John Butterfill (Bournemouth West, Conservative)

I have been advised that the hon. Member who was to move amendment No. 99 and speak to the group of amendments would prefer notto move that amendment or speak to amendmentsNos. 111 and 102. He simply wishes to move amendmentNo. 100. Is that correct?

Paul Goodman (Shadow Minister (Childcare), Treasury; Wycombe, Conservative)

That is correct, Sir John.

I beg to move amendment No. 100, in page 61[Vol I], leave out lines 31 to 44.

The reason for that change is as follows: as the Committee will be aware from listening to the Paymaster General’s response to the amendments that were tabled to clause 69, clauses 69 and 71 are closely related. In the debate on clause 69 she dealt with the arguments in the three amendments that I do not wish to discuss.

However, amendment No. 100 is discrete. The lines it proposes to delete refer to an arrangement of notices. It is a probing amendment, seeking to explore the regime of notices that the clause would write into the Bill. The clause does not impose a tax system that Her Majesty’s Revenue and Customs may challenge in the formal manner if it disagrees with the self-assessment. It would instead allow HMRC to issue a notice, which arguably represents issuing a notice by diktat. We should be grateful to hear a reason for the measure, particularly because the tax planning that would trigger the issue of the notice would probably have to be disclosed to HMRC under the disclosure of tax avoidance scheme rules, which are being extended in their remit. So HMRC should not be ignorant of the planning undertaken. There also seems to be nothing in the clause that enables a company to appeal against such a notice. It could be argued that that gives tothe Executive considerable powers that they shouldnot have.

Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)

I shall refer to the question of issuing a notice, which amendment No. 100 covers. Issuing of notices is a general part of the disclosure requirement regime. HMRC would issue the notice when it believed that the conditions of the clause were met; however, companies need not be concerned by the provisions unless they receive a notice. That is the first step. The notice would be a possibility if conditions were met. Obviously, HMRC must be consistent when issuing notices, and such issuing must be based on cases to which it reasonably believes that the conditions of the legislation apply. The conditions requirement means the exercise of judgment, but that is inevitable for what is a purposive test. There is nothing unusual in that, and such judgment is called for in many other areas of tax law.

HMRC has also issued guidance, to which I referred when we discussed amendment No. 101 and clause 69. HMRC has issued guidance on how it will exercise judgment in relation to the legislation. We were discussing the informal clearance procedure, and HMRC has also offered clearance on an either pre or post-transaction basis. Clearly, however, if a company takes its own view during its self-assessment, and ultimately disagrees with the decision, it will be referred to a special commissioner for ruling before going through the normal processes. I am not sure that I made this point this morning, so I should add that having given that informal clearance, HMRC will be bound by it—as long as all relevant facts about the arrangement had been disclosed in the first place. I hope that that explains the procedures. The hon. Member for Wycombe asked, if a company nevertheless disagrees, can it challenge? The answer is yes.

Paul Goodman (Shadow Minister (Childcare), Treasury; Wycombe, Conservative)

I think that the Paymaster General is saying that, in effect, there is an appeal system after the notice is issued. That being so, I beg to ask leave to withdraw the amendment.