Schedule 9
Finance Bill
4:30 pm
Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)
I welcome you to the Chair, Mr. Illsley.
I want to ask the Minister about the targeted anti-avoidance regime to which he referred before the lunch break. As I understand it, the supplementary avoidance rule contains a motive test and a pre-clearance test. I was surprised and taken aback when I saw that there was a pre-clearance test, because I remember the Minister lecturing me quite firmly in connection with clause 27, saying that there was no need for such a test. He said:
“The amendments are unnecessary because the clause contains a main purpose test, which means that it will apply only when a person has entered into arrangements that have the main purpose of securing a tax advantage, which is to say tax avoidance. Such schemes do not happen by accident. They are the result of contrived circumstances in which transactions are undertaken or carried out primarily to achieve a desired tax effect, as opposed to a genuine economic purpose”.
He continued:
“That main purpose may be inferred from the actions of the parties to the arrangements, but it is best understood by the person making the arrangements. It is therefore not necessary to set up a clearance regime when the person best placed to judge whether the rule applies is the person who makes a clearance application.”—[Official Report, Public Bill Committee Finance Bill, 17 May 2007; c. 223.]
It appears that there is one rule for clause 27 and one rule for schedule 9. Having re-read the Minister’s explanation in our debate on Tuesday morning, I am not clear why a clearance rule is right in schedule 9 but was not appropriate for clause 27.