Clause 16
Finance (No. 2) Bill
9:30 am
John Healey (Financial Secretary, HM Treasury; Wentworth, Labour)
I have explained the purpose of the clause, referring to it in my remarks on clause 9. Its material effect is to align section 23 of the Value Added Tax Act 1994 with schedule 9 to that Act and therefore give full legal effect to a situation that has been in place administratively since 6 December.
The clause also allows us to amend the meaning of “games of chance” by Treasury order. We will do that later this year to ensure that both section 23 and schedule 9 take account of the definition of a “game of chance” that is contained in the Gambling Act. We have further work to do both with the industry and internally on pinning down that definition. That is why we propose to do it by Treasury order later this year, rather than now. I commend the clause to the Committee.
Mark Francois (Shadow Minister, Treasury; Rayleigh, Conservative)
May I also welcome you to the Chair, Mr. O’Hara? I look forward to serving under your beneficent guidance and that of your fellow Chairmen as we plough our way through the Bill over the next few weeks.
I also take this opportunity to welcome the Economic Secretary to our proceedings, and to congratulate him on his early promotion to the Government Front Bench. Someone has clearly smiled upon him and I think we all know who it was.
We have moved on to part 2 of the Bill, which deals with the VAT regime. When VAT was introduced in the United Kingdom back in 1973 it was apparently billed as a simple tax that would be easy to understand and to administer. In the next few hours, I suspect that the Committee might disagree with that original assertion.
The clause deals with VAT and gaming machines. It represents a relatively gentle introduction to this part of the Bill and is relatively non-controversial. The Financial Secretary helpfully wrote to members of the Committee on 8 May, outlining the Government’s rationale behind the clause, which seeks, in essence, to update the definition of gaming machines for VAT purposes and the related definition of a “game of chance”. Anyone embarking on a political career might have their own definition of that.
I have one question to put to the Minister at this juncture. The final full paragraph of the Financial Secretary’s letter mentions that the updated definition of a “game of chance” is intended to comply with the definition in the Gambling Act. In itself, that seems to be a sensible provision. However, the letter also refers to a nuance concerning the fact that the Gambling Act does not apply in Northern Ireland. As the Financial Secretary said, confirmation is awaited that this will not cause any problems in using the definition in tax law. Before we allow the clause to stand part of the Bill, will the Minister expand a little on that point? Will he explain, at least roughly, when the Government expect that work to be complete? When do they expect that confirmation to be forthcoming so that the order can be issued.
Colin Breed (Shadow Minister, Treasury; South East Cornwall, Liberal Democrat)
I believe that this measure is a useful clarification. Much of the work will be done in the next year or so, before the next Budget. We look forward to the complexities of that. In the meantime, the proposal is sensible to ensure that the definitions and so on are comparable.
John Healey (Financial Secretary, HM Treasury; Wentworth, Labour)
The hon. Member for Rayleigh(Mr. Francois) describes this provision as a gentle introduction to the VAT section of the Finance Bill. It was not designed as such; it was designed for the fairly narrow purpose of dealing with the definition of a “game of chance”. The simple answer to his direct question is that the Gambling Act does not apply to Northern Ireland, which has its own legislation in that area, although tax legislation does. We propose to draw heavily on the definition of a “game of chance” in the Gambling Act. We have more work to do before we can confirm that, particularly checking with the Northern Ireland Office whether or not there is any inconsistency or potential problem that we have not yet foreseen.
In such circumstances, rushing to confirm the definition when we do not need to at this point does not seem sensible. We will do that by Treasury order later this year. Essentially, we need to complete some technical work in order to do so with a certainty and confidence that means we are much less likely to have to return to the Committee and to the House to put right any technical deficiencies that we could have avoided. That is the purpose of the timetabling in those stages. I hope that that gives the hon. Gentleman the reassurance that he seeks.