employer, the host employer in the UK, when the actual employer is overseas, the person providing the securities and the person issuing the securities. Amendment No. 29 would involve the Inland Revenue entering into an agreement with all four persons that only one of them would provide the information. The requirement on the others to provide information would then not be enforceable.
In practice, one of the four persons is likely to take on the responsibility. Once that person has provided the information, the others have no responsibility to do so, but if the Inland Revenue were to give up the opportunity to pursue one of the four relevant people to get the information, that would seriously inhibit the gathering of the information.
Amendment No. 30 would provide an excuse not to furnish information where a fellow group member had not provided a host employer with the necessary information. In practice, that could open the door to an employer avoiding his responsibilities. If a host employer is used, there is an obligation on the group to
keep it informed, so that it can comply with its obligations. Failure to do so should not provide a legislative excuse to avoid the information requirements.
Finally, amendment No. 31 would absolve a host employer from its responsibilities where the cost of issuing the securities is not borne by that company, thus preventing the return of information on the equity reward of many employees seconded to a UK subsidiary of an overseas parent. Without that information, the Revenue's compliance work would be significantly hampered, if not very difficult to achieve.
Schedule 22 substantially changes the legislation on equity remuneration. To ensure that the changes are properly implemented, it is essential that the information powers be improved. We do not think that the requirements are unduly burdensome, and the Inland Revenue will, of course, provide full guidance in due course to help companies comply with their responsibilities as easily and as efficiently as possible.
The combined effect of the amendments would make it much harder for the Inland Revenue to police the new legislation. That would not be acceptable to the Government. If the hon. Gentleman wishes to press any of his amendments to a vote, I will ask my hon. Friends to oppose them.